The Indicator from Planet Money - Pay Taxes Less Frequently? We're Interested...

Taxes can be a nightmare for taxpayers and also for the under-resourced IRS. But there's an idea that could make taxes easier for everybody: only pay taxes once every two years.

  • Play Speed:
Content Keywords: IRS taxes
N p. R.

Hey, Stacy. I want to tell you a really sad story about a federal agency. That's underfunded it is the IRS. It is very difficult to feel bad for the IRS for me to just give us a chance. I mean, it's understandable, but the IRS does have to have its budget approved by Congress. It's kind of like the unloved stepchild of federal agency. So, if you look at graph of the IRS budget in real dollars, it looks kind of, like a sledding hill about a decade ago. It was up at about fifteen billion dollars and it goes way down hill and it plateaus at around 12 billion today. Actually do this is truly problematic because the IRS is how our country pays for things defense, Social Security Medicare, all of that requires money from the IRS and right now, the iris is so underfunded. It is not able to operate efficiently couple of years ago. Things got so bad that the IRS received

Almost 100 million phone calls and only answered one third of them. 70 million unanswered, call Sally, 70 million unanswered calls. This is the indicator from Planet Money. I'm Stacey Vanek Smith. I'm Sally. Herships all those calls. Don't just mean a ton of grumpy people. Not getting their questions answered. It also means there are not enough Auditors. Making sure that people are paying the taxes. They owe President. Biden has a plan to pump, billions of dollars into the IRS, to short up and help it. Do its job. But there may be a simpler solution one that does not require more funding. And another phone is, we might not have to file our taxes every year. More about this magical sounding idea after the break. I like, where this is going.

This message comes from NPR sponsor. Microsoft teams, helping priority bicycles transform the way they work. When the pandemic hit, they started doing virtual visits on teams. Now people worldwide can come into their showroom, Morad teams. This message comes from NPR sponsor, cultural IBS symptoms can be tough to manage with diet alone and cultural i b s complete support a medical food for the dietary management the Bible. Yes, it designed to help use promo code radio on kosher

This idea, it comes to you're a working paper from the University of Southern California, the paper's authors say it would save the IRS, send us the taxpayers a combined 83 billion dollars here and your theory. Get ready for it. It's called biennial but we're just going to say biannual because we weren't math Majors. What it means is that we pay our taxes, not once a year, but once every two years you had me at every two years of a Cockerel is one of the co-authors of the paper. I guess I'll start with kind of why this idea is needed, just kind of three prongs of The Proposal. Before we let Emma, walk us through how her paperwork says, a few things, you should know about her. She's a student at the University of Southern California, she studies economics and math. She uses words like gas when she emails me, and she started writing this paper when she was 19.

Paper, their normal, 20 year-old who just happen to write a paper about the IRS. Pretty much I have to ask something if you're 20, have you paid taxes yet? I have a my first got interested in the idea of buying annual tax filing as a sophomore, when her economics. Professor Jeffrey Dubin, shared the theory with her. It was already out there, it has been proposed in 1997 and she got really fired up. So when our professor told her, there was evidence that by annual tax filing could help. The IRS be more efficient. She got cracking as one does to understand how pay our taxes every two years could actually help save money. You have to understand what Emma and her professor say are three main problems with our current tax system. First, the IRS is overstretched it's vastly underfunded so really, it's an agency that's forced to perform more with fewer resources, like with all those phone calls to some of those people might have been calling to clarify whether or not they owed money.

The IRS and just give up. But if all those taxpayers had two years to file, the IRS would have more time to answer all those phone calls and then next week get two audits that's on the IRS gets all up in your business or its business Realty, to make sure that you were paying your fair share. You know, you're not being creative with the numbers. Yes. And Emma says because of budget cuts, there are fewer Auditors today than at any point, since World War 2 soap, the audit rate at least for middle and lower-class. Americans tend to be really low. Which of course, it's not sound that bad to me since I have been audited, then it was terrible for 2015 which is the latest year that data is available for, we should be on a trade-in fluctuates around .5%.

Which is crazy. And so Lo. So again, if the IRS had two years instead of just one, wamo more time to do audit more time to collect our money. Emma says, were also not getting enough rich people. The problem is that tax returns for the wealthy are complicated and the IRS agents who do those audit require more training. So if you did. It's every two years. Mr. You would have more time for that training and the IRS would be able to double its audit rate, and potentially bringing billions more. It could also solve one of the potential problems. I thought of when I first heard about this paper, which is what is the government do to get over that hump year. The first time it has to wait an additional year to collect all that money. And the answer is you, wait, because there is going to be an epic pay off the Telly. We've been focusing on the IRS so let's talk about us. There is another perspective here and this is problem. Number three, Emma says because filing our taxes has become so

Complicated it cost. Us taxpayers a lot of time and money. And angst to do our taxes and the federal government actually tracks, how long it takes the government to publish his burden hours of each government agency for it and ours. This is very aptly named. These are the number of hours that Americans spend Gathering and sending the government information that his ass for you don't like, you know, for a driver's license renewal or passport. We spend most of those burden hours on taxes, and total government burn hours of about 11.59 billion of this 11.59 billion, 8.11 billion, is from the Department of Treasury, the IRS if you're a within the treasury. So if you put a price tag on that time, Emma's paper estimates, it comes out to $77 billion dollars in lost time and wages and pink accountants. If we pay our taxes every two years instead of one week,

Steve billions, which sounds great but I did have some questions. And is there any concern about for people who really need their returns? If they file every two years instead of every one year? And I mean, I know they're people who are like desperate to get that money back with that, be a problem for them. Essentially, it would be really easy to give low-income earners their their refunds before they've even filed their taxes. According to the tax policy Center, 36 countries around the world including Germany, Japan and United Kingdom already have systems in place, which would make it really easy to automatically issue tax, refunds. That system is called return-free filing. Means the taxpayers. Do not have to do anything. They don't have to file a return. Those governments just withhold taxes. It is automatic and this is the reason we haven't seen return-free filing in the states. It's just as a private sector lobbying tax prep is a hugely profitable industry but besides powerful private sector Lobby interest.

80. Emma says, it does not have to be this way. We do not have to pay our taxes every year. There's no real like legal or economic reason for annual tax reporting. And if you go back and look at, you know, the history of Taxation there, instances of biannual, taxation in Rome, in ancient Rome, the Romans tax once every three years even better. In fact that we apparently one of the reasons that Rome fell was because of a progressive, taxation to me, burn hours. So my annual taxes could really be a win-win and who knows by annual tax? Filing might even mean the IRS could answer all of those calls. This episode of the indicator was produced by Jamila, Huxtable with engineering by Kelley Mooney, it was edited by Kate concannon, and the indicator is a production of NPR.

Representatives are still helping other customers, please continue to hold.

Today, it seems like everybody's got a bone to pick with the news. So what happens when somebody stops talking smack and just decides to wage all-out war with the communications of the enemy. And what happens if they win? Visit Stockton California for a story about a revolt against the mainstream media but shaken up the city from NPR's invisibilia.
Translate the current page