Each tax season, tens of millions of American households have a decision to make.
A) They can collectively spend hundreds of millions of hours preparing tax information that the federal government already has.
B) They can pay other people billions of dollars to do it for them.
But let’s add a choice C: They go for a walk. Or, they have a nice dinner. Basically, they do whatever they want with those millions of hours and billions of dollars. Because their taxes are done for them, for free. They receive a document from the government with all of the relevant information already filled out, and they check a box to say, “okay!"
In the United States, the third choice sounds like a fantasy. But the excruciating pain of tax season is just another example of negative American exceptionalism. In fact, about one-half of American taxpayers earn all their income from one employer’s wages (which the IRS can see) and interest from one bank (which the IRS can find out without much effort). The IRS could easily send tens of millions of individuals their nearly completed taxes by mail—or even, by text.
“Rather than some crazy, wild idea that’s never been tried before, this is doable and a lot of countries do it,” said William Gale, a tax expert at the Brookings Institution. Eight OECD countries, including Finland and Norway, fully prepare returns for the majority of its taxpayers. In Estonia, it famously takes the average person five minutes to file taxes.