No EZ Fix For The IRS 574
meltoast writes "Apparently the IRS is storing all of the taxpaying histories of 227 million individuals and corporations in a system that still runs code written in 1962. CIO Magazine is running a story on the IRS's nearly failed $8 billion modernization attempt that includes missed deadlines, cost overruns of over $200 million and four CIO's in seven years."
A new strategy...... (Score:5, Interesting)
Ummmm......If this project was my responsibility, as CTO I believe I would have canned the whole project and started anew as from the sounds of it, there is too much baggage with which to continue. So, here we go: Don't deal with contractors and subcontractors or if you do, make sure that the IRS is actively involved with management and funding of the project so that nobody gets paid unless key points in the strategy are reached.
A simple strategy might be to run and fund the project entirely within the IRS structure and take the following strategy:
While the linked article is short on what exactly is going wrong with the transfer, I was talking with a guy working on the project in an airport last year. According to him, one of the big problems the IRS is facing is that everybody is talking about incompatible data formats and getting data to migrate from one database to another while maintaining taxpayer information. This may be a little glib, but perhaps we could take a more direct approach to updating the data file structures like deciding upon a data format a priori and simply, through brute force, repopulating the new database with the old data? We could create a few thousand temporary (2-3 year) jobs for those folks on welfare or currently out of work and using redundant strategies for error correction, manually enter the data into the new formats.
Done.
unix? (Score:4, Insightful)
Re:unix? (Score:4, Insightful)
Unix is written in C, many variants of which and decendents of which are still in use, so it isn't nearly as obscure as something written in Pascal or Fortran, not to mention some of the MUCH more outdated relics. The article didn't even mention what outdated language was used by the IRS in 1962.
Also, Unix is an OS that has evolved in the public domain for decades, open to the light of day. The IRS hodgepodge has grown up and together like a blackberry bush. Neither system looks the same as it did when created, but at least some order was imposed on Unix.
Re:unix? (Score:5, Informative)
sPh
Re:unix? (Score:5, Funny)
Now that's job security.
Re:unix? (Score:3, Insightful)
Re: (Score:3, Insightful)
Re:A new strategy...... (Score:4, Funny)
$200M and 7 years? Feature! (Score:3, Insightful)
You work in the private sector -- where a CTO's responsibility is to im
Re:$200M and 7 years? Feature! (Score:5, Informative)
Local and state governments have deadlines just like in the private sector. The only real difference is that we have to deal with a lot more buricratic cr*p.
If any of my projects were 7 years over due, I would expect to get canned, or demoted.
Re:$200M and 7 years? Feature! (Score:3, Interesting)
Re:$200M and 7 years? Feature! (Score:4, Informative)
Re:$200M and 7 years? Feature! (Score:5, Interesting)
I've hired a number of computer people and it's really hard to find great people who want to put up with government work. The dotcom bust has been great for hiring.
I put up with the red tape and piles of legislative rules, because I feel the research we do is worth it.
I make a decent living, but I know I'll never with the stock option lottery. Which sucks for you too, because if I didn't have to work for a living, I'd be writing free software. Luckily, my employer allows me to submit patches to the packages I use.
To sum it up: If government jobs are so great, why do so few qualified people apply to our opennings.
Re:$200M and 7 years? Feature! (Score:4, Interesting)
Sure, I've worked for corporations and there's plenty PLENTY of slack off time (just like in Office Space about the 15 minutes of actual work a day), but it's nothing like Gub'mint Work where I've been penalized for working too much. I ignored the first "slow down, you work too much" warning and it nailed me on a review.
You're paid for not working because that's the Magic of The Job. If you can't finish your job, you get a bigger budget.
My 2nd job is at a small company and I'm not paid more in the private company like you said. But I enjoy working there.
And public defenders, and I'm thinking of the one that told my uncle to plead guilty to an armed robbery that even the witnesses said wasn't commited by him, wouldn't do it if they were qualified enough to get a real job.
Cynical nonsense (Score:3, Interesting)
As for handing our favors, the semi-crooks that foisted a similar failed project on the California DMV are now facing jail time.
More likely in the IRS's case, if Congress tells the IRS to use 1962 technology and hire idiot slacker consultants, then 1962 technology will be used and idiot s
Re:Cynical nonsense (Score:5, Insightful)
Although government agencies (bureaucracies) are accountable to nobody, and as a result, the IRS would never support its own downsizing, you've hit at the real root of the problem.
If the Internal Revenue Code weren't so complex, the IRS would be forced to downsize, no matter how hard it screamed for self-preservation.
The revolving-door "in-house"/"contractor"/"in-house" system you describe is symptomatic of bureaucracy. But that bureaucracy wouldn't exist if Congress didn't invent it.
If every Congressman had to do his or her own taxes, with pencil, paper, and 4-function calculator, and with no assistance from anything but the IRS help line, web site, and published forms, the Internal Revenue Code would be fixed within a month.
Unfortunately, the odds of Congressmen having to face the monster they created are zero. As much as I hate the IRS - they're just the guys running the trains and seeing to it that the gold teeth are accounted for. The real villians in the story of high tax compliance costs are the ones who issue the orders that we get into the fucking boxcars.
Re:Cynical nonsense (Score:3, Insightful)
Re:Cynical nonsense (Score:4, Insightful)
The revolving door insourcing/outsourcing of IT has happened at many private companies, even mid-sized ones that should be small enough to figure out how to do better. Perot Systems and EDS have been involved in a number of these types of situations. If anything, in the current market government customers are less likely to be taken in because they've been fleeced so thoroughly in recent years already.
-Graham
Re:A new strategy...... (Score:5, Insightful)
CTO I believe I would have canned the whole project and started anew as from the sounds of it
That's the right thing to do, of course.
Practically, though, doing this kind of thing is difficult in government.
Your first presentation is with the people that give you funding. You tell them you want to start from scratch.
They ask you "Are you telling me that the $8billion we've given you has been wasted? Do you have any idea how bad this will make us look in the press? If you ask for this kind of change in course, there's no guarantee we could get the funding at all!"
Meanwhile, lots of nice underlings busting their butts for you will be seeking hints as to whether they'll even have jobs next month...
Oh, and there'll be vendors promising magic bullets.
Bearing up under this kind of pressure will be why you're making the money as a government CIO.
Re:A new strategy...... (Score:5, Interesting)
While I agree the IRS should be involved with the active management (well, at a strategy and audit level) using in-house development is the kiss of death.
This is the IRS, not some young
Not all of the government is the same, but the vast majority is. Dried up programmers protecting their lack of skills and ambition, clinging to their nice earner.
The source of my strong feeling? I worked in a government department implementing a new database system... nothing complex at all, just stored monthly data and compiled some percentages of this data. Budget was $1m, time to implementation 2 years. Final outcome? $3m in costs with a 3 year over-run. And hey, I was not on the IT team, I was a user! BTW: The old system was on a DEC and had worked fine for 20 years, the decision to upgrade was taken so we could go all TCP/IP and the DEC wasn't!!!!!!!!!
When I moved division I found a need for a similar system (their record keeping amounted to MS Word documents with tables in and a calculator in hand for the percentages). I took me a month to do it from database engine to fully functional query and data analysis system. Hey, I used Access (for data storage) and Excel (querying via SQL) to do it, all via VBA of course (yeah, this is
In house development is usually a bad thing because in-house IT staff tend to be old, dead wood.
Exactly the opposite problem.... (Score:5, Interesting)
But, I've witnessed exactly the opposite problem, too, or perhaps the exact same problem with an outsourced project.
My wife works at a nonprofit that does management of the federal Welfare To Work Program. The state (AK) installed a "wonderful" database system using all the latest and greatest tech-- based almost entirely on MS products. I mention this because I think it is relevant.
The system sucks so hard, it blows. It is constantly down, data is lost with no real explanation ("The broker crashed," is a common refrain), it is difficult to use, and it sometimes returns incorrect results. There is a multi-hour lag time between data entry and data availability.
Here's my theory: it was designed by people who think they are programmers because they can use MS Visual Studio to create a front-end to an application designed with MS-Access (deployed on MS SQL Server).
One of the downsides of the vaunted MS "ease-of-use" is the proliferation of half-assed coders who think they are hot, who have managed to ignore 50 years of history and knowledge, and are doomed to make the same mistakes over and over again.
I think this is worse than the aging IT folks who hide in government buearocracy, polishing and defending their niche until it both shines and cannot be assaulted. I would rather have old technology that works than new technology that is so misused or intrinsically faulty that it just barely works, and that's "good enough."
But then again, that's just my opinion. I could be wrong.
Re:Exactly the opposite problem.... (Score:4, Interesting)
They decided to do a "charity" project and surveyed serveral local charities to see if any of their IT needs could be filled.
At the initial meeting, some questions on the project came up and I asked, "Why don't we consult with the users to see what's best for them?"
I got laughed at and told that the project wasn't for charity but was instead to develop our skills in certain areas.
Needless to say I shied away from the project and didn't help futher.
The end project, from what I've heard, was just that - a bunch of code that really didn't fufill the users needs but was good for bragging rights on resumes.
Re:A new strategy...... (Score:5, Informative)
This is a crock of shit on so many levels that it barely deserves comment. The vast majority of the folks who work for the Fed. Govt, and that includes the IRS, are decent folks who are very skilled at what they do, and muddle through in a broken system that is primarily imposed upon them by Congress. Of course they try to do new things the improve the system, but unless you get a chance to do it all over at the same time, its impossible to ever really fix everything. Just ask the FAA. It only took them 3 trys and about $20 Billion to redo the air traffic control system in the US.
The reason it costs 45 cents to collect a dollar of revenue is the byzantine tax code that has been generated over the 80+ years we have had a federal income tax. We could fix that with a flat tax on ALL income over $25k a year, but that is a different thread all together.
My dad supervised most of the development work done at the IRS that supports the master file. The tax code is so complex that the only people who actually understand are the IT group at IRS, because they are the ones that actually have to implement it. Reading the article, and from first hand experience, the attempts had moderization have failed because Congress and the higher ups in Treasury and the IRS thought contractors could do it better than the in-house folks. Not a big surprise that the project fails when the folks who know the context of the system are not asked to participate in the development of the replacement.
If some group of folks came in and tried to tell me that they knew my job better than I did, but they understand the work did, or why we did it the way we did, I'd be pissed off too.
BTW, if you are wondering, every taxpayer in the US has about 3/4" of tape that contains their entire tax history. The master file lives in a huge vault at the IRS's data center in Martinsburg, WV, which has the biggest damn door I have ever seen. Not quite Cheyanne Mt big, but still pretty good sized.
Oversimplification (Score:4, Insightful)
Does that include inherited assets? What if the recipient is under 18? Does that include appreciation? Does depreciation count as negative income? What about taxes people pay overseas? What about money earned overseas? Dual citizens? Deferred earnings? Gifts to relatives?
The flat tax is a red herring. It's as if the additional math of a sliding scale is going to be a tremendous burden to the system. It's not. The system is complicated because of all of the various special cases involved in it. What about the parent who is earning 40k per year, but spending 20k on education for their children? Or the father making 70k but spending 35k on medical bills?
Make no mistake about it, flat taxes are a way that rich people can pay less, period.
Besides, the most byzantine part of the tax code is corporate taxes, which, it was recently revealed, %60 of all corporations don't pay. First of all, unlike people corporations only pay taxes on net income, not gross. So if they didn't earn any money, they don't pay any taxes. Of course, what qualifies as taxable income and taxable expenditures varies. Then you have exemptions and reductions for where you're headquartered, the types of workers you employ, what industry you are in, what kinds of R&D you do, employee training, and about a million other things. Add into that the problem of overseas earnings, and earnings at home from overseas labor. What about earnings passed up from wholly or partially owned subsidiaries? Do they pay twice?
A lot of these corporate special cases are desirable, because they encourage things that you want to encourage. To say that they must all go and be replaced with a "flat tax" is a gross oversimplification. You haven't even defined what a "flat tax" is in a multinational corporation. Is a man in Denmark buying a book on Amazon.uk using an American credit card to an american bank a taxable transaction?
With apologies to Einstein, it would be good to simplify the tax code as much as possible, but no further. The "flat tax" is not applicable to real-world situations, does not directly reference that which makes the tax code complicated, and does not solve the problem.
No disrespect to you or your family intended, but the flat tax is no solution. Personally, I wouldn't mind a total tax rewrite, but I suspect that in the current political climate that would open up a field day for all-new abuses.
Re:A new strategy...... (Score:3, Insightful)
By your own reasoning, what is the incentive for the in-house people to learn new stuff when upper management has the mindset that any new stuff needs to be outsourced because the in-house people only know 'the old stuff'?
The biggest reason to let in-house people do it: they are intimately aware of the business logic that needs to be implemented. They have either implemented it in the old system, wrote the documentation, or know the people that did. They know the pitfalls and the gotchas. If they can im
Re:A new strategy...... (Score:4, Insightful)
Dick Cheney was the trailblazer for contracting out everything at the DOD when he was Secretary of Defense. He conveniently went to work at Halliburton right after that, whose Kellog Brown and Root subsidiary has been the army's contractor of choice since at least Vietnam so his new policy was conveniently a bonanza for Cheney in his after life. Its led to oddities like Blackwater, an organization of ex SEALS and special forces who are essentially mercenaries, filling all the huge gaps in the regular army, thanks to downsizing and contracting, but they draw six figure salaries standing next to grunts not making anything close to six figures. Interestingly American troops in Iraq are fed by Saudi and Kuwaiti subcontractors to Halliburton. When your fighting a war against Muslims having indigenous Muslims feed your army is an immensely dangerous and interesting avenue for a terrorist infiltrator.
But to get back to the original point, since the government generally must contract out IT projects this has led to the creation of massive corporations who do nothing but bid for government IT contracts. Two of the biggest being CSC and EDS. IBM and other do to but they don't feed as quite as exclusively at the government trough.
The problem with companies like CSC and EDS is they are well honed killing machines when it comes to writing proposals for government contracts and doing whatever it takes to win them. At the point they make the kill, they really stop having any incentive to actually do the job well. The government does an exceedingly poor job of penalizing bad performance by contractors. As a result CSC comes in to something like this, they hire a required quota of warm bodies and they start going though a standard process of requirements, specifications, reviews, coding, delivering and billing. In the midst of all there is really no one who has a really strong incentive to develop a really simple, stellar solution quickly or cheaply. The solution almost inevitably becomes an exercise in unmanageable complexity, it overruns which is usually OK with the CSC, since they usually keep getting paid as everyone ever more desperately seeks an ever more elusive goal of completion. So what if the project is eventually cancelled and defeat is admitted. CSC is unlikely to be penalized in any meaningful way. It wont stop them from getting the next government contract up for bids. There is a chance they will be persona non grata at the the IRS for a while so maybe EDS will do the next attempt and they will most probably do no better and there are only so many big prime contractors to choose from.
A key point here is 8 billion dollars may sound like a lot and it really is to all the working people whose hard earn money is going in to taxes that are being squandered, but in multi trillion dollar Federal budgets its insignificant. Everyone is wasting this kind of money everywhere so who among the politicians, bureaucrats and contractor hogs feeding at the trough really cares. Its just a simple fact that the U.S. government has spiraled out of control, voting Democrat or Republican isn't going to fix it. At this point it appears impossible to fix it, because ordinary people have no way to unite, stand up in unison one day and say enough is enough. Of course lots of ordinary people are working at CSC and Halliburton and they REALLY have no reason to complain about the fraud, waste and abuse in the government contracting system.
Re:A new strategy...... (Score:3, Interesting)
Let's look at some numbers. Say his costs for salary, benefits, computer, electricity, and whatever else came to $100,000 a year. If he did it in a month, that's $8500 (rounded cleanly) in personnel costs, plus a few hundred dollars in software licenses. Throw in a $25,000 server (hardware and software, plus some to spare), and for $33,500 (3.35% of the original quote and 1.12% of the final cost) and one-twelfth of the time alotted (one-thirty-sixth of the actual time ta
Re:A new strategy...... (Score:3, Informative)
OK, this article is way light on details, so let me fill you in on the Way Things Are:
Currently, IRS data is stored in several large databases, which are seperate from each other, and are collectively referred to as 'the master file' This financial Voltron is made up of:
Re:A new strategy...... (Score:5, Informative)
You might be shocked to find out how many low wage earners have access to medical (HMO's and insurance companies), credit (mortage and credit lending agencies) and yes, tax information (federal and private contractors) on you already. There are systems in place to protect privacy at many companies and organizations that deal with this sort of data, but there are always folks that will abuse the system. The solution is to make punishments for identity theft crimes very severe.
Re:A new strategy...... (Score:5, Insightful)
The only reason why people commit crimes is that they believe they won't be caught, so the severity of the punishment is mostly irrelevant.
The evidence for this is very strong. Many countries have tried, at times, to apply the death penalty to an excessively wide range of crimes, but have always failed miserably at preventing their ocurrence.
Even if you could magically disintegrate all the criminals in the world, there would be more to take their place tomorrow morning.
Re:A new strategy...... (Score:4, Funny)
Re:A new strategy...... (Score:3, Interesting)
It's really not that hard.
Re:A new strategy...... (Score:3, Funny)
Re:A new strategy...... (Score:3, Insightful)
Re:A new strategy...... (Score:3, Insightful)
Knew we all the facts, we could expect to see incompetence and fraud within the IRS, byzantine complexity within the laws the IRS is trying to enforce, and embarrassing behavior starting roughly with the middle class and moving upwards.
This is not a flame. The IRS, I daresay, is likely doing the optimal job in a non-optimal situation. Restated, who could do bet
Abuse (Score:3, Insightful)
I interned at a company that made routers[1], and one of the big customers was the IRS. All the engineers joked that they wished they had known in advance so they could put backdoors in. Of course we didn't actually know the data formats (and at the datarates were are talking about, capturing isn't exactly feasible...) so it couldn't be done, but trust me, if you ever find that your code is being used by the IRS you too will be joking that you should have put a backdoor in.
[1]Router in the sense that on
Re:Abuse (Score:5, Funny)
Then, next year, submit a very carefully crafted 1040 form on April 15...
"Hey, this 1040 seems a bit odd. It's from a Mr "John Doe __________akjg908t9(%&@(dasaga9agajda(%(@Q@FAA062
Re:A new strategy...... (Score:3, Funny)
Re:CIO, IRS (Score:3, Informative)
The CIO is usually (in simple terms) in charge of How the company uses IT to accomplish its mission. There is often confusion between the terms CTO and CIO and some companies use them interchangably. However I believe the the correct definition of a CTO oversees technology that the company creates.
In fewest words possible, , A CTO overs creation of tech, a CTO consumes Tech.
Of course maybe this can clear it up more:
http://slashdot.org/askslashdot/01/01/
Look on the bright side (Score:5, Funny)
Sure there is... (Score:4, Informative)
OT: The Fair Tax (Was: Re:Sure there is...) (Score:4, Interesting)
Re:Sure there is... (Score:3, Insightful)
That method, taxing goods and services only, is what the rich want. It is unfair to the poor and middle class because they spend the highest proportion of their income on goods and services. Frequently 100%. The rich spend a much smaller portion of their income this way and therefore would pay much less proportional to their income. This is akin to the highest tax rates being imposed on the poor and the lowest on the rich. Believe me, this movement is backed by the wealthy and would benefit
Let me be the first to say that... (Score:4, Interesting)
Re:Let me be the first to say that... (Score:5, Insightful)
Re:Let me be the first to say that... (Score:3, Funny)
Yes, but $200,000,000 could easily go towards infrastructure, for example, making life more livable for hundreds of thousands of people.
Even better, I would bet the sinking ships of social security and medicare could make good use of all that diffused and useless pork money (I bet it's in the tens of billions of dollars).
$200,000,000 is enough for 50 or more people (including me, of course:) to retire right now and never have to work another day ever in their lives. This isn't chump change, and the peopl
Re:Let me be the first to say that... (Score:3, Insightful)
You're kidding...right? That's why the problems exists in the first place...the do-gooders who put those pyramid schemes together said that we'll just pay enough so that they don't have to deal with it. As a result, the taxpayer is gouged incrementally until he feels a sense of entitlement to what is essentially elderly
Re:Let me be the first to say that... (Score:4, Interesting)
Of course, this one isn't completed yet, either...
Hmmm (Score:4, Insightful)
How much could be saved by moving to a flat tax and getting rid of all the exemptions and deductions and tax-breaks?
Income: xxxxxx
x 0.20
Tax owed: xxx
You could fire 99% of the IRS employees and get the operating budget to that of a Taco Bell.
Re:Hmmm (Score:5, Insightful)
We have tax breaks because we want to ENCOURAGE people to get an education and child care, so that they dont have to decide between rent and school.
The whole concept of a universal flat tax is just silly if you think about it for more than 5ns.
Re:Hmmm (Score:5, Insightful)
Simple solution to that, suggested above. The first $X aren't collected. E.g., the first $5k aren't collected. People who make less than $25k pay no taxes. You're effectively only taxed for what you make over $25k (or whatever arbitrary figure you choose).
The rich making $1million per year owe 200,000, but that doesn't affect them in the least - 800K is still ashitload of money.
That's BS. People who make $1M still notice $200k. It may not hurt them AS MUCH. But it still hurts them.
Re:Hmmm (Score:5, Interesting)
Prosperity is relative, of course. I used to think of "the rich" in a different way than I do now, because I make more money today than I ever thought I would (and I was making more a few years ago). Of course I'm not "rich", which is kind of a silly word. But there are millions of people in this country who believe that I deserve to pay a higher percentage of my income than they do because I don't need mine as much. That's just not true.
We all work hard for what we have -- some harder than others, admittedly -- and out standard of living goes up as our income goes up. Most of us spend about 30% of our income on shelter, about 12% on food, and about 5% on clothing. If you make more money, you can spend more on your shelter, food and clothing. And you can also pay more taxes, but the PERCENTAGE should be the same.
The argument was presented that a guy who makes $16,000 a year shouldn't have to pay $3600 in taxes. Comparing it to 4 months rent was an emotional argument, and I could make the same argument but take it a step further. My total tax for 2003 is roughly equal to 7.5 months of my mortgage payments. How is that fair to me? There are people who honestly think that I have piles of cash sitting around my living room, I guess. Believe me, I don't. I have financial struggles too.
And the guy who makes a million dollars a year? He probably has a $15,000 mortgage payment. You could confront him with that and shame him for living in an expensive house, but you, too, would probably want to live in an expensive house if your hard work made you wealthy (insert here the tired argument about how none of the rich have ever worked hard for anything).
Fortunately, we have a universal law that makes everything fair. It's called math... more specifically, percentages. If everybody pays the same percentage, instant fairness. This won't happen, though, because the majority of Americans don't want to take the subtantial majority of the tax burden away from the "evil rich". It sure it weird for me to suddenly be among them and feel the hate spewing in my general direction. I'm really, honestly, not rich. I'm just trying to keep things rolling the way they are for me, and maybe a little better, just like everybody else.
RP
Re:Hmmm (Score:4, Insightful)
Yet, again, we have to explain to the socialists how the world really works.
There is a thing called supply and demand. The reason an unskilled shitty job pays $6/hr is that there are a ton of people lined up to do it. The reason another job pays $45/hr is that there are not many people who can't do it. Do you think the person who pays $45/hr wants to pay $45/hr? Nope, they would rather pay you $6/hr, but they can't because there is a scarcity of labor for the $45/hr job.
It has nothing to do with physical labor. Very few people can NOT do a physical intensive labor job and very few people have the skill set for the $45/hr job.
Re:Hmmm (Score:3, Informative)
Nowhere did I say that the higher paying job isn't valued as such by a capitalist economy. That's just high school economics. What I was responding to was a comment indicating that directly linked the act of working hard (which many unskilled workers do for 30+ years) to the rewards of financial success. That's a false cau
Re:Hmmm (Score:3, Interesting)
But no more whining from anyone about the different brackets, no more ways to "cheat", etc. It would simplify and reduce costs at the gov't level, at the payroll level for businesses, etc.
The only people that would be against it would probably be all the tax account
Re:Hmmm (Score:3, Interesting)
Are you kidding? The last tax cut brought us closer to a flat tax than we were and the democrats had a cow about it.
Here's how it will work (numbers made up):
Current situation:
People earning less than $200,000 pay $40 Billion in total taxes.
People earning more than $200,000 pay $45 Billion in total taxes.
Flat Tax situation:
People earning less than $200,000 pay $50 Billion in total taxes.
People earning more than
Re:Hmmm (Score:4, Insightful)
What's income? Do you tax gross income or net income? Gross income is unfair: Boeing pays more WA state business op tax than Microsoft does, because making planes is a much lower margin business than pressing CDs. Net income is unfair, because people will game the system to take large expenses at the same time that they realize large incomes, in order to keep net income down.
Does income include changes in the present values of investments? If so, then you're discouraging investment. If not, then I can easily hide lots of income by borrowing against a marketable asset. Oh, and how do you determine if that is happening anyway?
A flat tax is a pipe dream. It works really well for extracting money from wage-earners with a single discrete income stream. It does appallingly badly with everyone else.
Tax consumption instead (Score:4, Informative)
A VAT is very hard to game. The only deductible expenses are tax already paid. The biggest concern is using business resources for personal use. Even that can be legislated away; enforcement is just tricky.
Remember, a new system doesn't have to be perfect. Just better than the current system, which is a bizarre and ever changing mix of taxable, partially taxable, and non-taxable items.
Re:Hmmm (Score:3, Interesting)
Four Patches for the Internal Revenue Code (Score:5, Interesting)
At least $200 billion per year.
5.8 billion person-hours in 2002 [taxfoundation.org] - the equivalent to the entire labor of a city of 2.7 million people.
> Income: xxxxxx
> x 0.20
> Tax owed: xxx
The question is "how do you define income" -- at which point we're back to square one. Capital gains? Dividends? Revenue from your business? Or profits? If profits -- how do you handle the deduction of your legitimate business expenses? What expenses are legitimate and what expenses aren't? That yacht you bought to entertain your guests? The hamburger you bought when you were interviewing your first employee?
I believe that taxing consumption, not income, allows for a less complex system.
If I had to "patch" the US Internal Revenue Code, I'd:
1. Abolish the Alternative Minimum Tax. One tax code is enough.
2. Eliminate holding periods such as the one-year holding period to differentiate a "short-term" capital gain versus a "long-term" capital gain, and the "30 days, not necessarily consecutive, during the 60 days surrounding the ex-dividend date" used to determine whether dividends are "qualified" or "unqualified" dividends, and the 2-year rule on principal residences. Eliminating these arbitrary time periods and the differential tax rates they cause throughout dozens of forms would eliminate *hundreds* of lines of calculations that deal with the intersection of these arbitrary time periods, Section 1250 contracts, and the myriads of "wash sale", "straddle" and "constructive sale" rules, etc etc etc.
3. Eliminate phaseouts. There's nothing dumber than going through the entire year assuming you get a $5000 deduction, only to find out that the $5000 deduction is "phased out" by $0.25 for every dollar over $32,767 that you made, until $49,152. (Unless you're an Albino Sheep, in which case you have the Albino Sheep Allowance of $6000, phased out by $0.52 for every dollar over $39,152 to $42,767.) If you must have progressivity or social engineering measures in the tax code, make 'em all-or-nothing.
4. Tax employment income, interest income, dividend income, and capital gains income at the same flat rate. (Double taxation on dividends could be prevented under such a scheme by providing full deductibility for corporations that issue dividends. My personal opinion is that because investments are purchased with after-tax dollars, the only morally-justifiable tax rate on investment income - interest, dividends, or capital gains - is zero. But in this post, I'm talking about how I'd patch the existing Internal Revenue Code so as not to be so fucking confusing, not to make it "right".)
5. Scrap the motherfucker. And replace it with a consumption-based tax. But since #5 isn't gonna happen - ever - I'll vote for any ruler who includes any of #1 through #4 in his platform.
Guess you are not a John Kerry voter (Score:4, Insightful)
There seems to be a big bias in our political culture against people of modest means accumulating any kind of money through control over personal spending and saving. There is a concern about wealthy people controlling all of the resources of the society by making it easy for those fortunate enough to even have a small surplus over their spending to accumulate wealth -- the kind of Huey Long concern. People at the top have access to financial advise, tax planning, and investment opportunities that one can only dream of, but people in the middle get hosed.
Exhibit A is the advice for people of modest means to put savings into the stock market. Traditionally the stock market was a high risk undertaking for the very wealthy with money to burn. In the 1920's, mass ownership of stock caught on and then people got burned in a bubble collapse. A cornerstone of Depression era economics policy was Federal savings deposit insurance -- the idea was for people of modest means to have a low earnings but secure place to save money, and it wasn't in the stock market.
Well, combine the 1970's and early 1980's inflation with regulated interest rates and taxation of savings interest and you had a negative rate of return -- your savings just kind of evaporated for being there. So first there was the money market mutual fund and then the stock market mutual funds as the answer to middle class savings.
And then there was tax sheltered savings in IRA's, only they put in a phaseout on the IRA contribution, followed with the Roth IRA, which inverted the role of principal and earnings in terms of what was taxed, only that had a steep phaseout (actually an income cap), oh, and we are allowed to have tax-sheltered savings in 401K plans, only a good part of your earnings are paying an insurance premium to some pirate, and some 401K's have proven to be scams (can you say Enron? I knew you could!).
Oh, and the answer to health insurance for the self-employed is the Medical Savings Account, which is another scam^H^H^H^H where you are allowed to save money if it is for some sanctioned purpose and is done in some restricted way.
I guess we are really afraid of giving people the liberty to save money. People who have any kind of surplus over what they earn are suspect because apparently everyone from SSI recipients to Michael Jackson are spending every penny they receive and then more on top of it. From the principal of compound interest, even modest levels of saving in a minority of people can create great disparities in wealth, hence the need for inflation, low savings interest rates, and taxation of interest earnings to keep such people in line. And apparently our economy is one big Keynsian bubble -- if people stopped living beyond their means and buying on credit apparently the whole economy would crater.
With savings there comes moral principles of self-reliance and disciplined appetites. One can save enough money for your eventual nursing home stay without having to go on Medicaid. One can have that fancy car but one has to plan ahead for it. With the war on savings, one can have one's fancy car, but one has to be on a credit treadmill, one can have that college education, but one must be a financial assistance supplicant, one can be treated in a nursing home, but one must receive Medicaid assistance. One can "save" money too, but only if for sanctioned purposes and by participating in the correct program.
I say the problem is not the taxing of earned income but all the restrictions on what one can do with that earned income that follow from this great fear of income inequality is the heart of the problem.
Re:Hmmm (Score:3, Interesting)
Well, I'm not sure I'm understanding it correctly (since intuitively the figure seems kind of high to me), but according to the article:
the cost of collecting $1 of revenue--45 cents in 2002, the last year for which statistics are available--has not appreciably declined in two decades.
Re:Hmmm (Score:3, Funny)
Unfortunately, the IRS is here to stay, for political reasons. Getting rid of the IRS as we know it would:
1) Make thousands of IRS employees unemployed (who would, of course, bitch about it).
2) Make tens of thousands of H&R Block, Jackson Hewitt, etc. employees unemployed (who would, of course, bitch about it).
3) Put out of work many thousands of independent tax accountants (who would, of course, bitch about
20% Flat tax breakdown: (Score:5, Funny)
3% to the RIAA, to pay for the stuff they assume we've pirated in the last year.
3% to the MPAA, to pay for the stuff they assume we've pirated in the last year.
2% to Microsoft, as part of a "super-tough" DoJ settlement for Microsoft's wrongdoing.
2% to Halliburton, for no apparent reason, the government just likes to give them money.
IRS recordkeeping (Score:4, Funny)
No pun intended.
Let us have a crack at it! (Score:5, Interesting)
throw together a Postgresql/Apache software package?
Re:Let us have a crack at it! (Score:5, Funny)
throw together a Postgresql/Apache software package?
Ahh, the refreshing enthusiasm of the naive. Or perhaps you ment it as a joke and the mods didn't get that?
Proper allocation of funds? (Score:3, Funny)
So, the IRS can't manage money? Then why are we giving our taxes to them?
Modernization? (Score:4, Interesting)
How does a 'nearly failed' attempt to modernize the IRS still run code from 1962?
I doubt there was anything 'nearly' about it. Looks like they spent 8.2 billion, adjusted expectations, and called the project a success (or a 'near failure').
Re:Modernization? (Score:3, Interesting)
certain returns, and all the associated data for that TIN (SSN) are put on the new system. IIRC they started with 1040EZs that meet certain criteria. if the taxpayer changes so they don't meet that criteria, they get moved back to the old system.
it's pretty fucking hairy.
there's also alot of business bullshit involved. CSC was put in charge of managing the modernization contract. they at one point decided to fire many
It fails to point out... (Score:3, Interesting)
I see this every day. Some sales schmuck sells a load of goods. The vendor hires a bunch of programmers and spends years yelling at them to hurry up. Then they finally deliver a crap application that is really a giant leap backwards. But, it's got cool little widgets everywhere and we call it a portal not a web interface. So, instead of realizing that productivity just took a nose-dive because of a crap application management says; we need some new software to automate this and that so that we can get the cost down. And the cycle continues...
That's a lot of money (Score:3, Funny)
So do they get a big tax write-off this year or what?
*badum ching*
Can anyone say ..... (Score:5, Interesting)
The time has come to remove the nightmare that is the Internal Revenue Code. Flat taxes would make it IMMESURABLY easier to find Tax Cheats, file taxes, keep records etc.
Here is my plan. Short, simple and effective.
Income x Rate = tax basis - deduction = payment ( negative = 0)
10,000 x 22.5% = 2250 - 8000 = 0
50,000 x 22.5% = 11250 - 8000 = 3250 (6.5% tax)
150,000 x 22.5% = 33750 - 8000 = 25750 (17.2%)
Save tons of time, increasing productivity, lowering operating costs. The people crying the loudest would be the Tax lawyers and accountants. Possibly even the rich (shut up). Lawyers right bad laws, and accountant have a vested interest in keeping things complicated, so they should be bared from this discussion.
In addition, all those that say a tax cut favors the "rich" can all go pound sand. In my system a tax cut favors everyone, except those not paying any, and why should THEY complain about something that doesn't affect them at all?
As it is right now, nobody, not even the IRS is 100% sure what is in the code. If the elections were held on April 16th instead of November, that too would help.
Re:Can anyone say ..... (Score:4, Interesting)
The other problem problem is in deductions. How do you deal with things like:
* Children
* Mortgage interest
* Health care costs
* Education costs
I like the idea of a flat tax, but there's more to the idea of "money" than just a paycheck every week/fortnight/month.
Re:Can anyone say ..... (Score:3, Interesting)
Do you pay taxes on the appriciation of your HOUSE? why then would you pay taxes on appriciation of any other REAL property (including stocks, bonds etc).
I have dealt with the other things, or perhaps you just missed it.
The moment you start creating Deductions for SOME things, you end up exactly where we are today.
What about ________ can be (and has) been applied to just about anything.
With the exception of Health care each of the items is a choice. If we are
Re:Can anyone say ..... (Score:3)
right = correct
write = legislate
since they sometimes do BOTH, conflict of interest?
Which Language (Score:5, Funny)
I bet there are at least 1000 people right here on slashdot who could understand it just fine, and wouldn't mind putting a few "exceptions" in the tax code:
Re:Which Language (Score:3, Funny)
here's a simple solution (Score:3, Funny)
From the article: (Score:4, Interesting)
This is completely unfathomable to me. If they cut this number in half, the federal budget would increase by 25%!! Without raising taxes a single penny! The idea that half of the money you pay into the IRS goes simply to maintining their 4 decade old software is insane.
Re:From the article: (Score:5, Informative)
The IRS website publishes stats [irs.gov] and has an Excel file [irs.gov] reporting that in 2002 it took $0.45 to collect $100.
IRS = Incedible Rampant Stupidity (Score:4, Interesting)
Seems even their circa 1962 code can't deal with more modern features, such as Direct Deposit of refunds.
Case in point: my own refund.
I just got a letter from the IRS yesterday saying "Sorry, we have to mail [you] a paper check because the Routing Transit Number [you] supplied from your account is invalid". I went and pulled out my checkbook, and confirmed that both my checking account number AND my routing number were CORRECT.
Could they have been scanned incorrectly? Possible, but the numbers were written as clearly as if I had typed them.
Could they have been manually re-keyed incorrectly? Don't we have SOFTWARE to prevent that? Oh, wait, this code was written in 1962.
Worse yet, when I called IRS to complain, the lady on the other end of the line didn't seem to know what a Routing Transit Number was. Arrgh.
There needs to be a cure for Incredible Rampant Stupidity.
Re:IRS = Incedible Rampant Stupidity (Score:3, Insightful)
I disagree that the IRS is filled with idiots. Frankly, it amazes me every year that they can boil that heaping pile of shit known as the tax code into a few pages and a bunch of worksheets. Despite the complexity, it's all there. Sometimes, you have to be a logic expert to follow it, but it's rare to catch a mistake in the 1040.
In my opinion, it's the politicians that pass these tax laws that should be blamed. It's always about the latest feel good give-back, not about simplifying or removing.
The ta
If it ain't broke, don't fix it (Score:3, Insightful)
If experts have looked at it and determined that it will break, or has a good chance of breaking, then fix it.
If you want more features out of it (i.e. faster), then fix it (or rebuild it from the bottom up).
Apparently neither of these is a big issue right now. When it is, it will get fixed. Until then, business as usual.
bogus figures in article (I hope) (Score:5, Interesting)
"Meanwhile, the cost of collecting $1 of revenue-45 cents in 2002
WTF? What's the total tax revenue from IRS last year? Say a trillion dollars. Is the article really claiming that it cost 450 billion dollars to collect that??!
That's just absurd. Please somebody explain the truth to me here.
Re:bogus figures in article (I hope) (Score:4, Informative)
http://www.unclefed.com/Tax-News/2001/nr01-86.h
September 26, 2001
Data Book Details IRS Numbers
Shows Collection Costs Down,
Charitable Groups Grow
WASHINGTON - The Internal Revenue Services cost for collecting each $100 of tax revenue reached the lowest point since 1954, according to the new IRS Data Book for Fiscal Year 2000.
The Data Book, released today, shows it cost the IRS 39 cents to collect $100 in FY 2000, the smallest amount in more than four decades. In 1993, it cost 60 cents to collect $100.
Perverse incentives (Score:4, Interesting)
Hmmmm ... what to do, what to do ... Stretch out the job and the paycheck, and hope the antiquated system fails catastrophically, or make an honest effort to get the new system on line before that happens?
Of course, I'm sure that has nothing to do with the current difficulties. Seriously.
[1] In the U.S., tax returns (complete with check) are due on 15 April.
Re:Perverse incentives (Score:3, Informative)
many of the issues of why the modernization project is fucked is salaried upper-upper management of a few companies, not engineers making a paycheck.
and as for IRS employees themselves, they are way more liable for correct tax returns than other taxpayers. the
Re:Perverse incentives (Score:3, Informative)
Well, I did say that those perverse incentives had nothing to do with the problems. I'm sure that it's the usual amalgam of unrealistic specifications, creeping featuritis, management by committee, and so on, which afflicts pretty much every large project.
Remember ``The Bridge on the River Kwai'' [imdb.com]? Professional pride can get folks to do some crazy things, including shoot themselves in the foot for the public good
crapola $$ (Score:3, Insightful)
This is BS...We work more than a third of our lives for taxes and they have the efficiency of a MBA on a Winblows system. Come on, get with the system.
omg, $200 million?!? (Score:3, Insightful)
$200m is 1/40th of $8B. i wouldn't consider a 2.5% budget overrun headline worthy. of course, i guess it sounds like alot, so i'm supposed to be *shocked*
i just hope the IRS checked CPAN for an IRS module before they started
Programming golden rule... (Score:4, Informative)
"In order to write a good algorithm that can solve a problem, you must be able to solve it yourself."
How would you expect a computer knows how to file return when some people in IRS don't even know how?
Really poor project management (Score:4, Insightful)
Similar to Norway... (Score:3, Informative)
The big problem is that the politicians tend to make new rules for education loans every second year or so. Then, the system needs to be reprogrammed. Then, you need that COBOL programmer again. And that costs money.
So now they are getting a new solution. It's going to cost a lot. I'm not sure, but I think it was about $80M. That's a lot in Norway. For instance, you could give all secondary-school students free books for that kind of money (they pay it themselves now).
Not the only one (Score:3, Interesting)
In the mid-90s, they attempted to switch over to a new and modern accounting package, the same kind that the corporation I was working for (in the same business) was in the process of implementing.
Within a year, his company had given up, and reverted back to the software that he had written in the late sixties. My company, on the other hand, pressed on for a few more years before giving up the ghost and starting over with another software package.
Why should this be a problem? (Score:3, Interesting)
Many of those instructions conflict and contradict each other. It is impossible to computerize instructions like that. Can't be done. No way, no hope, no chance.
But why should this be a problem? Perfect opportunity to introduce a FLAT TAX. Everybody pays some percentage of their annual income, like maybe 5%, no exceptions and no deductions. Make the income cutoff at $30,000 or something like that.
SHAZAM, no more problem! The government gets the money it needs, because by reducing the 45 cents on the dollar cost of tax collection to somewhere around 5 cents (do you belive that? 45 fucking cents! And they say the military is expensive!) they more than make up for any reduction in the tax rate.
Plus they can fire half the IRS in one go. That's a goal to work toward! Yeehaw! Problem solved, next up, the INS.
Re:Why should this be a problem? (Score:3, Insightful)
where do you think the tax system comes from? congress. who tells congress what to do? constituents? yes, constituents. the ones with big pocketbooks.
Simple Solution (Score:3, Offtopic)
The new government tax entity can start from scratch with their information systems, and all of the IRS records can go to the archives. There's no reason why American tax dollars should be wasted on trying to save the dying IRS dinosaur when it can be replaced with a more sensible solution for a mere fraction of the cost.
Call/write your elected representatives up on the hill and tell them you're tired of this craphole of an economy AND tired of the ridiculous way taxes are collected. Tell them to support H.R. 25 or they can kiss your vote goodbye.
Imagine it... no more individual (or joint if you're married) tax forms to fill out... no more audits... economy would probably shoot through the roof... more jobs... more U.S. exports... the benefits are seemingly endless unless you're one of those tax-avoiding million/billionaires who manage to fly under the IRS radar.
For more info on the Fair Tax, visit http://www.fairtax.org/ or check out the brochure at http://www.fairtaxvolunteer.org/pdf/BROCHURE.pdf.
inside info from an IRS employee (Score:5, Interesting)
I work on the toll free help line for individual tax issues and I use the IRS system on a daily basis.
There are 2 parts to the user interface: IDRS (Integrated Data Retrieval System) and ICP (Integrated Case Processing).
IDRS is the main text based interface to the database.
ICP is a recent addtion to the system. It is a basic GUI which helps users enter command codes, switches and definers in the proper format.
There are several hundred command codes.
I use a couple of dozen on a regular basis.
The system has proven to be pretty stable but it does go down occasionally.
It does become inaccessible during the last week of the year so updates can be made in preparation for the new filing season.
The first few weeks in January are called dead cycles.
During this time, many of the command codes are taken offline so further maintenance can be done to the system.
Our desktops run Windows NT 4.0
Until January of this year, each of the ten service centers maintained a separate database.
Each of the call sites was assigned to a service center.
When data is entered or changes are made to accounts, it is first recorded to the service center database. Every two weeks, tapes of the changes made in the databases are flown to the central computing center in Martinsburg, WV where they are all integrated into a central database.
This made research exceedingly tedious.
If a taxpayer (TP) called in with a problem, you would need to check each of the active databases to find out what was going on.
If changes were made to multiple databases, error conditions would occur when the changes were consolidated with the master database.
In January, the service center databases were eliminated for individual tax accounts and we now access the master database directly which eliminates a lot of issues.
This was all done within the confines of the existing system.
There is some progress being made but it is certainly nowhere near being a user friendly system.
It takes quite a while to learn the commands and how to format them properly.
There is a 600+ page manual updated annually which helps you to interpret the information presented in IDRS.
Everything is presented as a numerical code.
For instance a refund being issued is designated with transaction code 846. Another subcode tells you if the refund is a direct deposit or a check. The date on the code is not the actual date the refund is scheduled to go out. To figure that you subtract 10 days if it's a direct deposit and 3 days for a check. All refunds are issued on Fridays.
If you are being audited there will be a transaction code 420
To correct errors on an account you enter the appropriate codes and dollar amounts and then it takes about 2 weeks to process,
It shows up as a pending transaction until processing time is up. If you didn't do it right, it'll come back to you as an unpostable transaction in about 30 days or so.
Needless to say this is not convenient for the TP.
Anybody who spends more than five minutes watching someone work with the system will realize that upgrading the system is not a straightforward task.
For those who are wondering how all those tax returns are entered:
They are typed into the database manually by seasonal employees who are paid piecemeal.
That's a shame. (Score:3, Funny)