Filing Taxes in the US vs. Sweden: A Tale of Two Systems
Introduction
The experience of filing taxes in the United States and Sweden couldn't be more contrasting. In Sweden, the government provides a pre-filled tax return, allowing individuals to sign and submit it with ease. In the US, however, tax preparation can be a daunting task, consuming significant time and resources.
Complexity of the US Tax Code
The US tax code is renowned for its complexity, comprising millions of words. This labyrinthine structure contributes to the high burden of American taxpayers, with 20% of eligible individuals failing to claim a valuable tax credit. The convoluted nature of the code is a result of incremental changes made over decades, resulting in an intricate and confusing system.
Advantages of Other Systems
In the United Kingdom, for instance, employees do not need to file tax returns, as taxes are automatically deducted through payroll. The Pay As You Earn system ensures precise tax withholdings, as the government has access to each individual's income information.
Social Policy and Tax Credits
The US tax code serves as a channel for various social welfare programs, providing assistance in the form of tax credits. These credits, such as the earned income tax credit, aim to support low-income households. However, the complex nature of the tax system can make it challenging for individuals to claim these benefits.
Role of Tax Preparation Companies
The complexity of the US tax code has created a demand for tax preparation companies. These entities profit from the confusion surrounding taxes, perpetuating the need for their services.
Steps Towards Simplification
Despite the challenges, the US tax system has taken some steps towards simplification. The Tax Cuts and Jobs Act of 2017 increased the standard deduction and streamlined itemized deductions. Additionally, the Direct File program allows certain taxpayers to submit returns directly to the IRS at no cost.
Future Prospects
Further simplification measures could include pre-populated tax returns and government-calculated tax liability. However, achieving these advancements would require legislative changes and collaboration between companies and the government.
Conclusion
The contrasting experiences of filing taxes in the US and Sweden highlight the need for a more streamlined system in America. While progress has been made, significant challenges remain. Simplifying the tax code would alleviate the burden on taxpayers, enhance equity, and promote economic growth.