
How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - danso
https://www.propublica.org/article/how-the-maker-of-turbotax-fought-free-simple-tax-filing
======
musicale
What's puzzling is that the IRS seems to calculate your taxes anyway; if
there's a disparity, then they send you a correction a few weeks later.

Why can't they do this beforehand so you have the option of just clicking "OK"
and being done with it?

~~~
rayiner
That wouldn’t work for most people. If you are married, have kids, or own a
house, the IRS cannot calculate your taxes correctly.

(Single young people downvoting me. The IRS doesn’t know how many kids live
with you, what you pay in mortgage interest, and whether you’re still married
to your spouse, all of which are necessary to calculate even simple tax
situations.)

~~~
jdietrich
The article explains how return-free filing already works in many countries
and how it could work in the US. I know it's against the HN guidelines to
comment on whether someone has read the article, but you clearly haven't read
the article.

From a British perspective, the US tax system seems utterly bizarre, because
most people here have never filed a tax return. Taxes for regular employees
are deducted at source by the employer. Everyone has a tax code that reflects
what allowances they are entitled to; if your circumstances change, you just
call the tax helpline, inform them of the change and they update your tax
code. Self-employed people do have to submit a tax return, but you can do it
all online and the tax agency offers free training on how to do it.

There is literally no reason why salaried employees should have to do their
own taxes.

[https://www.citizensadvice.org.uk/debt-and-money/tax/how-
to-...](https://www.citizensadvice.org.uk/debt-and-money/tax/how-to-pay-
income-tax/the-pay-as-you-earn-paye-system/)

~~~
rayiner
> The article explains how return-free filing already works in many countries
> and how it could work in the US. I know it's against the HN guidelines to
> comment on whether someone has read the article, but you clearly haven't
> read the article.

This article (or something similar) pops up on HN every six months, and it’s
stupid every time. It’s shocking to me that people find the idea credible
because it doesn’t even pass the smell test. Even if this was about lobbying,
there is no way Intuit and H&R Block can outspend all the people who have an
interest in simpler tax filing. Seriously, Intuit spends $2.5 million per year
on lobbying—there are dozens of things that raise more on crowdfunding each
year, such as the “Opal Nugget Ice Maker.” Last year, a board game raised more
money on Kickstarter than Intuit and H&R Block spent lobbying.

The UK is a very different country than the US, and much more comfortable with
both central government control and taxes. Switzerland also has manual tax
filing, and the US is much more similar to Switzerland in terms of taxes as a
fraction of GDP, guns per capita, federalism, etc.

~~~
jdietrich
Why don't you make paying tax easier? It wouldn't work here. Why don't you
reduce your carbon emissions? It wouldn't work here. Why don't you make
healthcare affordable? It wouldn't work here. Why don't you make it harder for
psychologically disturbed adolescents to access semi-automatic weapons? It
wouldn't work here.

It's the same argument ad nauseum about every political issue since before the
civil war. The US is unique, the US electorate have strong and immutable
views, the US cannot learn from anyone else. Time and time again, educated
people dismiss the possibility of change, dismiss the possibility of
persuasion and compromise and reconciliation, dismiss the possibility of
shifting the Overton window and changing the zeitgeist. That isn't common
sense, it's political nihilism. The consequences of that nihilistic ideology
are writ large on the American political landscape and they are proving to be
disastrous.

~~~
rayiner
Whether or not American culture can be changed is besides the point. My point
is that the article misidentifies the reason we don't have automatic tax
filing. It's not the $5 million in Intuit/H&R Block lobbying, which is not a
large amount of money. Intuit/H&R Block are simply riding much more powerful
political forces that exist for other reasons.

(For the same reason, the $5 million in NRA lobbying each year is not why we
don't pass laws limiting access to semi-automatic weapons for "disturbed
adolescents." It's voters like me who are morally opposed to the government
keeping a list of who can and cannot exercise their 2nd amendment rights. The
lobbying is just so the NRA can remind politicians how many of us there are.)

~~~
nielsbot
Sounds like you'd be surprised how cheaply politicians are bought.

BTW--"sensible gun reform" has majority support.

~~~
rayiner
That’s a self-refuting assertion. If lobbying works, why would it be so cheap?
The economy has tons of competing interests—if they could get their way
through lobbying, that should bid up the cost of “buying” politicians.

For example, Grover Norquist has no personal stake in keeping tax filing
complicated (he doesn’t own stock in Intuit or H&R Block as far as I know).
But he spends a lot of time on the issue for ideological reasons. You’re
telling me that there’s not a billionaire Democrat who could throw $5 million
a year at the tax issue for funsies? Or public unions who would benefit from
simpler tax filing allowing taxes to be raised more easily? If it was just a
matter of outspending Intuit and H&R Block, someone would do it. But I could
give you $10 million a year (double what the tax companies spend) for this
issue, and you would not be able to lobby tax simplification into law.

~~~
moorhosj
Why would people spend money on something like this “for funsies”? You don’t
even take your own idea seriously or provide a credible reason other than “why
not”. Intuit and H&R Block have a specific goal and target it with specific
dollars each year. Over time that builds influence and control.

Grover Norquist absolutely has an interest in keeping taxes complex, it’s his
entire basis for influence and power. His fight is about lowering taxes
anyways, not complexity.

Here’s the flip side to your stance. If lobbying has no influence, why do
privately held businesses spend so much on it each year? Wouldn’t these
rational actors stop wasting money if there was no ROI?

~~~
rayiner
You can’t build influence and control with $5 million a year in lobbying. It’s
just not very much money. There are a lot of public interest organizations and
concerned individuals who could spend that kind of money (and do). They spend
it on other issues instead because they know this tax filing issue won’t go
anywhere.

You’re missing the point of the Grover Norquist example. _Why_ is tax filing
something Grover Norquist cares about? He’s rich—this doesn’t affect him
directly. And he doesn’t make any money off tax preparation. He campaigns
against tax filing simplification because it taps into a very large anti-tax
movement that he’s part of. _It is that movement that keeps tax filing
complicated._ Intuit and H&R Block don’t create that movement through
lobbying; they lobby to tie their issue into the larger movement.

As to the amount of lobbying: private companies don’t spend much money on
lobbying every year. Total US lobbying expenditures is $3.5 billion, out of a
$20 trillion economy (and a $4 trillion federal budget). (And that’s not just
companies, but includes public interest organizations.) If lobbying had
direct, non-speculative impacts on legislation, companies would do a lot more
of it. Look at the tax filing example. H&R Block makes more than $3 billion in
revenue each year. If lobbying had direct results, they wouldn’t be able to
protect that cash cow with less than $3 million a year in lobbying. A
competitor would come in and outbid them for legislation. (Indeed, corporation
versus corporation lobbying is probably the most typical kind. E.g. all the
money Google spends on copyright lobbying is best seen as a proxy war with
Hollywood over whether copyrights should be weak, which favors distributors
like Google, or strong, which favors Hollywood.)

Of course lobbying is important enough that companies do it. But it’s not
transactional like people make it out to be. Lobbying involves hiring
professionals to make presentations to staffers about specific issues, tying
them into general platforms that politicians already believe. Tax filing is a
great example. Intuit and H&R Block aren’t going in and spending $5 million to
convince people who love taxes to oppose automatic tax filing. They’re using
that money to lobby legislators who already want Americans to be outraged each
year in April 15. They connect their specific issue to the larger platform the
politician already supports. “Simpler tax filing is the first step to Danish
style 60% tax rates.” Then, they educate the legislator about relevant pending
legislation. “Elizabeth Warren has introduced an automatic tax filing bill.”
And they arm the legislator with arguments and white papers they need to
oppose the lesilation. “Making deductions opt-in will result in a $45 billion
effective tax increase on seniors, who will be to scared to challenge the
‘bill’ sent by the IRS.”

~~~
moorhosj
==You can’t build influence and control with $5 million a year in lobbying.
It’s just not very much money.==

You still haven’t provided any evidence. Your comments in this thread are
mostly ideological arguments.

From the article about them directly lobbying against bills on this issue:

==The disclosures show that Intuit as recently as 2011 lobbied on two bills,
both of which died, that would have allowed many taxpayers to file pre-filled
returns for free. The company also lobbied on bills in 2007 and 2011 that
would have barred the Treasury Department, which includes the IRS, from
initiating return-free filing.==

~~~
1123581321
The article doesn’t establish that the lobbying was the cause of the death of
the bill. You did not refute rayiner’s central assertion.

~~~
moorhosj
To believe his assertion you must first admit that the market competition is
apparently broken and we have numerous profit-seeking companies who invest
heavily in lobbying while seeing no benefit.

There will never be a direct link made because no politician will say, “I am
voting against this bill because Intuit took me to a nice dinner and
contributed $100k to my re-election campaign.” We do have evidence that
constituents want taxes simplified, bills have been presented to fix this
problem, companies lobbied against the bills, and the bills died. What’s your
theory?

~~~
1123581321
He was not saying that lobbying was completely ineffective. He was saying that
lobbying rode supported an ideological belief that taxes should not be
simplified, and the cost to lobby against the combination of the 5MM in
lobbying plus the ideology is a lot more than 5MM. His evidence was that the
relatively low value of 5MM hasn’t been outspent by an interested party, there
being so many such people who could afford it. I don’t know if that is the
case but I would like you to address the central claim. I don’t have a theory
of my own.

~~~
moorhosj
I would suggest the burden is on proving that there is a legitimate group of
people who think taxes should be complicated for ideological (not political)
reasons. You readily accepted that premise without any provided evidence. It
seems to me that politicians are making a calculation that it is advantageous
politically to have complicated tax filing process. Oddly, in the recently
passed tax bill the House GOP campaigned heavily on the idea of taxes filing
so easy it could be done on a postcard, an admission that people want
simplicity. When the law ultimately passed, they didn’t follow through on that
promise, maybe due to lobbying maybe for political reasons.

No party has as much direct interest in this issue as tax preparers. That they
haven’t been outspent is not itself evidence of anything.

~~~
1123581321
I did not accept the premise. Please don’t mistake my attempt to improve the
discussion as agreement with anyone. I just want this discussion to be better.
I don’t think demanding burden of proof is a comment worth making; could you
at least explain why you think there can’t be such people?

I do agree it is interesting that the GOP campaigned that way, incidentally.
Regardless of what degree of support for complicated taxes there may or may
not have been, support for simplified taxes in the large, populist wing of the
Republican Party plus presumably broad support in the Democratic Party should
mean more changes to tax collection soon.

~~~
moorhosj
==could you at least explain why you think there can’t be such people?==

It's not that there can't be such people, it's that there hasn't been any
credible evidence provided to prove there actually are such people. That both
sides of the political spectrum use the same language is pretty strong
evidence that there is broad support ideologically for a simpler tax code.

Bringing up Grover Norquist seems like a red herring, as he is himself a
lobbyist. His organization, Americans for Tax Reform, describes itself as a
group that "believes in a system in which taxes are simpler, flatter, more
visible, and lower than they are today." [1] Yet, they are used by rayiner as
an example of an organization ideologically opposed to simpler taxes and tax
filing. If anything, we should be adding ATR's own $5 million of annual
spending to the total lobbying dollars being spent against a simpler system.

==should mean more changes to tax collection soon.==

This is the central point. The tax code was just completely overhauled and it
included almost zero simplification, even though it's main proponents used
that exact messaging in their sales pitch.

The article suggests that the lack of action is, at least in part, because of
lobbying. It provides the evidence of lobby spending related to this topic and
the ultimate death of those bills. The also have a quote from Former
California Republican legislator Tom Campbell, he says he "never saw as clear
a case of lobbying power putting private interests first over public benefit."

[1]
[https://www.sourcewatch.org/index.php/Americans_for_Tax_Refo...](https://www.sourcewatch.org/index.php/Americans_for_Tax_Reform)

------
kazinator
This year for my taxes I used a little DSL I hacked up in TXR Lisp, where I
you can declare each line on a tax form, along with its description and its
value (or else how it is calculated from other lines). A bit like cells in a
spreadsheet: reactive programming, basically.

There is a function to produces a report of all the lines and their values,
grouped by form, sorted by line.

If I change a value, as in _(set (line 42) 123.32)_ , then re-run the report,
it will indicate all the lines that have changed, showing the old and new
value side by side.

I have some nice things in there, like handling groups of conditional lines
that vary by tax bracket and such.

All of the data is in a nice text file that is just (load ...)-ed, together
with the module that provides the logic, and that file is checked into git.

If the government did these calculations, I'd still want the option to do it
myself; I wouldn't want to be forced into dealing with entering numbers into
some web crap.

~~~
curiousgal
> I'd still want the option to do it myself

" _Taxpayers would have three options when they receive a pre-filled return:
accept it as is; make adjustments, say to filing status or income; or reject
it and file a return by other means._ "

------
Simulacra
Any business that has a captive or semi-captive market is going to do all is
can to dissuade others from participating in the market. It's the basis for
most licensure laws.

------
gamerDude
Does anyone know the true cost of lobbying? Salaries + whatever other expenses
are involved. It would be interesting to see a kickstarter style company for
hiring lobbyists for more public interest causes.

~~~
Kye
These exist. They're called nonprofit organizations.

~~~
toomuchtodo
Would they matter? If representatives ignore the good of their citizens (in
preference of lobbyists providing campaign contributions), you might have to
find alternative methods to bring about positive change.

~~~
rcpt
There's a strong argument that lobbying is more of a "legislative subsidy"
than it is vote buying or persuasion.

The idea is that most of the information governments need to craft policy is
only provided by lobbyists and that government staffers are typically less
informed about a given field than expert lobbyists.

Congressional staffers don't make a ton of money and typically aren't PhDs.
One way to reduce the impact of lobbying would be to offer very high salaries
to staffers so that we could attract world experts to our side of the table.

[https://www.cambridge.org/core/journals/american-
political-s...](https://www.cambridge.org/core/journals/american-political-
science-review/article/lobbying-as-legislative-
subsidy/AE4B5D8AB9C2487BB78C2A51BB53E03F)

------
tastyfreeze
I have never looked into why the US hasn't moved towards government prepared
taxes like many other countries. I just want to say fuck Intuit! Wasting
thousands of hours of time for corporate profit. Absolutely disgusting.

~~~
ApolloFortyNine
That majority of people could fill out the 1040EZ in 10 minutes and call it
done.

There's no way for the government to know what your work expenses were, what
you donated to charity, and so on and so forth through many of the deductions.
If you don't want to maximize your return, you can be done in less than 15
minutes.

Even making more than 100k, with stocks through multiple brokers, a 401k,
interest from multiple accounts, a house, student loans, and probably a few
others I forgot to mention, it took me an hour and a half to do my taxes and
cost me under $20 on freetaxusa (whatever the price for the state taxes they
charged was low enough where I didn't care to figure it out on my own).

The tax code is one of those boogeymen items that everyone attacks, but in
reality isn't nearly as bad as people make it out to be.

~~~
baby
> That majority of people could fill out the 1040EZ in 10 minutes and call it
> done.

How long does it take to understand that it's all you have to do?

> There's no way for the government to know what your work expenses were

What? That makes no sense.

> what you donated to charity

Same. This makes no sense.

> it took me an hour and a half to do my taxes and cost me under $20 on
> freetaxusa

wow. I guess you are used to filling your taxes so you're fast.

~~~
ApolloFortyNine
Maybe you're not American? Or haven't done taxes?

In the US, you can deduct your work expenses if you so choose (such as
required clothes, for instance). Since you did this on your personal card, how
would the government have any idea that you bought that suit for work? And the
same goes for donations to non profits.

~~~
sokoloff
Work clothes are only deductible if required _and_ not suitable for ordinary
wear _and_ only for tax years prior to 2018. A suit does _not_ qualify.

------
p1mrx
At least they're being honest about it. It's not TurboTax's fault if lobbying
is legal and cost-effective. The only way they'll stop is if we make that kind
of lobbying illegal, and good luck with that.

~~~
_robbywashere
It 100 percent is their fault. They are manipulating elected members of
government intended to respresent the PEOPLES best interest. This is where
capitalism fails

~~~
mrunkel
Wouldn’t the fault lie with the representatives and the people that keep re-
electing them?

~~~
akanet
Uh, I mean, partly? It's a pretty strange argument to say that no one can be
culpable of a bad thing so long as that thing is currently legal.

~~~
chronolitus
Imagine that murder was not illegal. Imagine that instead of making it
illegal, we complained to murderers that what they are doing is bad and they
ought not to. Then, we'd wonder why the crime rate isn't going doing.

The argument isn't about assigning blame. It's about criticizing society for
not solving the problem. Complaining about lobbyists doing bad things is not
an effective solution. Doing so shifts the dialog away from law implementation
(solution-oriented and practical) towards what is "right" and "wrong" (vague,
subjective, and doesn't lead to improvement).

------
dang
Big discussion from two years ago:
[https://news.ycombinator.com/item?id=13853150](https://news.ycombinator.com/item?id=13853150)

And back in 2013:
[https://news.ycombinator.com/item?id=5443203](https://news.ycombinator.com/item?id=5443203)

~~~
wmeredith
I’ll bookmark this page so I can link to it in 2021 when we’re complaining
about the same thing again.

------
JMTQp8lwXL
The tax code is complex because of many special interest groups that get their
carve-out. Even if you completely ended all lobbying from the tax preparation
industry, how much simpler would taxes actually get?

If you want a straight flat tax (or a progressive one), you'd need to get rid
of the mortgage interest deduction, charitable deductions, all these things to
refine the tax calculation to a very simple formula. And you bet those special
interest groups would never let that happen, even if the tax preparation
industry didn't lobby.

~~~
philipov
Don't let the perfect be the enemy of the good. We can and must improve things
iteratively. Just because we can't fix everything doesn't mean we shouldn't
fix anything.

~~~
cyphar
The issue is that the reason why governments have tax cuts for certain groups
is because that's how they win votes. Tax codes are so complicated in almost
every democratic country in the world specifically because such complicated
tax codes serve a purpose.

The difference between governments is who is getting the tax breaks.
Progressive governments give tax breaks and stipends to ordinary workers,
while conservative governments give it to corporations and the wealthy.

In order to gain or stay in power you need to make sure your key supporters
are looked after. This is as true in dictatorships as it is in democracies.

~~~
jpfed
>The issue is that the reason why governments have tax cuts for certain groups
is because that's how they win votes.

Isn't that an oversimplification, though? Governments also use tax cuts to
shape behavior.

~~~
cyphar
I would argue that shaping behaviour is another aspect of looking after your
key supporters.

If you put taxes on speculative trading, such traders won't vote for you --
but people who are against speculative trading will. If you give speculative
traders a tax cut, the inverse happens.

It also obviously will shape behaviour, but if that was the only purpose then
the government wouldn't be fulfilling their primary purpose: trying to stay in
power as long as possible so they can achieve whatever they set out to do.

~~~
philipov
If you're a career politician, "Stay in power as long is possible" is _the_
thing you set out to do.

------
argd678
I could have sworn there was an effort to release the tax laws codified in
Python libraries by the IRS or another official government agency. I wonder
now if it was a dream, I can’t seem to find the article now.

------
faitswulff
This comes up on HN basically every year. I'll put a different spin on it than
"big bad company ruins America": America was broken before Intuit got to it.

There will always be bad actors in society. Ideally government officials have
the temperament, wisdom, and intelligence to act in the public's behalf.

Unfortunately, that seems to be largely not the case in the US.

------
cmurf
It isn't just Intuit, and it isn't just their $5 million in legal bribes. If
it were simple to do income taxes, it would be tens of thousands of accounting
industry jobs that would be cast aside. I suspect the lobbying money comes
with that as part of the message.

Leona Helmsley, as quoted by her housekeeper: "We don't pay taxes; only the
little people pay taxes." She believed that and I suspect we have no idea the
extent of this corruption, and very well could also be why the system is the
way that it is. Corruption and tax avoidance is a right for the privileged,
secured as a product they can buy. If this is all easy peasy and automated,
how do you do clever obfuscation so you're avoiding taxes?

------
thewhitetulip
I'm glad that Indian tax system is great. They already do everything & if not,
they have Excel document written formulas which you can download & enter
amounts and it does calculation

------
zanderz
I already hated TurboTax before that story broke because of the horrendous DRM
that blocks legitimate use. I had kept DVDs for each of several years I filed,
then once when I went back to re-install a previous year to open the file, it
wouldn't work. I even found the amazon sales email from that year and TurboTax
support said there was still no way to use it, despite having original media
and a sales reciept! NEVER AGAIN. I use FreeTaxUSA now.

~~~
0xcde4c3db
> horrendous DRM

In case anyone thinks this description is excessively dramatic, you should
know that the DRM scheme in question works by writing its activation key to a
particular sector of your boot drive that _probably_ didn't contain anything
important.

------
lnyng
Is distributing free tax filing software illegal? i.e. some web app similar to
Intuit that help you fill forms but not filing for you. For general public
that do not have many special deduction items I think this would not be very
hard to do. For special deductions, I guess the app can just point the user to
possible forms they should look at.

~~~
everythingswan
You can already file for free if you make under $66k:
[https://www.irs.gov/filing/free-file-do-your-federal-
taxes-f...](https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-
free)

Edit: I don't think I addressed your question, sorry!I agree that a simple
tool could be a great help if it doesn't already exist!

~~~
u801e
You can even do it if you make more than that with the free fillable forms
option.

------
rb808
I'm pretty sure the real reason its complicated is because politicians are all
trying to get deductions or special rules for their favorite special case. I
thin its simplistic to blame tax preparers.

Actually simplifying tax is one good thing Trump has done. Hopefully will
continue.

------
TimJRobinson
Is there a non profit out there lobbying and working to make tax filing free
and simple? I'd be happy to donate to them. We the people need to build more
nonprofits to fight back against corporate greed.

------
Zarath
At least having to file your own taxes maintains some pretense of financial
privacy.

------
rongenre
And that's why I do my taxes using Credit Karma.

~~~
charlescearl
I was tempted to but a bit worried that tax return information would be shared
with their partners.

