Just in time for Tax Day, the for-profit tax preparation industry is about to realize one of its long-sought goals. Congressional Democrats and Republicans are moving to permanently bar the IRS from creating a free electronic tax filing system. — www.propublica.org/…
Several countries have systems that automatically calculate tax liability for most tax-payers and send it automatically to the tax-payer. That reduces tax preparation time and expense. It also reduces the incidence of fraud, we’ve seen numerous instances in the US where identity-thieves have filed fraudulent returns with the IRS and collected refunds. The victim of ID theft is left holding the bag.
In one of its provisions, the bill makes it illegal for the IRS to create its own online system of tax filing. Companies like Intuit, the maker of TurboTax, and H&R Block have lobbied for years to block the IRS from creating such a system. If the tax agency created its own program, which would be similar to programs other developed countries have, it would threaten the industry’s profits. […]Experts have long argued that the IRS has failed to make filing taxes as easy and cheap as it could be. In addition to a free system of online tax preparation and filing, the agency could provide people with pre-filled tax forms containing the salary data the agency already has, as ProPublica first reported on in 2013. — www.propublica.org/…
Of course, this is exactly what we should expect profit-maximizing enterprises to do. They will marshal all resources to protect revenue streams. This includes paying an army of lobbyists to craft an influence legislation that prevents simpler, public solutions from being offered. For decades, we have seen Republican efforts to privatize all manner of public services. This includes schools, roads, even the army (in the form of military contractors).
The tax-prep industry does have a free-filing arrangement with the IRS, aimed at low-income filers. However, they tend to use this service as a way to up-sell services like “tax refund loans” laden with fees and interest.
All of us have an interest in simpler mechanisms for filing taxes. But the benefits to each of us is small. Meanwhile, the tax-preparation industry has a huge concentrated interest in preserving its revenue stream. Collective action by millions of tax-payers is required to push back the efforts of the tax-preparation industry. Yet, these diffuse interests are difficult to organize for a variety of reasons. Each of us has so little at stake that most just go along with the fees tax-prep companies offer.
Tax prep is a relatively small industry. Health insurance is much larger, and as the fight begins in earnest for Medicare For All you can expect the health insurance industry to use all its resources to undermine single-payer. A simple, universal, single-payer solution that covers all Americans is best. If we have anything more complex than that, say nothing more than a public option, the incentives and revenue stream will exist for the health-insurance industry to continue lobbying Congress for decades, chipping away at the public option in ways small and large. Advocates for incremental change in healthcare need to demonstrate why they believe a future Republican administration or Congress won’t try to undermine incremental progress by using the complexity of the solution against it. The insurance industry will seek to kill it with a thousand cuts, and we will never be able to parry each of them because most voters won’t have time to engage in fights over details.
A simple, universal, single-payer program like Medicare For All is simple to understand. And we know from our experience with other socialized programs like Social Security and Medicare that voters jealously guard these programs and pay attention to any perceived attacks on them.