Elizabeth Warren Is Right: It’s Time to Reform Tax Preparation

Rule of thumb: when you're in doubt on an issue, Elizabeth Warren is always right. Do what she says.

Rule of thumb: when you’re in doubt on an issue, Elizabeth Warren is always right. Do what she says.

Michael Arria at Alternet says that Senator Elizabeth Warren introduced a bill called the Tax Filing Simplification Act, which would “direct the Internal Revenue Service to create a free tax preparation and filing service.”

This is an absolute no-brainer. President Ronald Reagan proposed a similar, “totally voluntary” system in which Americans would “automatically receive your refund or a letter explaining any additional tax you owe.” And since the 1980s, computers have only made it easier to track and tabulate what people owe in taxes. And for those who fear dirty tricks from the IRS, this would be a system with plenty of checks and balances: most importantly, if you disputed the IRS’s return, you could simply do your own taxes and file them, the way you do now. Nothing would change for you. Automatic tax filing makes so much sense! Who would possibly argue against making tax preparation easier?

Well, that’d be Intuit, the company that owns TurboTax. Arria says they’ve put $13 million into lobbying against automatic tax preparation legislation. In 2014, Jordan Weissmann at Slate pointed out the sleazy ways that Intuit fights tax prep reform. Their lobbyists trick advocates for poor Americans into believing that automatic tax legislation would somehow harm the poor. They claim that the institution of tax prep reform would mean the end of free tax preparation services for low-income Americans, which is patently false.

If you haven’t already, I’d urge you to read Tom Heberlein’s great article on Vox about Sweden and taxes. It’s packed with all sorts of interesting information about why Sweden isn’t the socialist hellhole that conservatives would have you believe. But the part that’s most relevant to our interests for this post is this description of what tax preparation is like:

In Sweden, the four-page tax form comes in the mail already filled out. On a Saturday morning, Betty and I take our coffee to the couch and review the forms. Seeing they look reasonable, as they always do, we “sign” with a text from our phones. In 15 minutes we are done. We don’t have to hire a tax consultant, and we avoid fights about whether a print cartridge bought at the drugstore is a business expense or not.

To hear certain politicians tell it, you’d think that bureaucracy is the worst thing ever. Conservative politicians hate paperwork, and all the seemingly endless delays that paperwork causes. With tax preparation, the government has outsourced millions of hours of pointless paperwork to the American people, turning us all into bureaucrats. The American people spend an average of $200 a year on tax preparation, and we spend an average of 13 hours getting all those forms filled out. We have the capacity to automate this process, saving Americans money and time every year, and we have the capacity to do so in such a way that Americans who still want to fill out their own taxes are still allowed to do so. Really, why wouldn’t we do this?

Paul Constant

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