How Easy Is It to Find Tax Information on State Websites?
by Ellen Kant and Joseph Henchman
It’s April, which means Americans are rushing to finish federal and state income tax returns for 2012. Those who file a paper return rely on forms and rate tables posted online by the Internal Revenue Service (IRS) and state revenue departments. Even taxpayers who file returns with the help of paid tax preparers or computer software may make use of instructional information provided on state websites. Employers, for instance, need to know 2013 tax rates now for withholding purposes.
Consequently, we decided to evaluate how easily available this information is on the websites of state tax agencies (often a revenue department, department of taxation, or tax commissioner). We conducted two tests in March 2013:
• We counted how many clicks it took to find 2012 income tax rates from the agency’s website homepage. In five states (Indiana, Kentucky, Minnesota, New Jersey, and North Carolina), it takes taxpayers five clicks to find this information from the homepage. Taxpayers in three states (Colorado, Massachusetts, and Pennsylvania) can get it in two clicks.
• We assessed whether the state had made available (and findable in a spot check by our analyst) the 2012 and 2013 tax rates, tax table, and tax forms. While nearly all states had most of this information, our analysts were able to find all of this information only in five states (Colorado, Illinois, Pennsylvania, Utah, and Virginia; some of these states have one-rate taxes, making tax tables unnecessary). The vast majority of state revenue websites do not yet provide 2013 tax rate information even though 2013 income tax is currently being withheld from taxpayers’ paychecks.
Transparency can be a difficult thing to quantify, and we admit that these two tests are not a perfect proxy. However, poor transparency of basic tax information imposes real costs on taxpayers. The time and money an individual spends complying with taxes prevents them from productively spending these resources elsewhere. Ideally, a taxpayer should be able to quickly and easily locate and understand all taxes owed and with that information make informed allocative decisions and budgeting plans.
We are consequently pleased to recognize the Colorado Department of Revenue, the Illinois Department of Revenue, the Pennsylvania Department of Revenue, the Utah State Tax Commission, and the Virginia Department of Taxation for passing both tests (three clicks or less for finding information and having all 2012 and 2013 information available online). We hope all state tax authorities will follow their lead in making basic information easily accessible to taxpayers.
About the Tax Foundation:
The Tax Foundation is a 501(c)(3) non-partisan, non-profit research institution founded in 1937 to educate the public on tax policy. Based in Washington, D.C., our economic and policy analysis is guided by the principles of sensible tax policy: simplicity, neutrality, transparency, and stability.
Reprinted with permission from Tax Foundation <http://taxfoundation.org/sites/taxfoundation.org/files/docs/ff365.pdf>.
IOWA TRANSPARENCY NEWSLETTER is a monthly newsletter reporting on government transparency in our state.
IOWA TRANSPARENCY NEWSLETTER is published by Public Interest Institute at Iowa Wesleyan College, a nonpartisan, nonprofit, research and educational institute whose activities are supported by contributions from private individuals, corporations, companies, and foundations. The Institute does not accept government grants.
Contributions are tax-deductible under sections 501(c)(3) and 170 of the Internal Revenue Code.
Permission to reprint or copy in whole or part is granted, provided a version of this credit line is used: “Reprinted by permission from
NEWSLETTER, a monthly
newsletter of Public Interest Institute.”
The views expressed in this publication are those of the authors and not necessarily those of Public Interest Institute.
If you have an article you believe is worth sharing, please send it to us. All or a portion of your article may be used. The articles in this
publication are brought to you in the interest of a better-informed citizenry, because IDEAS DO MATTER.