TurboTax Creators Crush Program Meant to Simplify Tax Day

Federal lobbying by tax companies and organizations — Source: Maplight

America has the technology to make Tax Day simple. The IRS already collects financial information on what citizens earn throughout the year and can precisely estimate how much they owe automatically. All the IRS needs to do is send citizens the estimate, have them add in any optional deductions, and file it away with the click of a button.

In fact, when California piloted this exact idea in 2005, ReadyReturn, citizens reported finishing their taxes in less than 30 minutes. Ninety-seven percent of those who used ReadyReturn said they would happily use it again.

“THIS IS THE BEST SERVICE I HAVE EVER SEEN BY THE GOVERNMENT,” wrote one enthusiastic user in caps lock, according to California’s Franchise Tax Board.

Unfortunately, Intuit, the maker of TurboTax, has banded with other tax-filing corporations to form a multi-million dollar lobbying machine to halt the government from rolling the technology out nation-wide. In 2010, the LA Times reported that Intuit spent $1,250,000 lobbying the state, at least in part to kill the pilot and prevent its spread throughout the country.

“People in other states who had been interested in it started saying, ‘We just don’t want to pick a fight with Intuit,’ ” Stanford Law School tax Joseph Bankman expert told the New York Times’ Farhad Manjoo.

Of course, opposition to automatic tax filing is not entirely from the private sector. Tax companies have joined libertarian-leaning conservative think tanks who believe the government should not be involved in the tax-filing process at all. Perhaps it is a legitimate concern, but a few countries in Northern Europe, including Sweden and Denmark, have similar systems without any major issues (at least issues that have been reported). For better or worse, the tax is already involved in the tax process.

If citizens don’t want to use the IRS’s system, they could always choose TurboTax or any other private software company. But, at the moment, lobbying is taking that choice away from them.

*The Ferenstein wire is a syndicated news service. Publishing partners may edit posts. For inquires, email the editor at greg at greg ferenstein dot com.