The core issue isn't "the government already has this data".<p>The core issue is "the how-much-tax-do-you-owe algorithm is terrificly complicated".  Sure X counts as income ... unless you're blind, or you've got 3 kids, or you adopted a windpower system conforming to X,Y,Z standards during the tax year (but not between 1 July and 15 Aug), etc., etc., etc.<p>Why is the code base so complicated?<p>Look to something called "public choice theory".  If the tax system is really complicated and easy for politicians to modify, then they can sell modifications to the tax code to campaign donors (never listed in the clear as "Joe's Trucking pays no taxes this year", but always obscured as "a measure relating to certain income deductions for firms within 16 miles of an interstate but not more than 24 miles from a navigable body of water connecting to the Mississippi, excluding all firms that have filed for a rebate on depreciable expenses in the preceding four tax years".<p>As long as the tax code is monstrously complex and rapidly changing, it's a nightmare to keep a SOFTWARE code base in sync with a LEGAL code base.