It's not clear to me what "the returns should be file[d] automatically" means for this group of people.
In addition, there are many non-employment based events in the US tax code that change your tax liability. Last year I received a roughly US$3k tax credit because I installed a 6.6kW solar PV array on my house. There are dozens or even hundreds of cases like this in the US tax code.
The employer files the income forms and handles withholding. If you're self-employed, that means you are responsible for that part. And of course anyone with more complex taxes (e.g. non-W2 income) would still need to file, though they could start with the pre-filled forms.
> Last year I received a roughly US$3k tax credit because I installed a 6.6kW solar PV array on my house. There are dozens or even hundreds of cases like this in the US tax code.
Yes, and all those special cases should be removed as part of the reform. If they want to hand out money as an incentive for installing a PV system (for example) then they should make that a separate application and payment, since this has nothing to do with collecting taxes. For business income you can subtract legitimate business expenses (since this is about income, not gross revenues), for capital gains you obviously subtract the cost basis, and for personal income you subtract the official poverty level for your household. (If there are multiple filers for one household then they split the deduction.) If the sum is less than zero then you simply pay no taxes—there are no refunds. That's it. No special surtaxes or exclusions. Apply a flat percentage to the total and you're done.
[0] I don't agree about the flat percentage. The USA has had a progressive tax structure in various ways since its founding, and given the concept of marginal utility, I stronly believe that this is the right way to tax income.
