Thursday, November 19, 2020
Joseph Bankman (Stanford) presents Mr. Smith Gets an Education: Why it is so Hard to get Easy Tax Filing virtually at NYU today as part of its Tax Policy Colloquium Series hosted by Lily Batchelder and Daniel Shaviro:
Imagine that one day, you get a note in the mail from Visa saying that starting next month, Visa will no longer be sending itemized bills (or indeed, any bills at all) to its cardholders. Instead, it will be the responsibility of every Visa cardholder to keep a record of all purchases, and refunds charged or credited to their account during the month, along with late payments and late fees, interest accruing on unpaid balances, and then tote it all up at the end of the month to figure out how much they owe Visa. If cardholders inadvertently omit some charges and pay Visa too little, you’re informed, Visa will assess interest and penalties on the underpayment.
Why on earth would Visa do such a thing?, you wonder. After all, Visa already has all that information in its computers, which can automatically calculate from that information the net amount you owe. Why should individual cardholders duplicate that effort, at considerable annoyance and expense to themselves, and with the dead certainty of errors?
Why, indeed. And yet, that is exactly what the government asks taxpayers to do each year, in computing their tax liability and filing their returns.