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Congress is About To Ban the Government From Offering Free Online Tax Filing (propublica.org)

Posted by msmash on from the how-about-that dept.

Just in time for Tax Day, the for-profit tax preparation industry is about to realize one of its long-sought goals. Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system. ProPublica reports: Last week, the House Ways and Means Committee, led by Rep. Richard Neal (D-Mass.), passed the Taxpayer First Act, a wide-ranging bill making several administrative changes to the IRS that is sponsored by Reps. John Lewis (D-Ga.) and Mike Kelly (R-Pa). In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry's profits.

"This could be a disaster. It could be the final nail in the coffin of the idea of the IRS ever being able to create its own program," said Mandi Matlock, a tax attorney who does work for the National Consumer Law Center. Experts have long argued that the IRS has failed to make filing taxes as easy and cheap as it could be. In addition to a free system of online tax preparation and filing, the agency could provide people with pre-filled tax forms containing the salary data the agency already has, as ProPublica first reported on in 2013.

10 of 449 comments (clear)

  1. Absolultely shocking... by flippy · · Score: 5, Funny

    Politicians from both sides introducing a bill that's bad for citizens based on the lobbying of an industry. To quote Claude Raines from Casablanca, "I am shocked—shocked—to find that gambling is going on in here!"

    1. Re:Absolultely shocking... by lgw · · Score: 5, Insightful

      You'd need a constitutional amendment for a national sales tax or VAT. Plus those are regressive tax schemes.

      Interestingly, you could probably do a national sales tax if all the money went directly to some sort of UBI - the requirement is that the money be sent to the states in proportion to population, can't be spent directly by the federal government.

      A flat tax on all forms of income (including dividends, interest, inflation-adjusted capital gains, and so on) would be ideal. Make it progressive by sending everyone a check for a fixed amount on top of that tax. No need for an income tax at all: a payroll tax will cover all wages, sine it's a flat tax. But we'll never get this, because the very rich would pay a lot more.

      Now as soon as you allow any deductions whatsoever to the flat tax, it's ruined as loopholes will immediately be added for the 1%, and the tax rate will neeed to double to bring in the same total. But if there were no deductions or exceptions of any kind? Golden.

      --
      Socialism: a lie told by totalitarians and believed by fools.
    2. Re:Absolultely shocking... by PuckSR · · Score: 5, Insightful

      Why do we need a "flat tax" or a "fair tax".
      For 90% of Americans, who take the "standard deduction", tax calculations aren't even "calculations". I could write an Excel spreadsheet to do them in an hour. The govt has ALL of the relevant information and could just do them for the people. You don't need to do some kind of "flat tax" or "Fair tax". It already is EASY

      The problem is that most Americans don't understand it because of laws like this one.

    3. Re:Absolultely shocking... by tlhIngan · · Score: 5, Interesting

      Then again, it would be simple and easy and efficient.....so, at the same time, I think I"ll wish for a pony too.

      Think about it this way - for the vast majority of Americans, the IRS already knows about you and how much tax you owe. They get all that information from your employer(s), your banks, etc. Turns out they pretty much do your tax return for you. Hell, even if you buy and sell shares they get that information as well.

      So you doing your tax return is redundant - there is no reason for it since the IRS has already done it. They could just as well present their calculations to you and say "If you agree, just sign here and pay the amount owing (or to release your refund)".

      Of course, the tax industry would hate that, since they built up empires on ensuring people are forced to do taxes so they'd get business every year. And yes, many countries already do this as well - they realize that they already have every document you have, and every deduction you claim they know about.

    4. Re:Absolultely shocking... by rossz · · Score: 5, Insightful

      Income - PovertyLine = Taxable income. With a flat tax, calculating the amount is easy.

      You make 30,000. You subtract the 25,000 Poverty Line (or whatever it is) from your income. That leaves 5,000 that is taxable. A 10% flat tax rate means a $500 tax
      Even the rich guy with a 500,000 income gets to subtract that 25,000 from his income. Not that it will make much of a difference in his taxes. The tax would be $47,500, assuming a 10% flat tax.

      But I have three kids. Where's my deduction?
      You don't get a child deduction. Having kids was your choice that other people should not be required to subsidize.

      What about my mortgage interest deduction?
      You don't get a mortgage interest deduction. Buying a house was your choice that people stuck in apartments should not have to subsidize.

      Incomes and tax rates chosen at random for illustration purposes only.

      --
      -- Will program for bandwidth
  2. Well at least they're consistent. by GameboyRMH · · Score: 5, Insightful

    Just like health care, they throw the good of the population under the bus to protect existing industries that profit from the horribly broken status quo. And a large chunk of the population has been tricked into liking it that way.

    --
    "When information is power, privacy is freedom" - Jah-Wren Ryel
    1. Re:Well at least they're consistent. by dargaud · · Score: 5, Insightful

      When looked at from Europe, some things in the US are absolutely insane: for profit prisons (that'll want to maximize recidivism), for profit health insurance (that'll deny any expensive claims), guns everywhere, and now you have to pay to fill your taxes ? Isn't it the _basic_ role of the IRS to make it as simple and automated as possible ?!?

      --
      Non-Linux Penguins ?
  3. Re:Good by jandrese · · Score: 5, Informative

    It doesn't have to be "totally free" to save me money. Currently to e-file costs around $45. It's nearly a guarantee that the government can run the service cheaper than that. Virginia had a service like that nearly a decade ago and it cost them about $40k/year for the entire state. Lobbying from the tax return industry killed it and now every taxpayer in the state pays on the order of $55 each year to e-file. Millions of dollars funneled to H&R Block, Intuit, etc... because they bought off some representatives. Not once has any service saved me a dime off of my state taxes. I can't think of any money they have saved me on federal taxes either. The only reason I use them is because there is no free way to e-file if you have a middle class income.

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    I read the internet for the articles.
  4. Blame Grover Norquist and the Anti-Tax Faction by Koreantoast · · Score: 5, Insightful

    Isn't it the _basic_ role of the IRS to make it as simple and automated as possible ?!?

    A lot of the blame can be put on Grover Norquist, the leader of Americans for Tax Reform, an anti-tax, small government group. One of the things his group advocates for is to make filing taxes as hard as possible. The group fears that if filing taxes is easy, then people won't resist paying them or the growth of government. For those of you who may not be aware, Norquist pushes aggressively for politicians to sign a "Taxpayer Protection Pledge" that basically fights any new taxes. For Republicans, it's almost mandatory less have one of the largest right-wing groups move against you.

  5. Americ truly is a strange place by anarcobra · · Score: 5, Insightful

    The agency in charge of collecting your taxes is not allowed to provide a portal where you can submit them your tax information, and instead you have to pay a company to fulfill your legal obligation to file taxes?
    What a dystopian shit hole.