
How the Maker of TurboTax Fought Free, Simple Tax Filing (2013) - apsec112
https://www.propublica.org/article/how-the-maker-of-turbotax-fought-free-simple-tax-filing
======
xupybd
I live in New Zealand. I don't have to file taxes if my income is a standard
wage my tax payments are automatic. My employer deducts them from my wage and
they are sent to the IRD (Our government tax dept). My student loan and super
payments are also automatic. If there is anything wrong then at the end of the
tax year I can file to correct things.

I also get donations rebates, this is a one page form that lists all my
charitable donations. Very easy very quick.

All my details are available to me online. All transactions are there and it's
very transparent.

Why would anyone oppose a simple system like this?

~~~
jjeaff
It's almost that simple in the US if your situation is that simple. What
happens in NZ if you make $400 selling vintage cabbage patch dolls on eBay?
What if you earned $1k in returns on your investment account? What if you are
renting your place out on Airbnb?

If all you have is a simple income in the US, then the 1040ez is a single page
and you can file it for free online if you make under a certain amount. You
can pay a few dollars to file online if you make more.

Obamacare has added an extra level of complexity now, but that is also very
simple if you don't need or want the subsidy.

~~~
xupybd
Yes you have to file an IR3 if you make other income.

[http://www.ird.govt.nz/income-tax-individual/end-
year/ir3/ii...](http://www.ird.govt.nz/income-tax-individual/end-year/ir3/iit-
what-is-ir3.html)

My favourite part of our tax system is the advice to file if you have "income
from an illegal enterprise"

EDIT: Just as a reply to the original point. I'm not sure how complicated the
US system is. I'm not trying to say it's bad either, it just seems to me that
we have a system similar to the one that is getting lobbied against. And I
like our system, it works well for me..

~~~
jwilliams
_I 'm not sure how complicated the US system is_

FYI - At various stages of my life I've filed in New Zealand, Australia, UK,
Switzerland and the US (California).

I can't generalize to all persons, but I do have a decent spread of countries
in my own experience - and the US was by some serious margin the most
complicated.

~~~
ransom1538
It isn't that bad in the US using turbo tax. Just remember to answer no to
receiving payments from the "Ottoman Turkish Empire Settlement". (Actual
question).

~~~
wbl
Why should I have to pay $100 to file my taxes?

~~~
averagewall
A counter viewpoint - maybe the system has to be complicated to provide all
the various incentives that voters want taxes to do, and to patch all the
loopholes that would otherwise be open. Maybe such a system is too complicated
for a lay person to understand so they delegate the understanding to private
enterprises which can compete to provide the cheapest or easiest interface to
the complicated system. If it wasn't the taxpayers paying for the complexity
directly, it would be the government which would charge everyone via those
same taxes to implement their own clunky government computer system that
people would hate even more.

Countries with simple tax rules don't get to micromanage their economy so
much.

~~~
int_19h
The system can be complicated, but all those complications can be handled by
the tax agency. For the vast majority of people out there, all the data that
you put into your tax return is something that IRS already has, or can easily
obtain. And when that is not the case, you should really only need to tell
them once (and then update if it ever changes, like the number of kids you
have).

Tax filing in US is a huge waste of people's time. I wonder if anyone ever
computed the amount of people-hours spent on this malarky, and how much
productive output it could generate if used for something else.

------
harryh
Intuit certainly does this, but blaming them for our overly complex taxes is
wrong. They might move the needle a little bit but they aren't the primary
driver. The primary driver is all the constituencies of all the little things
in our taxes that add up to make them complicated.

Like ObamaCare? That came with two additional forms. Live in a high tax state
and like deducting your state taxes? That makes things more complicated. Big
fan of deductions to for education or child care? That comes with
complexities. I could go on and on....

Now maybe your answer to all of these questions was "no", but there are a lot
of people that say "yes" to a lot of these questions. It's really hard to
upset that apple cart. Lobbying doesn't have much to do with it.

~~~
stult
That's not the point of the article at all, nor of Intuit's lobbying. Even
with the current complexity of the tax code, the IRS could easily auto file
your taxes for you if your income is below a certain very high level and you
do not have any special complications. Such a system would work for 98% of
Americans. This has nothing to do with what deductions are available or
whatever complexity they introduce into the system. There is simply no reason
whatsoever not to implement return-free filing, beyond the large dollar
amounts tax industry lobbyists spend on the Hill.

~~~
dragonwriter
> There is simply no reason whatsoever not to implement return-free filing,
> beyond the large dollar amounts tax industry lobbyists spend on the Hill.

It's not all Intuit lobbying. Many politicians of a particular faction oppose
return free filing because they want to keep tax proxess as painful as
possible to make people emotionally susceptible to anti-tax and, more
generally, anti-government rhetoric.

~~~
sampo
Government which stays in power based on people's anti-government sentiment,
isn't that something.

~~~
georgeecollins
Welcome to the United States! We are governed by people who don't believe in
government. :)

~~~
0xfeba
> We are governed by people who don't believe in government.

This is more true now than ever. An EPA head that doesn't accept climate
change, or believe in the EPA at all. A DOE head that wanted to eliminate a
specific department that he heads, but can't quite remember what it is; an FCC
head that wants to remove most FCC regulations (this is not as bad as the
other examples, though), a SoE that doesn't believe in public education...

In a work of fiction, it'd be hilarious.

------
schainks
So, just for a different perspective, Taiwan has a relatively simple tax
filing experience, and the government invests significant resources to make as
simple as possible (which does result in many people paying their taxes
properly, on time).

While their digital tools for filing taxes make the telegraph feel modern, the
"in person" experience is full of helpful people and takes about 90 minutes
including travel time.

My main criticisms of the filing process:

1\. Tax bureau has a one month timeframe where you can go, in person, to file
"on time", but only during business hours. Any 9-5 worker must take time off
to go file in person. It's a pretty nice customer experience - The volunteers
in the bureau help you file your taxes with highest deductions possible, it
gets crosschecked by a government tax clerk, and you're done.

2\. Make the software work better on a modern OS and give it modern usability.
It's _really_ crap UI, and I only run it in a VM just in case because the
download site is also shady looking.

3\. Locals gaming the system can make your life harder as a working-from-home
small business owner. Many landlords don't pay income taxes on their
properties, which means tenants cannot register business addresses at their
homes, and must "rent" an address for about $100 / month.

4\. Withholdings on foreigners, by default, are artificially high as a
"precaution".

5\. Refunds process in August after filing in May. Because they still process
every return much by hand.

6\. Double taxation on people like US citizens. The tax clerk has asked
friends of mine, while filing, to show their US tax return to make sure there
are not more taxes owed. They can ask, but it's not enforceable. So why do it?
Because the tax rate on that income earned elsewhere can be as high as 30-40%!
The tax clerk gets to decide how bad of an offender you are. GLHF.

7\. If your income goes down compared to the year before as a foreigner, you
will probably pay a penalty for "making less money" because they suspect tax
evasion. Pay the fine (less than $USD 100) and walk away, or they dig your
records hard and you could wind up in a situation like #6 above.

~~~
Symbiote
> Double taxation on people like US citizens.

That's America that's out of step. Almost all other countries only tax their
residents, not their residents plus citizens. It's normal to tax worldwide
income.

I told the British tax office that I'd left the country. They sent a refund
and final statement a few months later, and we haven't communicated since.

If I had, for example, a house in Britain being rented out, I'd need to
declare that income to my new country.

------
tschwimmer
Serious question: Is it possible for society to criminalize rent seeking
behaviors like this? It seems clear that there's no benefit to keeping the
status quo tax filing system except for the benefit of tax preparers. What's
stopping the US from creating a law that says if a company attempts to lobby
for something in bad faith (like the tax example), they will face sanction?

~~~
sbuttgereit
Fair question and I dislike this sort of thing as much as anyone. And of
course such an opening comment means there is a "but..." coming.

What you're asking for is to criminalize certain petitions of government. So
how do you choose whom to discriminate against such that they cannot petition
their government in regards to law making without, at the same time, simply
institutionalizing the viewpoints of the other side? Maybe we shutdown
corporate lobbying, but then do you need to shut down other associations of
individuals (consumer groups, unions, etc) from lobbying government in order
to keep equity, or tacitly assume those other organizations must be right
anyway? There are many ways to play that game and the only options are those
that simply favor one interest group over another... sure, the winning side
probably won't complain about undue influence or insensitivity to the concerns
of the losing side... but when has it ever been that way?

If you want a real solution to problem you're talking about without explicitly
shutting down the give and take of ideas (good and bad) that are required to
make the democratic aspects of our system function, your only solution is to
limit what power the government has to influence preferential outcomes for
anyone that would lobby it and increase the rights of individuals to act on
their own accord or in trade with other, similarly free individuals. Without
the power to deeply intrude into the economic lives of people (regardless if
employee or shareholder), lobbying government for favors simply wouldn't be a
good investment. Indeed, it is ironic that you ask to outlaw this sort of
thing... because any time you expand the government power to regulate or
influence outcomes you make the lobbying dollars just that much more
worthwhile. Going further, you simply are considering a totalitarian
systematization of your ideas: something worse than the rent seeking you
rightfully decry.

(edited for slightly better use of language)

~~~
wpietri
I think "only solution" is far too strong. It seems to me there are two sorts
of lobbying: positive sum informing of legislators, and zero/negative sum
jockeying for societal advantage. We want to keep the former and minimize the
latter.

So my proposal is:

1\. Make all paid lobbying illegal. Make corporate donations to candidates,
campaigns, and parties illegal. Eliminate revolving doors. Strongly limit
individual donations. (And, while we're at it, maybe add federal funding of
elections with spending caps.)

2\. Industry groups, consumer groups, and the like can exist and publish what
they want on their websites, but may not have private contact with
legislators, their staffs, etc.

3\. Legislators can communicate with outside groups to request information,
opinions, and the like, but all requests and responses must be published in a
permanently maintained record.

4\. We increase the budget for congressional staffing and for neutral research
groups like the CBO, so legislators have the resources necessary to make good
law without having to lean on paid lobbyists.

I'm sure there are plenty of other proposals that could be made as well. The
flow of ideas isn't the problem. It's the flow of money and power.

~~~
sbuttgereit
So questions to your proposal:

1) You make corporate political donations illegal, but that's pretty specific
to a single class of interest group. What about those that regularly act in
opposition to corporate interests, such as unions, environment groups,
consumer groups? Your point 2 seems to imply they would be included, but why
are you specific here as to the prohibition? Or do you propose to treat
different association of people preferentially and on what basis?

2) Again you're specific to certain kinds of interest groups but this time
leave out corporations when granting permissions. Again, do you have favored
classes of associations of people?

3) How do you police such a thing? How do police communication through
surrogates or the thousand other ways creative individuals seeking rent or
hoping for regulatory capture will bypass "communications with the outside"?
Isn't this the sort of creative thinking that caused problems with
McCain/Feingold and the like? If you accept greater regulatory involvement
from the state, the greater the rewards to those that can gain the ear of the
regulator. Risk/reward continues to skew to creative evasion.

4) What makes a neutral group neutral, and, in some way, can there ever be
such a thing? Don't get me wrong, I don't know of any instances of the CBO
outright gaming information, or releases, etc. for clearly political purposes
(nor have I studied the question). However, CBO Director is still appointed by
the politicians. What if one political interest group captures congress and
decides to politicize the CBO since they can't get sufficient outside support
for their position under your proposal? Do you politicians like Trump would do
such a thing? Even if we put those sort of hand-wavy humans-are-humans
arguments aside, elected politicians are ultimately beholden to their
constituents regardless of the CBO position; CBO says we spend recklessly on
the military (or if then that sort of thing) a big military district
politician will very much ignore that advice. I expect your funds for
increased staffers results simply in increased "independent" research
supporting whatever position a given politician wants to hold for whatever
reason.

Unfortunately, I still think I'm on the right track and that just about any
solution that doesn't somehow require the political class, their staff, and
families to be quarantined into some forced monasterial existence cutoff from
the outside world, seems corruptible.

~~~
gech
If we thought up all the bad things that would happen we wouldn't act at all

~~~
sbuttgereit
Uh, ok... so what's your point caller?

Both sides of this thread have suggested actions, albeit competing actions.
Rational discussion of competing ideas involves discussing the positives,
negatives, motivating ideals, and the validity of the ideas on the table. Not
discussing or raising issues evades reality and doesn't do anything to diffuse
or give answer to that reality. Simply put, if we're going to do something I
rather do it with eyes wide open, understanding the downsides, rather than
mimic one of those "hold my beer..." memes.

And... notwithstanding the debate at hand, perhaps we shouldn't act if acting
actually makes matters worse or drives bad behavior further underground.
Significant thought in the climate change debate and the environmental
movements is spent on thinking up all the bad things that will happen if we
continue to act as an industrial society. Is your admonishment for them, or do
you pick and choose who can argue as is convenient? One might say... that's my
problem with the person whose proposal I was responding to... they seemed to
want to pick and chose who could say what and when.

------
tuna-piano
I haven't read a legitimate argument against the IRS calculating taxes
automatically, but here it is.

The more invisible taxes are to the individual person, the less they think
about that money (and the higher taxes can go without them complaining too
much).

Rent feels expensive because every month you write a check for rent. However,
for many people, taxes are a much bigger expense than rent. But taxes don't
feel as painful, because people don't write a check every month for taxes.
Taxes are just invisibly withdrawn from your paycheck.

The easier and more invisible it is to pay taxes, the more you forget about
how much money that really is. If you believe in constrained government,
there's a good case to be made that we should make tax payments more visible,
not less.

~~~
millstone
In 2014 the Obama administration provided a "tax receipt" so you can see how
much you paid and what you got for it. Cool idea.
[https://obamawhitehouse.archives.gov/2014-taxreceipt](https://obamawhitehouse.archives.gov/2014-taxreceipt)

------
hackuser
A tangential issue: It seems almost impossible to me that the systems of tax
preparation services, whether cloud-based, local software, or offline, are
secure.

The standard of security is, make the target more expensive to breach than
it's worth to the attacker. How much would it be worth to have access to the
tax returns of large swaths of the population?

I don't know the answer, but I'm guessing it's easily worth billions of
dollars. Foreign intelligence services would very much like that information,
as well as sophisticated criminals.

I am very doubtful that Intuit or H&R Block, for example, invest in security
sufficient to protect themselves against that level of attack.

~~~
freehunter
The answer, of course, is "it's not that secure". Now, Turbo Tax and H&R Block
aren't being hacked, but breaking into their systems isn't the easy way. And
like you said, attackers want to take the easy way. The easy way is to get
just enough info from your targets as it takes to extract money from them. And
in the past few years, e-filing fraud has skyrocketed. The mantra is "file
your taxes before someone else does", because the number of people who are
submitting their tax form only to find out it's already been submitted is
greater than ever before.

It's really, really hard to attack Intuit. It's much easier to submit
fraudulent tax forms and pocket the returns before anyone notices.

~~~
gst
> The mantra is "file your taxes before someone else does", because the number
> of people who are submitting their tax form only to find out it's already
> been submitted is greater than ever before.

The IRS is liable for losses due to fraud, so why would I care about fraud?
It's up to the IRS to secure their systems.

~~~
JohnTHaller
Perhaps because it is a long and painful process to prove it and then get your
money.

~~~
peller
This is absolutely the case. My parents' personal data was dumped when one of
the major health providers got hacked a few years ago, and somebody started
submitting junk returns with their info. Each season it takes them easily 20+
hours on the phone, and usually the IRS won't believe their identity over the
phone (understandable enough) so they need to show up in person at the nearest
IRS office (which isn't very near, and requires an appointment - another
3-4hrs on hold to schedule, and they never take you on time when you get
there). It's a nightmare, and if you choose not to resolve it, you're just
setting yourself up to get audited.

------
mb_72
I have experience as a tax payer in Estonia (employee only) and Australia
(employee and business owner). In Estonia I login to my bank with my citizens
ID card, click through a few screens ... and my tax return is done. All the
financial information supplied by my employer to the government is immediately
visible and checkable, not to mention donations made to tax-deductable
organisations is also immediately visible. It is incredibly quick and
convenient. In Australia it's just easier to leave everything to my accountant
as they already have my quarterly business returns information; cost is still
pretty reasonable (500AUD or so for the yearly business returns and the
personal returns for my wife and I). But ... yeah ... in Estonia it just
rocks. The ID-card based functionality for banking, digital signatures, tax
... just awesome.

~~~
jedberg
> But ... yeah ... in Estonia it just rocks. The ID-card based functionality
> for banking, digital signatures, tax ... just awesome.

That's what happens when your head of state has a computer engineering degree
and used to work on databases before going into politics. :)

------
azernik
There's a fascinating article linked from this one:
[https://www.propublica.org/article/turbotax-maker-linked-
to-...](https://www.propublica.org/article/turbotax-maker-linked-to-
grassroots-campaign-against-free-simple-tax-filing)

See the final paragraphs, which I've copied below - it's essentially a version
of the Citogenesis effect.

\-----------------------------

"Dennis Huang, executive director of the L.A.-based Asian Business
Association, also told ProPublica he was solicited by a lobbyist to write
about return-free filing. When the lobbyist sent him a suggested op-ed last
summer and told him the proposal would hurt small businesses, Huang wrote an
op-ed in the Asian Journal that claimed Asian-owned businesses would not only
spend more time paying taxes, but they'd also get less of a refund each year.

Huang declined to disclose the lobbyist's name, but acknowledged he didn't
really do his own research. "There's some homework needed," he said.

Oregon's Martin did some research on return-free filing and now supports it.
She also co-published a post about the issue and the PR efforts related to it
because, she says, she was alarmed that other nonprofits could easily agree to
endorse a position they did not fully understand.

"You get one or two prominent nonprofits to use their name, and busy advocates
will extend trust and say sure, us too," Martin said."

------
elberto34
the deep cynicism here is how people think Turbo tax is doing a pubic service
by making taxes easier and cheaper, that's how effective their marketing is.
Convince the public there is a problem that only said company can solve.

~~~
bluedino
Paying TurboTax $59.99 is cheaper than going to H&R Block and paying a tax
preparer $169

~~~
texuf
The IRS already knows what taxes you owe. In most cases they could just send
you a bill.

~~~
nodesocket
Only true if you have a simple standard w-2 job.

With stocks, capital gains, dividends, write-offs, company you need to handle
these manually and the government doesn't know your write-offs and all sources
of income.

~~~
ceejayoz
Capital gains and dividends get reported to the IRS.

If nothing else, the IRS could say "here's the info we have, feel free to
review and add anything we don't know about".

------
Upvoter33
well, of course. imagine you are a business and the govmt could change a law
and put you out of business. wouldn't you put as much money as you could into
preventing that change? this is why money in politics causes problems...

~~~
joering2
Same old same old: show me a doctor who doesn't want you to be sick. Show me a
lawyer who doesn't want you to get in trouble with law. Show me a priest who
doesn't want you to sin.

It just blows my mind up to what degree TurboTax will go with this!

~~~
caoilte
Doctors want you to be sick? - no. HMOs? - maybe. Lawyers want you in trouble
with the law? - no. Prison Corporations? - definitely.

People are generally good, corporations are evil by design.

~~~
refurb
_HMOs? - maybe._

Why would an HMO want you to be sick? They spend most of their time _not_
covering medical claims. In fact, they'd make more money if you _never_ used
your insurance.

And your claim that people are generally good makes no sense. Corporations
don't make decisions, people do.

~~~
cmurf
False. If people never used insurance, then they'd stop buying it, and the
whole industry would collapse. The reason why the industry exists is it helps
manage the alternative: fear of eating into savings, going into debt, or going
bankrupt, just to get well again. Or worse, just giving up and dying.

The reality is, no insurance company insures known sick people unless
compelled to with sufficiently large pools to redistribute wealth and risk. If
a pool had only sick people, insurance is no longer insurance, it's a payment
plan. What we in effect have now is one part insurance for totally
unpredictable things, with one part payment plan for all the predictable
doctor visits and scripts that people want to justify a monthly payment.

------
sshumaker
This is one of the reasons Credit Karma launched a totally free online tax
product this year
([https://creditkarma.com/tax](https://creditkarma.com/tax)). (We view this
similarly to credit scores a decade ago, when everyone advertising "free" was
a bait and switch).

------
joering2
I always love reading absurd statements made by otherwise reasonable people
who - of course - a salary depends on being unreasonable.

Here:

> Intuit argues that allowing the IRS to act as a tax preparer could result in
> taxpayers paying more money.

Majority of work will be done automatically by some free jQuery and PHP
scripts (hello Obamacare website) and taxpayers have only shell-out initial
cost. Even if TurboTax is $19 per year, I have a hard time believing that
200MM tax payers X $19 will be less than running an enterprise servers for
online consumers.

> [...] "STOP IRS TAKEOVER" campaign and a website calling return-free filing
> a "massive expansion of the U.S. government through a big government
> program."

I honestly laugh at this one. Just exactly which part of information that IRS
process is not already in the IRS possession? With that statement -- they
really reach out for the dumbest people hearing them out.

> Explaining the company's stance, Intuit spokeswoman Miller told the Los
> Angeles Times in 2006 that it was "a fundamental conflict of interest for
> the state's tax collector and enforcer to also become people's tax
> preparer."

I have to place a call to intuit maybe they will sponsor my idea that I should
fill out and asses my own respondibility when it comes to a parking ticket. I
mean you cannot trust the government that they will be fair to you - so I
should get note "you violated parking zone - fill out this form and return to
us with own assessment of your penalty". Gosh imagine wild wild west we would
be living in if you stretch it to criminal law.

~~~
smsm42
> Majority of work will be done automatically by some free jQuery and PHP
> scripts (hello Obamacare website)

Obamacare website was notorious for being completely terrible. And so were
many other government-run healthcare sites - I personally tried to find some
info on CA site when it was launched and failed for several days until they
worked out the kinks.

And tax code is vastly more complex than what healthcare needs. There are
literally hundreds of various exceptions, deductions, conditions, etc. Many of
them inter-related or conditioned on other things. Did you every try to figure
out how to use some of the IRS worksheets? It's no picnic. I recently tried to
figure out whether I can deduct the cost of some home improvement I've made -
took me several hours and I'm still not 100% sure I got it right. US tax code
is insanely complex.

Of course, it may be that IRS has most of it already implemented and it may be
that this implementation actually allows to produce pre-filled return (from
what I've seen from IRS, it's not that easy, but maybe I'm wrong). Still, the
project would probably have very significant cost, and unlike the commercial
offerings, it won't be privately financed, and it would inevitably suffer from
what many government projects suffer from - cost overruns, bureaucracy,
wastefulness, choosing suppliers based on political clout, etc. It's not going
to be free, it's going to cost a lot of money.

> Just exactly which part of information that IRS process is not already in
> the IRS possession?

Quite a lot of it. E.g. my charity donations aren't. Many of my other
deductible expenses aren't. Education expenses probably aren't. A lot of small
business income may not be. A lot of deals like selling non-public stock
aren't.

I think you might have very narrow view of how complex a tax return can be if
you don't have just "one/two salaries, standard deductions" situation - which
btw many preparers offer to handle for free or near free already. That's not
where the problem is. It's when it goes out of that simple case where the
complications lie.

And yes, currently the simple taxpayers in some measure are subsidizing the
more complex ones, by financing the platform that allows handling more complex
cases with their money. However, I'd hate if I had to pay $600-$1K for my more
complex case (that what it would cost to hire a tax accountant) instead of $60
or so I'm paying now for the software (plus hours of time reading IRS
instructions of course).

Maybe Intuit argument is still bad, I don't know, but it's not as laughably
bad as you describe it, not even close.

~~~
joering2
> Quite a lot of it. E.g. my charity donations aren't.

I think you missed the point.

IRS will know about your charity donation shall you decide to give this
information to TurboTax for TT to lower your tax burden. IF you don't want to
lower your burden, don't give it to TT and don't give it to IRS, problem
solved.

So at the end of the day it doesn't matter if you provide something to
TurboTax and they forward to IRS, or IRS will have it directly from you by
adding this information to your online tax form on Gov site.

~~~
smsm42
> So at the end of the day it doesn't matter if you provide something to
> TurboTax and they forward to IRS, or IRS will have it directly from you by
> adding this information to your online tax form on Gov site.

Ah, in this scenario it indeed wouldn't matter - but this scenario means that
there's a government-run clone of TurboTax. I doubt the government will do
better job and be cheaper than Intuit, which have a lot of experience and
knowledge in doing this.

~~~
joering2
> but this scenario means that there's a government-run clone of TurboTax.

No, in this scenario there is no place for companies like TurboTax in the
first place.

> which have a lot of experience and knowledge in doing this.

TurboTax has more knowledge and experience in taxes than.. IRS ?

------
nojvek
If trump administration actually manages to simplify tax code and kill the
stupidity corporations induce via lobbying such that I can file my own taxes.
I would have a lot of respect for him.

~~~
laser
In the first paragraph, "Meanwhile, Massachusetts Sen. Elizabeth Warren
proposed a bill yesterday to allow free government-prepped returns."

~~~
djrogers
Note it says "free" and "government prepared". Setting aside that those are
mutually exclusive concepts, that says nothing about simplifying taxes - it's
just having the government do the complicated stuff instead of you (or your
accountant).

~~~
gech
At least the govt is ostensibly about the public good. Anyone else through
self interest is suspect. Which gets back to the title of the original post
here for this thread...

------
jaypaulynice
You can do your taxes for free using this:
[https://www.freefilefillableforms.com/#/fd](https://www.freefilefillableforms.com/#/fd),
but it's a huge pain unless you know what you're doing. I did it last year,
but it took 10+ times to submit it correctly and the errors were straight from
programming errors (i.e: tax_status is not valid, etc.)

Massachusetts had free tax filing, but got rid of it this year. It was really
great and fastest refund I ever received.

------
pag
I'm really happy with how the Canadian Revenue Agency handles things. You file
online, there's plenty of free services to do your taxes. They support auto-
fill where the CRA can send them the tax info it already knows about you (e.g.
from banks and employers), etc. I filed my a few weeks ago and they assessed
my returns by the next afternoon. Last week I received a cheque in the mail,
but that's only because I forgot to fill out the direct deposit info on the
CRA website. The husband of a former colleague used to fill out junk on their
tax returns because they knew that the CRA would just fix it all up, and then
tell them what they owed (or what they would be refundend) in their notice of
assessment.

~~~
upofadown
Technically the situation in Canada is the same as in the US. You must use a
third party to file your taxes online. There is a donationware system from
simpletax.ca and most (all?) of the others will not charge for a sufficiently
low yearly income.

That doesn't change the fact that in Canada there is no way for a citizen to
file their taxes directly with the government other than by using the paper
forms and mailing them in. There used to be a telephone system but that was
eliminated some years back.

The relationship between the private tax preparers and the CRA is much closer
than is healthy. I suspect that is related to the current situation.

This bothers me enough that I file my taxes on paper as a form of protest. The
nice thing is that you can put pretty much any nonsense on there you want.
They will just ignore your figures if they disagree which of course shows how
silly the current situation is.

------
startupdiscuss
A lot of the comments here are conflating two different things:

1\. The complexity of the tax code

2\. The complexity of filing

They are not the same thing.

You have to go through some process to file now. Let the government go through
that laborious process.

For those who are not conflating the two, this point does not apply.

------
grexe
In Austria, since I think 2016, you also get automatic tax returns as an
employee, but these are calculated based on a minimum standard wage and
parameters, so you want to do the math on your own anyway, but it's very
simple and straight forward, at least once you validated your account, which
is a very official procedure but ok for security reasons. There's a simple
online form where you basically only have to put 4 sums for each tax category
and that's it, the rest is already sent by your employer. Always a nice and
welcome surprise and a rewarding experience

------
mlinksva
Many tech companies are members of CCIA and should demand it stop advocating
for Intuit's civilization-destroying agenda.

It's been one of their issues for a long time eg
[http://www.ccianet.org/2011/09/irs-tax-prep-not-a-budget-
sol...](http://www.ccianet.org/2011/09/irs-tax-prep-not-a-budget-solution/)
and [http://www.ccianet.org/2002/01/treasury-irs-announce-
efforts...](http://www.ccianet.org/2002/01/treasury-irs-announce-efforts-to-
expand-tax-e-filing/) ... and it's a major activity of theirs
[http://sunlightfoundation.com/2013/04/15/tax-preparers-
lobby...](http://sunlightfoundation.com/2013/04/15/tax-preparers-lobby-
heavily-against-simple-filing/)

> The Computer and Communications Industry Association (CCIA), of which Intuit
> is a member, represents its members on a wide range of technology issues,
> but spends a significant amount of its $6.7 million in lobbying on tax
> simplification. As ProPublica's piece points out, the group operates the
> website "Stop IRS Takeover" which bashes the idea of pre-filed returns.
> Disclosures indicate the CCIA has focused on "issues pertaining to tax
> preparation services" and legislation involving simple filing. It lobbied in
> support of Rep. Lofgren's bill that would have barred government-filed
> returns, and rallied against Sen. Akaka's bill that would have let taxpayers
> file directly through the IRS "without the use of an intermediary." The CCIA
> is an active political giver as well, doling out over $650,000 over the past
> 20 years with 91% going to Democrats. Silicon Valley-based Rep. Lofgren, an
> opponent of IRS-prepared returns, has been the biggest beneficiary of CCIA
> donation, collecting over $12,000. The group also opposed John Chiang in the
> 2006 California controller election, chipping in $50,000 to the Alliance for
> California's Tomorrow — the same group that received $1 million from Intuit.

CCIA also gets lots of mentions in
[https://www.warren.senate.gov/files/documents/Tax_Maze_Repor...](https://www.warren.senate.gov/files/documents/Tax_Maze_Report.pdf)

------
twblalock
The fact that taxes are complex is the government's fault.

The fact that companies can manipulate the government into keeping the taxes
complex is also the government's fault.

------
rushabh
While the focus of this discussion here is on the taxes, I think the bigger
story is the unethical behaviour of companies like Intuit. And its not only
Intuit, but also companies like SAP [1] that engage in such behaviour at the
cost of tax payers.

The finanical might takes away so much from the commons and also pushes back
adoption of good Open Source software. We constantly under-estimate the damage
done by these mega-corps.

[1] [http://blogs.wsj.com/riskandcompliance/2015/08/12/former-
sap...](http://blogs.wsj.com/riskandcompliance/2015/08/12/former-sap-
executive-pleads-guilty-to-bribery-charge/) [2]
[http://www.iafrikan.com/2017/02/21/sap-south-africas-
managin...](http://www.iafrikan.com/2017/02/21/sap-south-africas-managing-
director-implicated-in-alleged-38-million-sap-licenses-purchasing-and-
kickback-scandal/)

------
unclebucknasty
Reminds me that raw capitalism isn't the answer to every problem.

Kind of like the current healthcare debate in the U.S., where the problem
seems to be "how do we allow insurance companies, pharmaceutical companies,
etc. to make maximum profits while providing healthcare for the maximim number
of people at minimum cost?"

------
rayiner
It's not really a credible idea that an industry accounting for 0.05% of U.S.
GDP somehow manages to out-lobby the industries representing the other 99.95%
of GDP, so as to keep tax filing complicated when otherwise there would be a
critical mass in favor of simplification.

------
thewhitetulip
I am in India and tax filing here is as simple as 1 2 3. We have the Form16,
which has the data to be entered in an excel sheet that you can download from
the govt website, punch in the numbers and voilà, they tell you tax you owe!
Pay via net banking and you are done.

------
randyrand
The maker of tax return software doesn't want to lose business? news at 11.

------
shakencrew
Previous discussion on Hacker News:
[https://news.ycombinator.com/item?id=5443203](https://news.ycombinator.com/item?id=5443203)

------
frogpelt
As strange it may seem, a portion of people/corporations are always pro-
privatization and anti-nationalization.

This helps explain why there is an anti-net-neutrality faction. It's not just
because people don't understand. And it's not just because people are bought
and paid for. There are actually legitimate arguments for privatizing things
and then regulating them rather than nationalizing and trusting the government
to manage effectively.

------
dennis_jeeves
Interesting, that in all income tax discussions the underlying premise of
income tax is not questioned.

For me it's a form of extortion. If I avail of certain services provided by
the government, I would expect a bill only for the services I availed. And
just like my ISP I should have the option of not opting for the for their
services.

~~~
TulliusCicero
Whether income tax is generally acceptable is a much broader (and
philosophical) topic than the simpler question of whether it should be simpler
to handle (obviously yes unless you make money from its complexity).

~~~
dennis_jeeves
In that case the debate would _never_ end. Even before we get down to tax
complexity, how do we decide if 10% of income as tax is good enough, versus
20%? Notice the rabbit hole of arguments that one can get sucked into.

~~~
TulliusCicero
> Even before we get down to tax complexity, how do we decide if 10% of income
> as tax is good enough,

Why would we have to do that? The reality is that we already have an income
tax, and we can definitely simply its filing process without changing its
current rates.

So far this sounds like a standard libertarian tactic where you try to turn
every debate on political policy specifics into a debate around whether
government should be doing anything at all. It's not any different than
internet marxists who, given a topic that revolves around business, will
always reply "well X should just handled by government anyway FULL COMMUNISM
NOW". It's completely unproductive and borderline trolling.

------
kumarski
I once contemplated buying NovoNordisk and investing millions to open
subsidized donut shops for the wealthy.....

------
rodionos
Aggregate filing statistics for US tax returns 1990-2014:

[https://apps.axibase.com/chartlab/bbca48dc#fullscreen](https://apps.axibase.com/chartlab/bbca48dc#fullscreen)

Percentage of all reports filed electronically reached 86% in 2014. Big relief
for USPS.

------
alkonaut
TIL how I file my taxes (log in and submit a pre-filled web form, or send a
text message approving it) was the exception, not the norm.

I would have expected at least most of western Europe to have reached that
point.

~~~
Taniwha
here in NZ most people don't even have to file taxes - we have NO exemptions,
if you have one job your boss will have gotten your tax right, your bank will
withhold tax on interest at your declared marginal rate - if you have multiple
jobs filing a one page web form might get you a refund (with interest!).

less than 5% of us, those with complex financial lives who can likely afford
it, have to file a more formal return

~~~
alkonaut
Same here, but I have to actually confirm that I have seen it and sign it (via
text message, online or paper). The stuff I have to manually add to the filing
is s.g if I bought or sold a house or did any complicated stock market trades
(but then the broker or bank usually lets you take that form pre filled from
them at least).

------
em3rgent0rdr
The problem is not who prepares your taxes. The problem is how complicated
taxes are.

------
BrandoElFollito
I have this in France, filling in the taxes takes 20 seconds on Internet.

------
shmerl
That's really disgusting, and the reason I'm not using TurboTax.

~~~
ProAm
I switched to Tax Act [1] a couple years ago and have not been happier. Easier
to use and MUCH cheaper. For federal and state the total came to $30

[1] [https://www.taxact.com/](https://www.taxact.com/)

~~~
shmerl
Yep, they are pretty good.

------
orless
I live and work (not self-employed) in Germany, which has one of the most
complex tax systems in the world. Normally, a certain amount is deducted from
my salary upfront automatically so I pay my most of my taxes through the year.
The deducted percentage is defined by so-called "tax class" (1 for singles,
3/5, 4/4 or 5/3 for married or "registered partnership" couples).

When the year is over you MAY file a tax declaration if you had 1 or 4/4 combo
- or you MUST file it if you had 3/5 or 5/3 combo (because then you have
normally underpayed the taxes through the year as a couple). If you have 1 or
4/4 you have normally overpayed taxes so if you don't file, the goverment is
happy.

The tax code in Germany is mindbloggingly complex. And it's not just laws,
its' also "common practices", knowing what the Tax Authority (Finanzamt)
accepts and what not. It's also knowing the current lawsuit which may be
potentially applicable to your declaration. Every year there's a few dozen
such tax lawsuits where the results are applicable to large groups of
taxpayers.

When I was single I either didn't file the tax declaration or filed it myself
with the help of software and a few books. There's a bestselling book "1000
absolutely legal tax tricks" ([https://www.amazon.de/Konz-1000-ganz-legale-
Steuertricks/dp/...](https://www.amazon.de/Konz-1000-ganz-legale-
Steuertricks/dp/3426788411)) which is a a good starter.

Nowadays with family and kids we must file a tax declaration, but now there
are so many special cases we're either subject to or can profit from that it's
not realistic to do it on our own. We outsource our tax declaration, it costs
us around 300€ a year and is absolutely worth it. Our tax consultant routinely
argues with the Finanzamt over two-digit sums, basically fights for every
cent.

Honestly I don't think we'd better off if the tax system in Germany would have
been simpler. We profit from a number of special cases like "extraorinary
burden" because of the disabled child, so I think in the "one size fits all"
system we'd probably lose. I'm totally fine with 300€ fee for the tax
consultant, she allows us to use the benefits of the system. By the ways, this
fee is considered the next year, we get out tax back from the fee.

If I remember correctly, a few years ago politicians discussed a "no-file"
option: you declare that you don't file you tax declaration this year and get
some bonus back (I think the proposed sum was around €300). The Finanzamt has
less work to process declarations, so probably this was worth it. I don't
think it was implemented, however.

------
the_cat_kittles
slightly off topic, but... you can file for free using any number of tax prep
software if you make less than ~64k a year: [https://www.irs.gov/uac/free-
file-do-your-federal-taxes-for-...](https://www.irs.gov/uac/free-file-do-your-
federal-taxes-for-free)

~~~
dustinhlyons
Or use Credit Karma Tax. Completely free software assistance at any income
level. ([https://www.creditkarma.com/tax](https://www.creditkarma.com/tax))

Disclaimer: I work there.

~~~
nodesocket
I've looked at Credit Karma tax free, but I'm a bit nervous as I own a
California LLC (100% sole owner), and also have capital gains, dividends,
write-offs.

Is Credit Karma a good choice for more complicated returns? Last year I paid
H&R $650 for literally one hour of time which infuriated me.

~~~
dustinhlyons
This is our first year, so we don't currently support filing as an LLC (just
individual income/loss as a result of a small business):
[https://help.creditkarma.com/hc/en-
us/articles/216489263-Cre...](https://help.creditkarma.com/hc/en-
us/articles/216489263-Credit-Karma-Tax-frequently-asked-questions#q8)

~~~
nodesocket
I'm 100% owner of the LLC, so all income is mixed with my personal. Just need
the ability to do itemized deductions including rent.

~~~
ensignavenger
I just did my taxes with them, and it does have some support for business
income and loss, so I think in your case (pass-thru entity) you may be okay- I
didn't have to use this section this year as all of my income came from my
salaried position this year, so I can't ssay for sure how it works.

------
camperman
Institutions prolong problems to which they themselves are the solution \-
Systemantics.

~~~
camperman
Ak, that was actually Clay Shirky. Sorry Clay ;)

------
transfire
I have a better idea. Simplify the tax code so anyone can do theirs on an
index card. There is absolutely no reason for the gargantuan tax code in a
free society.

~~~
geofft
That's what the 1040EZ is. Seriously, take a look at it, it's a single page,
only half of which is calculations: [https://www.irs.gov/pub/irs-prior/f1040ez
--2016.pdf](https://www.irs.gov/pub/irs-prior/f1040ez--2016.pdf)

If you object that this isn't sufficient for you or someone else, I'll be
happy to argue that whatever behavior would make you 1040EZ-ineligible should
either not be permitted in a free society (because it's a tax-avoidance scheme
for certain types of rich people with political power) or should be taxed as
W-2 income (because otherwise it'd become such a tax-avoidance scheme), but
good luck getting the people who benefit from those schemes to allow it.

~~~
JohnDotAwesome
> Use this form if: Your taxable income (line 6) is less than $100,000.

For a lot of the folks on HN, I'd bet that isn't true.

At the end of the day, US taxes are super weird. This may be an overly
simplistic view, but I'm definitely of the opinion that we need to drastically
simplify taxes. Complex systems generally produce more opportunities for
exploitation.

I wonder just how simple a viable tax system could be.

~~~
geofft
I assume that's because it gets vaguely into AMT territory (nothing in the
normal 1040 changes at or even near $100K), and the AMT mostly exists because
of the complications of tax law.

------
yawz
When I read this, unfortunately I'm thinking "don't hate the player, hate the
game". Lobbying is a double-edged sword, and it is a game played very well by
the powerful and the rich.

~~~
averagewall
Lobbying only works because voters don't care about what they're voting for.
You can always vote against the candidates who were lobbied into doing
something you don't like, or lobbied at all. But the majority of voters can't
do that - they insist on voting for the candidates with the most expensive
advertising and forget about where that money comes from.

------
tacostakohashi
It's pretty much the same as the situation with taxi medallion owners now that
Uber has come along.

If you ask me, the correct answer is for the government to either give some
one-off compensation to Intuit (or buy the company from its existing
shareholders), and then shut it down, and reform the system.

Why should the government pay money to a private corporation or shareholders?
Because they created this mess ("opportunity") in the first place with a
ridiculous tax code. It's just the actual, realized, dollar-value cost of the
mess that was created, instead of externalizing the cost onto taxpayers. Once
that cost has been paid, the system can be fixed.

