How the Maker of TurboTax Fought Free, Simple Tax Filing (2013)

If you aren't relying on the bonus for other things it's a good option. It means the bonus sort of 'disappears' psychologically, but then if you have a mortgage it probably just gets swallowed up by that anyway.

Your fear -- that by removing the hassle of tax preparation, people will dwell in blissful ignorance of their tax burden and the government will jack up tax rates -- is not borne out by my experiences in countries where return-free tax filing is the norm.

I'm not trying to rag on being American. But I've got close ties with the U.S. so often I compare what a life event would have been like, had I been a typical U.S. family of my economic class.

> _the_majority_ of the tax payers file no tax returns at all.

I think there's a confusion here. Maybe several. First of all, in US filers and payers are not the same, as you may pay federal taxes (e.g. by deductions) and still not have to file (e.g. low income). Second, there are state taxes, which most countries don't have. Third, many countries just don't have the tax return as a thing - if you got something deducted, it's gone, good luck getting anything back. In US, you get stuff back for mortgage interest, state taxes, property taxes, charity donations, etc. etc. - you can get quite a decent amount of money back. I think it's better than just sending it over and getting nothing back, even if it could mean a bit more work.

FYI - At various stages of my life I've filed in New Zealand, Australia, UK, Switzerland and the US (California).

I can't generalize to all persons, but I do have a decent spread of countries in my own experience - and the US was by some serious margin the most complicated.

But that's because I feel that corporations should be mostly about collective ownership and protection from direct liability. It shouldn't be a carte blance.

Could you list any of these websites or PM me please?

Politicians protecting an industry through action or inaction, no matter if its lobbyists or others suggesting that they do, isn't the free market.

Our current system is the opposite of a free market. You can think of paying your monthly rent payment, your banking, etc. as (mostly) free market.

You can think of taxes, DMV, healthcare, etc. as not free market.

it's not the free market when you lobby the GOVERNMENT to do what you want it to do

For example, in France if you have more than 3(?) kids, you get 70% off all train rides. That required this whole process to get set up (I imagine it was more through regulation than law but you at least need the budget to the SNCF).

The easiest way to get an equivalent thing through the US legal bureaucracy would be to do: "If you send us receipts of your train tickets and have over 3 kids, we'll deduct them from your taxes at 70%".

It "pays for itself" in the sense that the government doesn't have to give money to Amtrack, just give back money that was just given to it by the taxpayer. It doesn't require intergovernmental coordination, just the IRS. It can be passed through the huge budget process. Much easier than many other regulatory schemes.

After all, if you can afford a mortgage, you are clearly well-off, so you should be taxed more.

(And there is a good point: Mortgage deductions distort the housing market. But rent subsidies distort it even more.)

In the US, you get a deduction for interest on your primary residence. In Australia, you cannot do that, but instead, you get to make a deduction of interest in any investment property you own against your personal income! Plus investment properties have a lower capital gains tax rate than other asset classes.

The tax laws in this country are fucked.

I absolutely can,there are far too many voters who are now upset that obamacare & the aca are the same thing and they're going to lose their health insurance.

A tax form is essentially a giant function, but one with tons of inputs. It can only be automated once all the inputs are known (essentially, that's the job of tax software). The only person that has all of those inputs is you, so you're forced to buy TurboTax to be able to reasonably input and evaluate taxes.

If you're thinking that all these inputs could ever be tracked by the federal government in a giant database, I still think it's crazy: you'd need a database for student loan interest paid, which every loan organization reports to, for charitable donations, for stock purchases, for stock sales, for dependents, etc. (I don't even know how you'd begin to track dependents, aside from how we do it now: manually.)

Regulatory capture is a problem, but I think you'd have much worse problems regulating complex industries without talking to them.

For example, the FCC doesn't really exist to protect consumers from anyone, but to be the "traffic cop" protecting manufacturers and operators of radio equipment from each other. I have a hard time believing the FCC could make coherent rules and spectrum allocations without the affected parties being able to raise issues to it.

Ditto, for example, airlines and pilot unions being unable to raise concerns to the FAA.

Ideally, lobbying is a way to say:

"Hey! We do this thing you want to ban [guns | amateur radio | general aviation | take your pick], and here's why, and by the way, we vote."

"Hey! We have this serious problem in our industry, one of our peers is behaving badly, can we do something about this?" Net neutrality regulation, for example, comes from companies like Netflix advocating for their interests against companies like Comcast.

You can publish this on the web all you want, but Congressmen aren't going to read the whole internet every day. We need some kind of "push" mechanism to get issues in front of them.

Obviously there are many very serious failure modes, particularly when one side of an issue has a disproportionate budget compared to the other. But there are also important use-cases.

Lobbying is not so simple an evil. Lobbying backed by campaign contributions, on the other hand, is much more simply bribery.

I was involved with a startup in the past several years where one of the people in the startup had a relative that was an official in a federal bureaucracy. The startup was in an area which was tangential to the regulatory authority of that bureaucracy, but relied on third parties which definitely were under that authority. The relative, it was reported, made it clear that if we thought that the third parties were acting in a less than compliant fashion towards us, thus hindering us, we should let them know so they could make it right. I expect our colleague made a bigger deal of how connected they were with us than may have been warranted, but the implication was clear: I'm connected and can pull strings if someone gets in our way.

Now of course a company reporting a regulatory problem they're having with another company isn't underhanded, no matter the connections... but I have a hunch that having the contact within the establishment would have helped that claim move up in the line or be taken more seriously than a claim coming in without the proper introductions (if you will). I don't expect the relative gave our colleague the yellow-pages number (yeah, I'm old) to make such a report, just in case, if you know what I mean.

But the key here is that this didn't even involve a politician. Rent-seeking in a highly regulated environment doesn't even have to come through the politicians. It can be made through the appointed and career officials that create and enforce the regulations mandated by legislators. This is especially true today when so much of law is simply and vaguely mandating the creation of categories of regulation rather than actually specifying what is law and what it is not.

1) You make corporate political donations illegal, but that's pretty specific to a single class of interest group. What about those that regularly act in opposition to corporate interests, such as unions, environment groups, consumer groups? Your point 2 seems to imply they would be included, but why are you specific here as to the prohibition? Or do you propose to treat different association of people preferentially and on what basis?

2) Again you're specific to certain kinds of interest groups but this time leave out corporations when granting permissions. Again, do you have favored classes of associations of people?

3) How do you police such a thing? How do police communication through surrogates or the thousand other ways creative individuals seeking rent or hoping for regulatory capture will bypass "communications with the outside"? Isn't this the sort of creative thinking that caused problems with McCain/Feingold and the like? If you accept greater regulatory involvement from the state, the greater the rewards to those that can gain the ear of the regulator. Risk/reward continues to skew to creative evasion.

4) What makes a neutral group neutral, and, in some way, can there ever be such a thing? Don't get me wrong, I don't know of any instances of the CBO outright gaming information, or releases, etc. for clearly political purposes (nor have I studied the question). However, CBO Director is still appointed by the politicians. What if one political interest group captures congress and decides to politicize the CBO since they can't get sufficient outside support for their position under your proposal? Do you politicians like Trump would do such a thing? Even if we put those sort of hand-wavy humans-are-humans arguments aside, elected politicians are ultimately beholden to their constituents regardless of the CBO position; CBO says we spend recklessly on the military (or if then that sort of thing) a big military district politician will very much ignore that advice. I expect your funds for increased staffers results simply in increased "independent" research supporting whatever position a given politician wants to hold for whatever reason.

Unfortunately, I still think I'm on the right track and that just about any solution that doesn't somehow require the political class, their staff, and families to be quarantined into some forced monasterial existence cutoff from the outside world, seems corruptible.

But when you look at the money involved, you can see why Intuit is moving so slowly and is willing to continue to spend on its own data center. $40m/yr may sound like a lot of money, but when your product pulls in $3b/yr, it's a rounding error. And the data centers aren't dedicated to TurboTax...Quickbooks and a few other products run there too. And I have to say that, for certain services, I think you get a lot of piece of mind from not sharing and having your own data center. Take, for example, Intuit's service for scraping data from financial institutions (FICDS). It powers Mint, Quickbooks and TurboTax and is required to store login credentials for people's banks, retirement accounts, brokerage accounts and such. Needless to say, the security of such a service is paramount and there's no way that I'd ever entrust my banking credentials to any service hosted in the cloud. You just can't get the same level of security you can get when you've got physical control over your hosting.

The problem is more about marketing - every online system claims to have strong security, and users have no way to test those claims. Users regularly hear reports of data breaches so they become cynical about security do not trust any online system.

Curiously, the efforts by the EU to ban end-to-end encryption [0] may lead to an easier marketing pitch in the US: "Security So Strong It's Banned In Europe!"

You make a good point about liability. Any data breach has a big impact on the reputation of online system, but particularly so with a company that claims to be stronger than the rest. There may also be extra litigation in such cases.

[0] https://techcrunch.com/2016/08/24/encryption-under-fire-in-e...

Because, ultimately, you and I wind up paying for it.

But your comment about identity theft, that's part of the "file it before someone else does" aspect. Not necessarily that Intuit is getting broken into, but the rampant identity theft that seems to be common and even acceptable in today's day and age is making it a lot easier to file someone else's taxes for them and then make off with the money. And hackers will always go for the easiest target.

Do you mean to suggest that malware unrelated entirely to the tax software has an impact on its security? I mean... you'd have the whole host machine compromised - no need to "exploit" the tax software at all, you can get that and a lot more than just taxes off there - but it's still hard to do in true bulk. Much worse than a simple database dump and would only affect people who browsed to your site during the time of the exploit. Much more limited than anyone who used a given service.

Additionally, full browser exploits these days are very rare and extremely valuable though. I doubt you'd see one wasted on such a purpose - at least, one that still works if you keep reasonably up to date.

Taxes get complicated REALLY quickly as you move beyond single W2 earnings.

With stocks, capital gains, dividends, write-offs, company you need to handle these manually and the government doesn't know your write-offs and all sources of income.

The IRS cannot correctly calculate what the typical small business owner owes, what the typical real estate investor owes, what the typical upper middle class family owes, because they don't have all the information available to them.

But someone still has pay their student loans :)

i don't think this is meant in an interpersonal, malicious sense.

Why would an HMO want you to be sick? They spend most of their time not covering medical claims. In fact, they'd make more money if you never used your insurance.

And your claim that people are generally good makes no sense. Corporations don't make decisions, people do.

I would say corporations are generally amoral, not evil. This is why regulations for corporations are so important; they guarantee an appropriate way to make profit without say polluting all the drinking water in the country.

In the case of the prisons and medical insurance, the profit motive is directly in conflict with the actual positive desired outcome. In cases like this it's clear that the government should be the service provider, where the desire is to reduce costs, not see them increase for profit.

Doctor want you to be sick? - no. Health Execs - yes.

There are doctors who push these things that are of questionable medical efficacy, but definitely put money in their pockets.

Before I could see a doctor, I had to pay cash. I had to pay again to do the blood tests ordered by the doctor.

Ah, in this scenario it indeed wouldn't matter - but this scenario means that there's a government-run clone of TurboTax. I doubt the government will do better job and be cheaper than Intuit, which have a lot of experience and knowledge in doing this.

It's not a very large percentage of returns (around 6.5%) if you credit them with the ability to file all 1040EZs (they probably can't auto-file all the 1040EZs but can probably do most of them).

"Doing your taxes" mostly involves showing you their calculations. It's almost a freedom of information issue.

Compared to the cost of private prep and filing, it basically does seem free (gratis). And even if you choose to dispute or file independently, such a program could save each filer time and money by providing a base document; you would just provide diffs.

Why would we have to do that? The reality is that we already have an income tax, and we can definitely simply its filing process without changing its current rates.

So far this sounds like a standard libertarian tactic where you try to turn every debate on political policy specifics into a debate around whether government should be doing anything at all. It's not any different than internet marxists who, given a topic that revolves around business, will always reply "well X should just handled by government anyway FULL COMMUNISM NOW". It's completely unproductive and borderline trolling.

https://www.irs.gov/businesses/small-businesses-self-employe...

Then how about the fact that offerings are only applicable if you're filing 1040EZ. For example, if you so much as claim student loan interest or itemize deductions, that's automatically 1040A at a minimim and disqualifies you from the free offering.

Then there's actually getting your tax return. If you don't provide an ACH bank account and routing number, you'll get charged to have your return credited. You'll also be solicited to purchase crap like bonds, insurance, or donate to some charity. Another common tactic to nibble away at your return is to offer to get paid by the service provider (as opposed to the IRS) for an upfront cost. I won't even touch on the dark patterns employed in this process.

To e-file, you'll also need to know your prior year's AGI or PIN. This is important when coupled with a model which tries to get people to "push and forget" without keeping any independent documentation. There's no doubt in my mind that many people go back to same provider not because of superior service or competitive offerings, but because their information from the previous year will automatically be pulled to enable e-filing. If you weren't diligent enough to keep good records and want to try a different provider, you'll be charged for a digital copy of your previous years' filings.

Now go do your own homework.

I refinanced my mortgage and paid points for the refi. Those points have to be amortized over the life of the loan (which the IRS knows the law, but doesn't know that I paid points on the loan).

I just refinanced that mortgage again, meaning next year that I'll write off the rest of the points for the previous loan as a 2017 expense.

There's plenty that the IRS doesn't know until you tell them.

My parents were audited by the IRS for 5 years straight. They were convinced that my father "was hiding income through losses in your wife's business." My father was a surgeon; my mom ran an antiques shop. The IRS auditors setup camp in our living room for a month going on five years. That quote was straight from the lead auditor's mouth. I remember it very starkly as a young teenager. (I said hi to them each morning on my way to and from school) It really peeved me that they viewed my mom (the woman) as a failure and only a place for my father (the man) to "hide income."

Every year they came to the same results. My mom's bookkeeping was a mess, but she always overpaid her taxes and we got a refund at the end of the audit. The best kicker? My mom made more than my dad. The IRS thinks women should make less than men (by word and by audit).

As for the historic reasons of this thinking, see my reply below.

If married filing jointly isn't sexist, why are the income brackets different? Even for married filing separately, why are they different than for single people? Sit and think about it for a minute.

Could you explain this? I don't see where MFJ assumes women make no money.

> if you're a dual income bunch of shmucks, that your wife must make 80%

Also don't see how it means that. Could you explain your argument in a bit more detail?

Also, charitable donations have weird constraints. My church would like to end deportations of undocumented immigrants based on our reading of Leviticus 19:34, and the most effective way to do that would have been to campaign against certain presidential candidates. We couldn't do that. Another church wanted to end civil recognition of same-sex marriage based on their reading of Leviticus 18:22, but that involved campaigning for a ballot initiative, and they were allowed to do that to the tune of millions of dollars.

I'm obviously not inclined to say "Please start taxing my church," but the fact that we can participate essentially by chance in some political activities and not others doesn't seem like it would exist in a "free society".