Adopting Japanese-style return-free filing would fix a lot of what's wrong with the tax system, but not everything. Even with return-free filing, the tax system would include marriage penalties and evasion opportunities for the rich and corporations. The American tax code could still do more to reduce inequality, to make work pay, and to provide a basic standard of living to poor families, including ones who cannot work.
Fixing these problems requires a wholesale, bottom-up reevaluation, a holistic project that basically no Democrats in recent memory have decided to take on.
Bernie Sanders was the most ambitious Democratic candidate on policy in decades, but even he didn't release a comprehensive reimagining of the tax code. He proposed a plan for single-payer health care and then specified that payroll taxes and a few other measures would pay for it; he proposed making public college free, and specified that a tax on financial transactions would pay for it.
Hillary Clinton did the same. Her "tax plan" was a melange of new benefits (like new tax credits for caregivers of elderly family and for out-of-pocket medical costs and an expansion of the child credit) with a lot more new taxes of various kinds on rich people to pay for non-tax programs she wanted, like free college, paid family leave, and universal pre-K for 4-year-olds.
There are some advantages to this approach. It makes it clear that the candidates' tax plans are designed to pay for popular and beneficial programs, not just for kicks; it's easier for Republicans to just slash rates and call that an accomplishment in and of itself. And taxing the rich is pretty popular, making it tempting to hike taxes for high-income people in a sort of slapdash way to pay for various stuff.
But this approach can also lead to overcomplicated policy. Tax credits, tax breaks, and welfare programs with very similar but slightly distinct goals proliferate. The government could offer low-income families with children a clear cash allowance. Instead, benefits for the poor from federal and state governments are a mix of food stamps, the WIC program for kids under 5, the earned income tax credit, the child tax credit, and, for a small fraction of poor families, actual cash welfare with lots of strings attached.
Most of those programs are good and effective, but it's a lot for anyone to keep straight, let alone a poor parent coping with the stresses of rent and low pay and debt and child rearing.
Steven Teles, a political science professor at Johns Hopkins University, has called this system "kludgeocracy," and argues the consequences aren't limited to the people the benefits are meant to help. The piecemeal approach also leads to exorbitantly high compliance costs, makes government administration more difficult, and makes it easier for businesses to extract rents from the government.
It also has broader implications for the political system: Suzanne Mettler, a political scientist at Cornell, calls the approach "submerged state," and argues it erodes public belief in the effectiveness of government by hiding the government benefits voters receive from view. Middle-class Americans who got subsidized student loans to pay for college and deduct their mortgage interest from their taxes are getting government benefits too — but those benefits aren't perceived the same way as, say, Social Security.
Many of Clinton's proposals — like the out-of-pocket health costs tax credit — were good ideas that were nonetheless kludges. They would make the system more complicated and difficult to interact with rather than less. Bernie Sanders's spending platform was less kludgey — single-payer health care would simplify a lot of government functions in one fell swoop — but his tax plan was far less coherent. His tax increases were scattered across a plethora of different plans, and unless you added them up by hand (as I found myself doing), it was hard to know what they amounted to, all put together.
The proposals were split up in so many places that it was hard to even see potential problems, such as Sanders's proposed a maximum rate on capital gains income of 64.2 percent. Both the Joint Committee on Taxation and the Treasury Department think people would just stop selling stocks if rates got that high. There's a relatively straightforward way to fix this — tax assets every year rather than when they're sold — but, perhaps because the problem itself was hidden, Sanders didn't propose that solution.