
H&R Block and Intuit Lobby Against Free and Simple Tax Filing (2017) - aaronbrethorst
https://www.propublica.org/article/filing-taxes-could-be-free-simple-hr-block-intuit-lobbying-against-it
======
grovernorquista
There's another bad-faith actor in this fight to make you burn your time
preparing tedious tax bullshit for your personal taxes.

It's Grover Norquist: [https://www.huffingtonpost.com/grover-norquist/grover-
norqui...](https://www.huffingtonpost.com/grover-norquist/grover-norquist-
taxes_b_3005698.html)

To give these folks something they don't deserve (an assumption of good faith,
non-cynicism, benefit of the doubt, etc): they think "letting" the IRS do
folks' taxes will lead to more taxes and poor, defenseless taxpayers simply
won't have the courage to challenge a "bill" from the IRS.

Simple fix: let folks contest whatever final "pay this number and you're done"
amount they get invoiced for & sear that into federal law. But you probably
won't ever hear Grover and all the other looney tunes ever mention that.

They don't want easy, hassle-free IRS filing. It's an opportunity for people
to be pissed (who wants to pay money for the government)

There's also talk about your taxes fitting on a postcard and that, as usual
from the scumbags nominally in charge of our country, is bullshit too because
it just conceals a ton of paperwork (source:
[https://www.accountingtoday.com/opinion/the-postcard-tax-
ret...](https://www.accountingtoday.com/opinion/the-postcard-tax-return-a-
simple-solution))

~~~
jjeaff
I agree with Norquist. You make things too easy, and people will just let it
happen.

As someone who owns a business and has to make quarterly tax payments, paying
taxes is painful. I know how much it costs me every time I write a check and I
am very reticent to vote for any politician that thinks we should raise those
taxes.

On the flip side, I have many friends whose taxes are just pulled out every
paycheck. And at the end of the year, they get a tax refund. They act like the
government is giving them money! Many don't even seem to realize that all they
are getting is a repayment for an interest free loan they have been giving to
one of the largest and wealthiest organization/government in the world.

I understand and agree that taxes are important, but if we make it too easy,
we make people complacent and the next thing you know, we will wake up with a
75% tax rate.

This is the same reason I disagree with adding the tax in on product prices.
People in other countries that do this don't realize how much of the price is
going towards taxes - and to keep a government in check, information is key.

~~~
koyote
Many western countries have very simple or near-automatic tax systems and I
would argue that the tax you pay is actually much more visible to residents of
such countries.

In the UK, for example, most employees do not have to file a tax return. The
HMRC files it for them and sends them a letter every tax year with their
calculation. It even comes with a nice chart to see how much tax you've paid
and where it went to
([https://secure.i.telegraph.co.uk/multimedia/archive/02871/ta...](https://secure.i.telegraph.co.uk/multimedia/archive/02871/taxtable1_2871685b.jpg)).

The tax brackets are also very straightfoward and everyone knows which bracket
they are in. The same is true with tax on product prices. Everyone knows the
tax rate on items because it's a simple number and there's a lot of public
discussion whenever politicians decide on reducing/increasing it. If you ask
anyone in the UK (or any other country other than the US with VAT) what the
current VAT rate is, they will be able to tell you. Good luck getting an
answer to such a question from someone in the US; you just pay what the
cashier tells you to as VAT depends on so many factors.

~~~
BeetleB
>Many western countries have very simple or near-automatic tax systems and I
would argue that the tax you pay is actually much more visible to residents of
such countries.

I think if you want to counter the poster, you need to give an example of a
western country that has simple/automatic tax systems and have a _lower_ tax
rate than the US.

His/her complaint is primarily that if a system is too simple, it's much
easier to raise taxes. You're giving exactly the example he/she is looking for
- a country where it's easy and the tax is higher.

~~~
koyote
I believe that the income tax paid in California is higher than in the UK for
the median household.

Now correct me if I am wrong, I have only filed tax in the US for a single tax
year so I might be missing something. But for the median household income in
California of around $66,529, you would be paying an effective tax rate of
around 24%. (using this website: [https://smartasset.com/taxes/california-tax-
calculator#wWyPf...](https://smartasset.com/taxes/california-tax-
calculator#wWyPf1PomS)). And yes, I realize this is excluding deductions.

In the UK, the median household income is £27,300 and you would have an
effective tax rate of around 19.6%
([https://www.uktaxcalculators.co.uk/](https://www.uktaxcalculators.co.uk/)),
also excluding deductions.

Of course higher salaries attract higher taxes in the UK, but if the above is
correct, then the average person should be paying less tax in the UK than in
California.

~~~
BeetleB
>And yes, I realize this is excluding deductions.

That's a big disclaimer.

I'm not going to argue for a hypothetical. I actually ran the numbers once. My
state's income tax rate is high, but lower than CA's. For my income (above
median), one year I actually calculated my tax for CA (as in actually got the
forms and filled them out).[0] Despite the lower tax rate, the my state's
income tax was higher. The reason? CA has a lot more deductions for people of
my income or lower. CA can get you in all kinds of _other_ taxes, but not
income tax.

Also, just checked. Other than the deductions, for single people, you hit the
second highest bracket at a little over $8K in my state. To get to that same
bracket in CA, you have to earn over $50K. CA tax rates are low for lower
income people.

[0] It's a long story why I did this - it was not fun at all.

~~~
koyote
Of course, it's very difficult to directly compare such things for a single
individual, never mind the median individual (you'd have to account for the
fact that the UK taxes include medical insurance as well as a pension on one
side and lower sales tax in California on the other side, and so on...).

My point was that taxes in countries where the tax return is automatically
performed by the government aren't necessarily higher than in parts of the US.
In other words, OP's comment above was nothing more than FUD.

------
bluejekyll
This is a great example of why the way in which politicians raise money and
how they are lobbied is corruptive.

This is a case where quite easily 80% of their constituency would applaud the
change. But a minor set of companies with an ability to contribute large sums
of money (for or against) is able to influence something like this passing.

Citizens United and similar SCOTUS cases have made it even that much more
unlikely that the situation will be improved any time soon.

~~~
fmardones
"You sit down, review a prefilled filing from the government. If it’s
accurate, you sign it. If it’s not, you fix it or ignore it altogether and
prepare your return yourself. It’s your choice. You might not have to pay for
an accountant, or fiddle for hours with complex software. It could all be over
in minutes."

This is exactly how it works in Chile...since 2005!

~~~
perl4ever
Something that is not clear to me - suppose that the government in one of
these countries that makes it easy to file your taxes doesn't do it correctly
and you sign it and file it. Who is liable?

If the taxpayer can relieve their obligation by filing a government provided
return, with the option to correct it, that sounds great. But if the onus is
on the taxpayer to correct mistakes by the government, then all that is really
happening is free government provided tax prep which may have a value of zero
or less.

~~~
simonh
In the UK you don’t have to sign anything unless you are going your own taxes.
If you are charged too much you can claim a refund, not sure if there is a
time limit but if so I think it’s pretty long. The revenue service is audited
and there are independent consumer protection groups that can help people who
need it.

Also the online tax forms are actually really good. The government has a web
team that has radically simplified and unified all sorts of government web
forms and made a huge difference.

Wrong thread, but so far as I’m aware, we don’t pay 75% tax in the UK.

~~~
perl4ever
That sounds reasonable. So if you are charged too little, the worst that can
happen is they send you another bill?

~~~
tialaramex
It would have to be by a lot.

If they realise you owe say £500 they just send you a new calculation saying
here's why you owe £500, we wouldn't tax X amount of your income by law, so, Y
= X - £500 now we won't tax the first Y next year.

Pay As You Earn means most ordinary workers in the UK have all their income
taxes collected by their employer automatically. The employer doesn't know why
you pay the taxes you do, they just get told a code signifying how much to
charge.

There's a cute trick to let HMRC verify that payroll accounting is legit
without snooping personal bank details of people who aren't suspected of tax
fraud. Basically there is a field with a blinded cryptographic signature in it
in electronic payroll feeds, all the signatures should tie up to tax records
without revealing who exactly was paid how much.

------
kerng
I wish this would get a lot more attention. The world could be rather simple,
majority of people would just be happy with a straight forward process. What
annoys me is not the money I have to spend on filing taxes nor to pay my fair
share, but the actual time I waste every year doing so.

~~~
justapassenger
This so much. I’m fine with taxes (I benefited a lot from services provided by
them, when I needed). But the whole process is made complex for no good
reason. I want to show to government all my money, have them tell me what I
owe, and if I don’t agree, have an appeal process.

~~~
hueving
The problem usually isn't the knowing how much you made bit. It's the knowing
how much you can deduct because that's all based on expenses.

~~~
SparklingCotton
In a simple tax system there aren't that many deductions. This is especially
true for low-tax jurisdictions.

If you want non-standard deductions, create a company and do normal
accounting.

50-100 standard deductions can be handled centrally by the IRS with no issues.
It's been done in other countries for _decades_.

~~~
sokoloff
The IRS does not get a feed with the details of our charitable giving. They
also don’t get a feed of various ad valorem taxes I pay.

Those are common, non-business cases where the IRS doesn’t have enough info to
properly prepare a return. Small business returns (even simple Schedule C
“hobby businesses”) definitely can’t be done correctly in an automated
fashion.

~~~
justapassenger
With current tax code it's not possible. But that's the thing - tax code needs
to be updated. It works now because of weird combination of stockholm syndrome
and giving people a feeling of getting a deal.

Tax code is messy and complex, with tons of loop holes. And those loop holes
mean most of the people pay much less anyway, but they get to feel good that
they're getting a great deal. It's brilliant from psychology point of view.

~~~
sokoloff
Well, I can’t see any feasible way to automate Schedule C and preserve a tax
system that taxes income/profit (rather than revenue).

I’m not sure which part of my reply you think is amenable to tax code changes
(and I don’t want to erect a strawman). If it’s just ad valorem taxes, you
might be able to compel every jurisdiction seeking to impose one to provide a
data feed to the feds. I’m not sure I think that’s Constitutional. You could
also block the deductibility of charitable giving and property taxes (and
likely hurt charities who are currently struggling; the Gates Foundation will
be fine; the local soup kitchen may suffer.) That still leaves Schedule C as
unsolvable, Schedule D as only partially (though increasingly) solvable, and
Schedule E as likely unsolvable [having many of the same complexities as
Schedule C and then some additional ones around basis, depreciation, and some
real estate specific taxes/expenses that are not necessarily reported to the
IRS today].

For the record, I don’t think I’m getting a great deal at all despite having a
quite complicated return.

------
dTal
A textbook example of the "Shirky Principle", to wit: Institutions will try to
preserve the problem to which they are the solution.

------
paul7986
Thanks for pointing this out. I have used Turbo Tax for the last five years or
so and won't be using them anymore.

Each year either the state or federal come back to me saying I didnt pay what
I fully owed them. Now with a pre-filled return from the fed I'd know.

Hopefully more TurboTax customers hear of this and boycott them as well!

~~~
cristianMD
I had the same problem. never using turbotax again

~~~
deanmoriarty
Same comment I posted above: did you ever track down the cause of the
mismatch?

~~~
paul7986
Answering here... I used Snaptax each year it was offered/promoted in the app.
That failed me and I had to pay back taxes.

The last year or two I just followed their arduous step by step process in
filing. That also failed me and I had to pay back taxes.

Now I see this.. the most efficient and best way US taxes could be filed yet
moneybags is holding us back from the most innovative/efficient system for
filing.

If the fed and state sent me my return saying I owe X... ok here’s that money
and I’m done til next year. No surprise IRS letters saying I owe back taxes.

~~~
deanmoriarty
If I were to receive communication from the IRS saying that I owe extra taxes,
I would compare my 1040 line by line until I can exactly track where I forgot
to include the amount the IRS is asking.

You are painting it as if they were black box calculations: they are not,
especially for "traditional" tax situations it's very feasible to follow the
forms (automatically filled by turbotax) and understand where your return
differs.

That being said, I agree with you that it would be nice if we were directly
"billed" by the IRS, but what I wanted to understand from you, and reason of
my question, was __exactly__ where TurboTax failed (e.g. exact line of the
form or "Oh, I forgot to include a 1099INT via SnapTax that was reported to
the IRS"), to get a better perspective of the specific issue.

I've been using TurboTax for 10 years with a fairly elaborate tax situation
(W2, multiple 1099INT, multiple 1099B, AMT tax for startup equity, AMT
credits, backdoor Roth IRA, ...) and I've always been able to get the number
right to the point that I never received any further bills from IRS (though I
might get audited in the future, obviously).

------
gigatexal
In Germany this year a law passed that while a bit vague mandates all banks by
the end of this year provide an external API to at least their current
accounts (checking accounts). This is PSD2. Imagine if the same could be done
in the states and the reaction of banks: I doubt American banks would like to
become dumb pipes to allow fintech firms to build value on top of them. I see
these tax preparers no different. And I hope one day a truly simple and free
tax return process actually takes hold.

~~~
dmitriid
Because of PSD2 some banks in Europe are finally investing in their own apps,
analytics etc. to create more value for customer, or invest in third-party
apps like Tink.

But yeah, in the US it would cause an uproar.

------
Meekro
The article doesn't show evidence that the lobbying was effective. The tax
prep industry wanted the Free File Act passed to prohibit the IRS from
implementing automatic tax filing. Senator Warren introduced a bill to require
the IRS to make automatic tax filing available.

"Neither Warren’s bill [the good act] nor the Free File Act [the evil act]
made it out of committee."

Sounds more like the do-nothing Congress at work.

------
piyush_soni
I always thought that's the case, because there's absolutely no reason it has
to be that complicated, or for them (goverment) not to do what companies like
TurboTax do themselves.

~~~
downrightmike
The IRS is already doing your taxes in the first place. That is how they know
when you didn't include a job etc. They run the numbers to check against.
There is no reason that this can't be the default for 95% of citizens. Want to
amend the numbers the IRS came up with? Just file your own taxes that year.

~~~
xyzzy123
There's an argument that: If the IRS does not show all it's cards up front,
people might disclose additional income the IRS were not aware of. If you
think of filing taxes like a negotiation, there's benefit to "not being the
first to name a number".

With that said, I am absolutely "pro" automatic filing.

~~~
labster
I doubt that the "pro" argument is worth the lost economic productivity of
taxpayers, or the time spent double-checking the average citizen's math. In
public policy you should always be aware that you are not optimizing for rule
compliance alone. You optimize for the healthiest society, which typically
contains a small amount of cheating. Random tax audits of the middle class
probably don't make enough income to justify their existence-- but they scare
enough people into compliance.

------
elektor
Are there any good resources for filing your own taxes?

I’ve always relied on family members and want to take a crack at it.

~~~
Cyph0n
FYI, Credit Karma is providing free online tax filing regardless of your
income.

In general, I think online tools become worth their cost when you are claiming
mutliple deductions and have income from various sources across more than one
state. Otherwise, the 1040EZ is where you should start.

~~~
idunno246
just remember that credit karma makes all it's money from selling you credit
cards... so by using them to fill out your taxes you give them all the info on
your income info to further "personalize" these ads

~~~
Cyph0n
Are you certain that Intuit and others aren’t doing the same thing? That is,
using your data to gain insights?

~~~
gst
After logging in to TurboTax (for the first time in a tax year) it asks you if
it can share your data with its parent company (Intuit). Declining works and
doesn't have any impact on TurboTax. However, based on how the UI for that
looks like it might not be obvious for some people that data-sharing is
optional.

------
kwhitefoot
Is there any other country that makes taxation so painful for ordinary
employees?

Her, Norway, and in the UK, most people never have to fill in anything.

------
shmerl
Intuit is really corrupt. Use someone else if for tax filing. There are better
alternatives.

~~~
gst
What are the better alternatives?

Last year I tried out all the major offerings, and TurboTax was the only one
that worked without any issues. TaxAct didn't even manage to fix their broken
electronic import of broker data until some point in March or April.

~~~
shmerl
I've used TaxAct, and didn't have any issues with import.

~~~
gst
They fixed the import in March or April. I tried importing earlier and just
got the error message that the import functionality is not available yet.
Here's a thread about that issue:
[https://www.bogleheads.org/forum/viewtopic.php?t=210511](https://www.bogleheads.org/forum/viewtopic.php?t=210511)

I understand that I could have waited a little bit longer with filing my
taxes. But the fact that key functionality is missing from a product doesn't
give a lot of confidence in that they have enough resources to handle their
job.

The only feature from TaxAct that I'm missing from the online version of
TurboTax is attaching PDF files for transactions. With TaxAct I can report
aggregated transaction data and just attach the PDF from my broker which is
then automatically included with the efiled return. With TurboTax that's not
possible yet and I'd need either list transactions individually (which is easy
due to electronic import) or send the itemized broker statement by mail.

------
nodesocket
Making taxes easier is something both sides of the aisle politically should
agree on. Doing taxes, especially being a small business owner is way too
complicated. While the Tax Cuts and Jobs Act of 2017 did make improvements,
especially for standard W2 employees, my taxes for 2018 are still going to
take me days to aggregate, complete, and file.

------
aynawn
Like most engineers I'm in favor of automation. Besides the already mentioned
open source software for tax filing, are there any tax filing companies that
do not lobby the government or contribute money against prefilling our forms?
If so I'd love to give them my business.

------
csomar
> Intuit spent more than $2 million lobbying last year, much of it spent on
> legislation that would permanently bar the government from offering
> taxpayers prefilled returns. H&R Block spent $3 million, also directing some
> of their efforts towards the bill.

Not only this is an example of a broken system but also shows how fragile it
is. You only need $5m to sabotage the advancement of the system and waste
millions of productive man hours.

------
anonymous5133
There is nothing stopping any private organization from making free tax filing
software.

~~~
saagarjha
Other than the fact that it costs time and money to write this software? And
as other commenters have mentioned, people have tried to do this in the spirit
of “open source”. It’s just that the problem it’s solving is something that
can be viewed as an artificial one.

~~~
Spivak
This I think is the core of the argument. Saying that the government should
compute your taxes for you is essentially arguing that the cost of tax prep
should be paid by the IRS/your taxes. Unless you believe that the IRS can do
it better/more efficiently than the current group of companies providing the
service then we might not really gain anything.

~~~
gst
That's a good point!

Most of the data already known to the IRS is available in an electronic format
anyway. I fire up TurboTax, electronically import my W-2, the tax statements
from my bank, etc. and I'm 90% done.

And the remaining items (various deductions, reporting my foreign bank
accounts, etc.) are things that the IRS itself probably also wouldn't know
right at the beginning of the year.

------
crisdux
Posts like this come around every year. There is a belief held by some that we
should avoid making taxes easier to file. We shouldn't just take the number
given to us by our government. Some believe filing a tax return should be an
explicit process so we are conscious of government burden.

Also, a more practical reason. The government can't tell you all of the
deductions you are entitled to.

~~~
maxxxxx
The whole reasoning behind not prefilling makes no sense. The government tells
you what it knows and you can then amned the return in whatever way you wish,
e.g. deductions. There really is nothing negative for the tax payer as far as
I can tell.

~~~
BeetleB
>The whole reasoning behind not prefilling makes no sense.

While I don't support the reasoning in the GP, it does make sense, and in my
experience, is largely true. Many people I interact with (coworkers, etc) have
very little understanding of the tax system - precisely because they don't do
their own taxes (they either pay a very expensive person, or use something
like TurboTax). If the government gave them a prefilled form, I fully expect
that most people will not understand taxes.

The reason I don't put much weight in the argument is that their feared
scenario _is already the current reality_. Right now there is a burden to do
taxes, and yet most people still have almost no understanding of it. They just
pay someone to do it for them.

~~~
dmitriid
I live in Sweden now, and I understand my taxes way better now precisely
because I'm given a pre-filled form I can correct if I wish to.

Because I clearly see: ah, this is my income, it goes here, and I pay this
much; ah, this is my additional income, it goes here; ah, these are the
deductions I'm eligible for and pre-filled etc.

I needed to correct the form only once to account for some stocks that were
not reported for some reason. And I was warned about that by the bank handling
my stocks. All I needed to do was to log in to the tax agency, go to my tax
form, click on the "stocks and funds" tab and fill in the missing info.

