
H&R Block and Intuit Lobbying Against Simpler Tax Filing (2017) - bajsejohannes
https://www.propublica.org/article/filing-taxes-could-be-free-simple-hr-block-intuit-lobbying-against-it#
======
gbacon
_In an opinion piece for The Daily Caller and on his site, Rep. Peter Roskam,
R-Ill., said “making the tax collector also the tax preparer creates an
inherent conflict of interest while forcing citizens to relinquish control of
their taxes to the government.”_

The government already controls taxes and thus citizens’ incomes. In a time
when so many are worried about privacy, few voice any concern about the
enormous privacy problems inherent in the forced full disclosure of the
intimate details of one’s financial affairs.

Fiscal year 2019 is forecast to have federal revenue of $3.422 trillion[0], of
which $1.688 trillion will be from individual income taxes. That means
repealing the income tax and replacing it with nothing would take the federal
budget not back to the founding era or even the nineteenth century but to the
Clinton years[1].

[0]: [https://www.thebalance.com/current-u-s-federal-government-
ta...](https://www.thebalance.com/current-u-s-federal-government-tax-
revenue-3305762)

[1]: [http://www.taxpolicycenter.org/statistics/federal-receipt-
an...](http://www.taxpolicycenter.org/statistics/federal-receipt-and-outlay-
summary)

~~~
maxxxxx
This quote is just another example of willful misunderstanding of issues by
the people in Congress. They don't even try to understand an issue but stick
to some talking points that make sense only on the surface. It's really
infuriating that such idiots are allowed to participate in the discussion of
important issues. The same happens in health care.

If the IRS sent a pre-prepared tax return it would give the tax payer an
advantage because the IRS would give away what it already knows. In the
current situation the tax payer sends a return and the IRS compares it to the
data they already have. The tax payer doesn't know what the IRS knows though.

~~~
yborg
"It is difficult to get a man to understand something, when his salary depends
upon his not understanding it!"

In the very article, it's noted that Roskam was the direct recipient of
campaign contributions from Intuit and H&R Block. To me, this is plain anti-
establishment pandering, and ironic in that the anti-establishment movement
was once considered the domain of radical leftists. That the people are better
off having their taxes calculated by for-profit corporations that directly
donate to the individuals who control the government seems counter-intuitive
to me.

~~~
tzs
> In the very article, it's noted that Roskam was the direct recipient of
> campaign contributions from Intuit and H&R Block.

The contribution from Intuit was $13 600 over 10 years. During that same
period there was also $21 200 from individuals who worked for Intuit. If we
count all of that as being Intuit, that's a total of $34 800 over 10 years.
For H&R Block, it was $2 500.

If $3.7k/year is enough to buy a Congressman's vote, a handful of middle class
people in the district should be able to get together and easily afford to
counter that. For a group of 10 like minded people, that's only $31/month
each.

I think people generally get the causality wrong on the relationship between
campaign contributions and the positions or votes of the politician. The
politicians don't set their positions based on campaign contributions. It's
usually the other way around--the contributors chose where to place their
contributions based on the known positions and past votes of the politician.
If that is not known, they place contributions based on party, on the
assumption that the politician is going to generally go along with the party.

~~~
maxxxxx
"The politicians don't set their positions based on campaign contributions.
It's usually the other way around--the contributors chose where to place their
contributions based on the known positions and past votes of the politician."

That's how it should be but often it's the other way around. Don't forget that
most laws get written by lobbyists and the politicians are just a front for
them.

There are few issues where the people in Congress have their own opinion but
there are lots of other issues where a well spoken lobbyist with some cash has
a big influence.

I agree that the contributions are really low. That why lobbying has a huge
rate of return. You can get billions in tax breaks for a few million in
expense.

~~~
rayiner
Your conclusion makes no sense. If you can get “billions in tax breaks for a
few million in expense,” then every money manager who isn’t investing in
campaign contributions is breaching their fiduciary duties. As a general
economic principle, investment opportunities that return 1000x don’t just sit
around, they get arbitraged until the rate of return drops to match the risk.

The fact that campaign contributions are so small relative to the amount of
money affected by these decisions is powerful evidence that they have
extremely attenuated influence on the results.

@tzs’s theory makes much more sense: companies contribute to the candidates
that are ideologically predisposed to them in hopes of ensuring they keep
their seats.

------
curun1r
It's worth noting that they're also against it getting too complex too.
There's a sweet spot where most people feel comfortable using software to
complete and file their returns but is also not too simple to need software.

Also, their position is that simple filings allow the government too much
control and that taxpayers are better represented by an entity that is
incentivized to minimize their tax burden.

Still, I always found Intuit's lobbying efforts to fail Brad's (Brad Smith is,
the CEO) "you wouldn't tell your mother" test and it was one of the main
reasons I ended up leaving Intuit.

------
flexie
Lobbying is a way for the rich to legally shortcircuit democracy. It’s legal
corruption and as bad for democracy as the illegal counterpart.

In Denmark we have had prefilled tax forms for I don’t know how many years.
More than two decades. Nowadays its online. You log on and see your taxes and
edit when necessary. It’s still unnecessarily complicated if you are not an
employee, but for the 90 percent who receive salary as their only income and
only have ordinary deductions it’s somewhat bareable although it can be hard
to check if the tax authorities calculated the tax correctly.

~~~
Angostura
I don’t think lobbying per se is a problem. I have friends who have
successfully lobbied in the the U.K. to get bills introduced to curb climate
change. I support the Alltrials people, lobbying to ensure that the results
from _all_ medical trials are published whether ‘successful’ or not.

Groups of people or interest groups _should_ be allowed to bring their case to
legislators to try to convince them.

It’s when the convincing them comes in the form of personally enriching the
legislators that it turns into bribery and the problems occur.

~~~
ivan_gammel
Not necessarily personally - all sorts of exchanges here should be banned,
including contributions to the election campaigns, which in true democracy
should be funded solely from public money. Being allowed to bring the case
does not mean that you have to or should be allowed to pay for that.

~~~
anovikov
Isn't funding election campaigns from public money a quick and sure route to
totalitarianism? I'll say the opposite - any kind of public money involvement
into elections should be banned.

Don't get fooled with 'democracy' thing. Election and democratic process are
the way for the elites to decide matters between themselves without resorting
to civil wars/violence, in an orderly, regulated manner. They were invented
for that purpose in the middle ages England which got tired of civil wars and
serve that purpose perfectly.

'Opinions' of ordinary people are not important because they effectively,
don't exist: propaganda decides what their opinions will be.

~~~
hn0
> Don't get fooled with 'democracy' thing. Election and democratic process are
> the way for the elites to decide matters between themselves without
> resorting to civil wars/violence, in an orderly, regulated manner. They were
> invented for that purpose in the middle ages England which got tired of
> civil wars and serve that purpose perfectly.

That’s a fascinating thesis, can you point me to sources on it?

~~~
nerdponx
I think they are talking about the Magna Carta.

------
afarrell
There is a useful distinction to be made among three things:

\- The activity of lobbying, which is explicitly protected by the 1st
amendment as petitioning the government for a redress of grievances.

\- Contracts to pay someone else to engage in lobbying, which apparently used
to be illegal[1].

\- Giving gifts to legislators, which is illegal if quid-pro-quo.

[1] My source is [https://priceonomics.com/when-lobbying-was-
illegal/](https://priceonomics.com/when-lobbying-was-illegal/) though that
does not itself cite any sources. I'd love if someone more familiar with legal
history could comment on its accuracy.

------
kenning
Reminds me of the similar article posted recently, '“Is curing patients a
sustainable business model?” Goldman Sachs analysts ask.' Or net neutrality.
Regulatory capture is out of control in at least a dozen american industries i
know of.

I've read a thread like this before, prepare for lots of people from countries
that aren't the US explaining that their taxes are way simpler.

------
raverbashing
I wouldn't be surprised if a significant part of the GDP of the US comes from
rent-seeking "services" that are either not needed or overcharged. Like
"credit protection" for "identity theft". Healthcare seems to be the main
contributor to this.

~~~
dcposch
This is a really important issue that I’ve never seen addressed well...

We measure numbers that are easy to measure, like GDP or GDP PPP according to
some basket, or unemployment rate.

But how much of it is _real_?

We have a ~18t GDP, but how much is actual productivity vs rent seeking?

We’re at 4% “unemployment”, but how many people have busywork jobs that don’t
fundamentally need to be done? How many have crappy jobs / bad bosses / no
security/ need a second or third job to make rent?

Without digging deeper, I think the top line numbers are misleading and lead
to optimizing the wrong things.

I think the things we care about most are the things we aren’t measuring yet.

------
yasminahmed
Governments across the world are becoming more proactive and trying to improve
ease of doing business and paying taxes. This is the way it should be.
Citizens shouldn't have to run around or pay someone to pay taxes. In India,
starting a business used to be a hassle taking more than 2 - 3 months, now
they have completely made it online and free. So players in India like
[https://www.indiafilings.com](https://www.indiafilings.com) are also adopting
to the changes by providing more services or lowering the fee, which is great
for Entrepreneurs. Hopefully, the politicians will not budge for lobbying to
satisfy a few corporates and look at the bigger picture.

------
cfitz
Am I disappointed? Yes. Am I surprised? Absolutely not. They truly fear for
the safety of their industry, which is responsible for ~$7.5B in revenue
between the two (per annum).

~~~
jonny_eh
Would it make sense for the government contract out the pre-filled tax returns
to these companies?

------
baxtr
In Germany, many people don’t need to file taxes, as they’re deducted anyways.
But you can and it usually saves you some money. If you do though, it’s about
as complex as in the states, the only difference being that there is only one
form you’d need to fill and not 2-3 (federal, state, city)

~~~
ProblemFactory
My impression is that "US taxes are complicated" arises from the fact that
they have such a wide variety of possible tax deductions and tax credits, each
with complicated conditions and rates. For medical expenses, moving expenses,
training expenses, for various personal purchases that you use for work, for
solar water heaters, and so on.

If you earned salary from one employer and used only a few standard
deductions, then filing US taxes should be easy as well.

~~~
spoonie
I’m a Canadian who has filed taxes in Canada (file like the US, but it’s
simpler), the UK (no filing necessary if you only have interest and employment
income) and the US.

One of the other complications with US taxes is that payroll systems and the
exemption formula make it hard to get your deductions exactly right (this
happens in Canada too), because you have to be able to exactly predict your
annual income. In the UK the “Pay As You Earn” system deducts exactly what’s
needed as you earn it. Even interest payments from the bank will have a line
item for withheld taxes.

~~~
loeg
How do different entities determine your current tax rate for correct
withholding? Say your interest payments from the bank — does the bank consult
the tax authority to determine the correct rate? Similarly, how does it work
if you have two employers?

Second, in a graduated income tax system, this would result in decreasing
take-home pay over the course of the year. Does that not cause some
confusion/strife? Seems like plenty of people struggle to budget beyond
paycheck-to-paycheck as it is (in the US).

~~~
alkonaut
EU country: My employer reports my salary and already paid my taxes for me,
deducted from my pay check. All banks report what I paid in interests on my
loans and how much interest I got paid on my savings accounts. They also
report what profits I made from funds and whether I sold any at a profit (in
which case they deducted and paid the tax on those profits).

The rates are fixed for most kinds of income that entities other than
employers are concerned with. So a bank can deduct the dividends tax easily.
Tax brackets for salary taxes exist, but so long as you have _one_ employer
only, and don't suddenly get a massive pay hike/cut, they will know your
yearly income and can deduct given the correct bracket. There is no decrease
in take-home pay and no confusion (I honestly didn't quite understand where
the confusion would arise?)

If too much or too little has been paid for the whole year, that's simply
mentioned at the bottom line of your prefilled online tax return form.

~~~
loeg
> Tax brackets for salary taxes exist, but so long as you have one employer
> only, and don't suddenly get a massive pay hike/cut, they will know your
> yearly income and can deduct given the correct bracket. There is no decrease
> in take-home pay and no confusion (I honestly didn't quite understand where
> the confusion would arise?)

That's pretty much identical to US withholding. As long as your employer can
easily predict your annual wage income, that part is withheld basically
correctly. If you change jobs or experience an unusual bonus or hold multiple
jobs, good luck.

> If too much or too little has been paid for the whole year, that's simply
> mentioned at the bottom line of your prefilled online tax return form.

Yeah, that's similar to the US, except the prefilled form isn't always online
and is called a W-2. It is copied into the actual filed 1040 document and
withholding is credited against your taxes owed.

The grandparent post claimed: "One of the other complications with US taxes is
that payroll systems and the exemption formula make it hard to get your
deductions exactly right (this happens in Canada too), because _you have to be
able to exactly predict your annual income_. In the UK the “Pay As You Earn”
system deducts _exactly what’s needed as you earn it_." (My emphasis added.)

That comment (and the name) suggests that — unlike the US — the UK withholds
at the rate of your exact current tax bracket. If that's true (perhaps I am
misreading it), your take-home pay would decrease as your tax rate increases
over the year, assuming your gross pay is split evenly across pay statements.

~~~
alkonaut
That does seem confusing (unless the gp was formulated incorrectly). Most tax
systems have some progressivity such as a large base deduction which could
effectively make your first salary tax free and quite possibly make the last
one of the year be taxed at over 50%. It would be confusing to say the least.
I'm guessing the GP was just poorly formulated and that doesn't happen and
"exactly what's needed as you earn it" is still involving at least a
multiplication with 12 as the prediction for yearly income from monthly
salary.

------
paxys
IMO the problem is the tax code itself rather than who is filing the
paperwork. Unless that is simplified, there is zero chance the average citizen
can work through their taxes themselves and pay the correct amount.

~~~
mitchdoogle
I'm always puzzled when average people argue that taxes are too confusing. It
seems to me like people make it out to be a much larger burden than it
actually is. If all you have is a W2, and deductions less than the standard
deduction (which is what I'd argue is average), then you can fill out a 1040
by yourself in 30 minutes or less. Even faster if you use some of the software
solutions out there.

~~~
JoeAltmaier
Half the people filling out taxes were in the bottom half of their math class.
Its not easy for everyone. This forum may suffer from selection bias?

------
danieltillett
Nothing can be done about open corruption like this until money is taken out
of politics. Since the Supreme Court has ruled that this can’t be done by
banning donations or limiting political advertising, the solution is to reduce
the size of each electorate so that politicians don’t need to raise truckloads
of cash in order to run.

If there were only 20,000 voters in each district then people would be able to
run (and win) on personally meeting all the voters. No need for advertising
and the money this requires. If you got rid off all the political staff then
it wouldn’t even cost anymore.

------
kpozin
> Sen. Elizabeth Warren, D-Mass., offered a bill last year that would have
> actually allowed the government to start offering prefill tax returns.

Ironically, just last year, Massachusetts got rid of its own simple, free
online tool for filing state taxes, and instead directs residents to
commercial offerings.

------
johnlbevan2
Related thead on SE: [https://politics.stackexchange.com/questions/30223/why-
doesn...](https://politics.stackexchange.com/questions/30223/why-doesn-t-the-
irs-just-send-me-a-bill-for-the-taxes-i-owe-based-on-the-info-th)

------
Mauricio_
Planet money had a podcast on this subject.
[https://www.npr.org/sections/money/2017/03/22/521132960/epis...](https://www.npr.org/sections/money/2017/03/22/521132960/episode-760-tax-
hero)

------
rayiner
It’s annoying to see this pop up every year. H&R Block and Intuit aren’t
somehow blocking tax reform that would simplify filing for all the other huge
companies that do taxes. That’s an absurd theory. They’re lobbying to support
something that’ll happen anyway because a huge bloc wants people to be
outraged every April 15 when they do their taxes.

And you know what? It works! Every year I write a check to pay our marriage
penalty and fume about how it. I think it’s responsible for why middle and
lower income Americans feel like they’re over taxed (even though they pay much
less taxes than in europe).

~~~
loeg
> And you know what? It works! Every year I write a check to pay our marriage
> penalty and fume about how it.

FWIW, the marriage penalty almost completely disappears in the 2018 tax
reforms. There is still a higher rate for very high earning couples than for
very high earning singles, and some deductions are not doubled for couples,
but most of the tax brackets now line up as exactly double the single bracket
(up to the 32% bracket). This markedly closer than prior years.

[https://www.forbes.com/sites/robertberger/2017/12/17/the-
new...](https://www.forbes.com/sites/robertberger/2017/12/17/the-
new-2018-federal-income-tax-brackets-rates/)

------
dangoldin
For those interested in the theory of lobbying and special interest groups one
of my favorite books is Mancur Olson's Rise and Decline of Nations
([https://www.amazon.com/Rise-Decline-Nations-Stagflation-
Rigi...](https://www.amazon.com/Rise-Decline-Nations-Stagflation-
Rigidities/dp/0300030797/)). It's an incredibly approachable read that does a
wonderful job digging into the incentives and explains why lobbying exists and
why it works.

------
dawnerd
I might be alone here but in high school we had a single class to teach us
money management and how to file taxes ourselves. It’s only complicated if you
have complicated situations. Vast majority of people probably shouldn’t be
using software anyways but the marketing makes them think they’ll get a bigger
refund.

I also wouldn’t have a problem with them getting rid of all the weird rules
around certain deductions. Example, is web hosting a utility or subscription
service?

------
tuna-piano
The legitimate side to this is that people should know what their government
is costing them. Because of tax withholding, many people don’t even realize
how high/low their taxes are.

I have a belief that we should get rid of tax-withholding, and have people
just write a big check (or receive a EITC check) for all of their taxes at the
end of the year.

To me (and I think many republicans), hiding the taxes you pay with
withholding is really pretty slimy.

~~~
mikeash
It’s hardly hidden. Withholding is clearly listed on each pay stub. It’s true
that people often don’t pay attention, but that’s not at all the same thing as
hiding it.

If you ended withholding, tons of people would spend too much during the year,
not have enough saved to pay their taxes, and get into serious trouble. It
would be the mirror of how so many idiots are giddy about their refund each
April, except instead of feeling like they got a windfall, they’d end up with
massive penalties.

You could argue that it’s their own fault and they should be more responsible.
I’d agree that they should, but they won’t, any more than they’ll be
responsible enough to read their pay stubs and understand their withholding.

------
sachinprism
What are the examples of some of the other industries that thrive on this kind
of asymmetric information for the buyer?

Reminded me of this article by Tyler Cowen [https://www.cato-
unbound.org/2015/04/06/alex-tabarrok-tyler-...](https://www.cato-
unbound.org/2015/04/06/alex-tabarrok-tyler-cowen/end-asymmetric-information)

------
barneygumble742
Every year a week before the tax deadline, this exact topic pops up. I've
noticed now for the past 4 to 5 years.

The IRS should really advocate for this since it makes their jobs easier due
to people making less mistakes. The IRS also has it's own lobby group - the US
Congress. It's just not good at lobbying for the IRS...or Americans.

------
shmerl
Yeah, they are known crooks who want to retain their middlemen position at the
cost of the public. Quite disgusting.

------
Pierre-C
I have found a free spreadsheet online,and I mail a paper return. The
spreadsheet is surprisingly good, and I can use it in libreoffice. I started
doing that after finding $22,000 worth of errors in years past. I call it
paper protest.

------
akayoshi1
Tax companies whose existence relies on them and only them to decipher cryptic
government tax laws. Quite literally the most predictable and unsurprising
news article to come out on the internet.

------
arnarbi
Don't hate the player? Lobbyism doesn't serve the public, but it _is_ how
American law-making is done. Of course companies will lobby to keep their
business.

~~~
sendben2
That’s apologism for a despicable practice. Hate the player and hate the game
because we’re all getting played in systems where lobbying is legal. This is
how politicians end up serving corporations instead of people.

~~~
db48x
Writing a letter to your congressman is also lobbying. Are you going to make
that illegal too?

~~~
JetSpiegel
Only if there is money in the envelope.

~~~
db48x
Oh, gotta outlaw all forms of political fund-raising too, then; apparently
it's ok to give money to your neighbour unless that neighbour is running for
office. Am I still allowed to spend my own money on an ad in the newspaper
extolling the virtues of my preferred candidate?

------
matte_black
Personally I’ve always found it sickening that a government would just hand
you a prefilled form and say _This is what you owe!_

Feels much better to do it all yourself and declare _This is what I’m going to
pay_. It’s a careful distinction.

