Tax Receipts

Robert Waldmann

The entire blogsphere seems to be fascinated by the idea that maybe the IRS could mail tax payers a receipt showing where their taxes go. Oddly the IRS just decided to stop mailing something — 1040 booklets. Which, you guessed it, explain where your tax money goes.

This has been mailed to every household every year for decades. So why are tax receipts a new idea ?

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footnotes and rant after the jump.

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Now it’s not perfect. The IRS doesn’t like tiny slices so they put medicaid and welfare together as “social programs” (welfare might mean tanf plus food stamps plus suplementary security income) and put foreign aid in with defence. People would have to read the footnotes. An actual policy is never as pleasing to people as one they can design but it can be as good as the one which will come out of the sausage factory.

I am old enough to have filled out tax forms on paper. Nothing encourages casual skimming and looking at the illustrations more. I have spent much time staring at these pie charts while trying to force myself to look through my “records.”

No one seems to know about the pie charts (which are still there in the 1040 instructions on page 101 (warning huge boring pdf)).

Like Tim Geithner (see page 170) I am tempted to blame turbotax.

A receipt in the mail will do no good. The only solution is to require tax preparation programs to display the data and tax prepareration firms to show it to people before they sign the forms. Of course forcing people to look at something really is illiberal. Nothing less will force US taxpayers to learn where the money goes. They don’t know, because they don’t want to know.