FTC Is Investigating Intuit over TurboTax Practices
propublica.org
propublica.org
Last year, I, at every step of the process, declined the expensive options that say "maybe you'll save more money if you permanently switch into this paid mode". Yet after a couple hours of filling out forms, they said at the end that it wasn't possible to file using the free version, and that I would have to pay a couple hundred dollars. That ticked me off. They have all of the information required to figure this out much earlier in the process (income), yet they continue to allow you to pick the free tier up until the very end where the tedium of starting over with a different service is too high. Fuck em.
Their UI is very nice though, especially for guiding people through a process that they almost intrinsically hate.
Which is evidence towards the idea that if they wanted to make choosing the free or paid versions easy and obvious which was best for each person, they could.
Edit, did some searching and it's completely free if you're able to file via a 1040EZ, which I'm pretty sure was my method. I don't know too much about tax filing though, so maybe I'm confused about things (I mean, I'm definitely confused about tax things overall, haha). I'm 100% positive TurboTax didn't take any additional money from my refund though.
It also seems like most software engineers won't qualify for free file anyway, because it has an income limit of $69,000 a year as far as I can tell.
One thing I genuinely wonder, at what point will digital/web-based services become the default for handling information by the government and every other large institution? Will it ever happen in my lifetime? Why are we still having to pay for 3rd party software to fill out physical forms? Even docusign, while it has become very prevalent for most contracts these days and is very convenient, is still requiring that you fill out a scanned image of a physical piece of paper, instead of just making the contracts web-based. Why?? Why doesn't the IRS just have a web app like turbotax for everyone to file taxes through? And if the answer is that the tax code is way too complicated that it's prohibitively expensive for the government to build a site as comprehensive as Turbotax, then fix it!
"Fix it" only makes sense for bugs. It doesn't make sense for features. TurboTax, accounting firms, entire professional organizations (CPAs) live off of the fact that the tax code is hard to understand. Maybe it needs to be difficult to properly align incentives. Maybe it doesn't. But it's absolutely intentional.
Fixing the US health care system would probably also destroy quite a few jobs in health insurance and medical billing.
It turns out overcomplicated and wasteful systems also make jobs. So even if fixing the system would be better for society in the long run, all the lobbyists have to say is "doing that will destroy X jobs" and the politicians will be scared into inaction.
My state had developed a free filing system and had successfully tested it with selected tax filers for a couple of years. It was due to go live the following year for all state tax filers. Intuit and others successfully lobbied the state legislature and newly elected governor to ban the state from moving forward with deploying a solution.
> Under a longstanding agreement with the IRS called Free File, Intuit and other tax prep companies promised to offer free products to most Americans; in exchange, the IRS agreed not to create a free government tax filing option that would compete with the industry.
Because of great lobbying by Intuit. This planet money episode goes into the details: https://www.npr.org/sections/money/2019/04/03/709656642/epis...
Same answer of course.
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."
I sent in X amount. We were good.
I had one of those, and it specifically identified the error. When I went and checked the paperwork, the figure in the letter was precisely correct.
Because capitalism blah blah. The government isn't supposed to compete with businesses.
Another completely free offering is freetax.com. I used them for a few years, and while not quite as easy to use, it works well.
Note that both of these free offerings include free state tax filing and have no income limits or up sells.
Then they dropped the forms method. Now they look like TurboTax.
I remember that filling out paper forms back in the day - especially before small electronic calculators - was a real pain. Especially when you made a change and had to roll everything up again!
That's why Intuit bought them. Don't expect it to stick around. https://techcrunch.com/2020/02/24/intuit-credit-karma/
I've used freetaxusa.com for the past couple of years. They don't do the same level of hand-holding that TurboTax and TaxAct are famous for. So what I have done in the past is fill out the tricky parts in TaxAct using a free account and if the number look right, copy them into FreeTaxUSA.
I used to use TaxAct until their prices, tiers, and upsells got to be flat-out usurious. FreeTaxUSA federal filing is free but you have to pay a small (around $15) fee if you want to e-file for state. _That_ is a price I can live with. I don't mind paying it at all if it means escaping the TurboTax and TaxAct traps.
Plus, if something wonky does happen, they know what the hell to do.
So last year, I just filled out the forms myself. For me at least, it wasn't actually all that much harder. Sure the UI isn't as nice, and the questions are a little bit harder to understand, but when it comes down to it, I need to fill in the same information either way.
I don't want this to turn into a commercial for any particular provider but let's say I've made 6 figures and paid under $20 to file for multiple years now.
How intuit can get away with charging $200 or whatever on the sly and almost nobody knowing about the multiple competitors who run relatively squeaky clean businesses at way more affordable prices should belong as a test-case in every business and marketing book, it's really something.
They're actually far easier to use as well since they aren't employing dozens of sneaky tactics and evil design patterns to try to slide you into the "deluxe pro extreme package" or whatever.
I would be shocked if intuit didn't constantly a/b test how to trick people - that's kinda their business model in the same way that blockbuster could only stay in business with late fees.
"Why isn't the IRS giving people a way to prepopulate and file taxes for free with the financial info that the IRS already has on everyone?"
Well, I suppose it's just a product of the corporate interests and congressional deadlock that prevents us from doing a multitude of things right now. Other countries manage to do this just fine.
edit: save_ferris linked to an excellent story below: https://www.propublica.org/article/filing-taxes-could-be-fre...
- why does a judge in a lawsuit get to make the decision here? I.e. why is this kind of law not debated as part of public discourse and a decision made through a democratic path?
- given this benefits a tiny fraction of people in the US, why doesn’t a particular party/politician take a stand on it as a policy to win a chunk of votes?
For the first point, a UK former judge spoke extensively on the topic of the courts overstepping their remit as part of the 2019 Reith lectures: https://www.bbc.co.uk/programmes/m00057m8
Because national politics in the U.S. in 2020 is big business. It's not about votes or public policy, it's about redirecting funds to party coffers, paid consultants, and ideally the office-holders themselves (or at least their advisors, family and friends).
What judge?
The FTC investigation mentioned in the article may end with the FTC filing a lawsuit, but that would be about whether Intuit deceived taxpayers (by directing them towards a paid version even if they were eligible to file for free), not whether the Free File program should exist or whether the IRS should develop its own software.
The Free File program as it currently exists is the result of executive action, a “memorandum of understanding” between the IRS and tax software companies. [1] Last year there was a bill in Congress that would have codified it into law, but that part of the bill was dropped due to concerns it would permanently bar the IRS from developing its own software. ProPublica’s reporting about Intuit’s obfuscation played a part in that outcome. So there was a “public discourse” of sorts, although it’s a pretty obscure issue.
Also:
> given this benefits a tiny fraction of people in the US
Keep in mind that a large fraction of Congress follows the ideology that, broadly speaking, the government can’t do anything right and it’s best to outsource as much as possible to private companies. Intuit’s lobbying was obviously a major factor, but they were playing for a receptive audience. Congress is also not particularly tech-savvy, by and large.
[1] https://www.journalofaccountancy.com/news/2019/jun/congress-...
A similar bill was passed in 2019: https://www.propublica.org/article/congress-is-about-to-ban-...
If you have an unusual tax situation you have to do it still, but 99% of people just have 1 job with 1 salary.
We (Americans) still, in general, don't need to file taxes like we do, though. The US has tons of paperwork: Norway sends me an electronic document to look over and unless I want to file, I owe money, or something is wrong, I don't have to do anything. They will automatically pay out refunds. Sure, I still "file taxes", but realistically, I just look over some electronic paperwork.
This method of "filing taxes" makes it easy to comply with filing and I'm guessing it makes collection rates better with less work.
This is by design, in the US the anti-tax crowd wants filing taxes to be harder and more inefficient. It serves their purposes. And they are a powerful lobbying group.
Not including sales tax actually demonstrates more clearly the result of anti-tax sentiment, though I'm still not convinced it is lobbying itself that does this. Instead, the same sort of folks go into politics and directly get involved in making laws about this sort of thing. Of course, this is built on a long-standing anti-tax sentiment in the US that folks tie into an "origin story" of sorts (taxation from England minimally helped spur the revolution).
And they do have a point: The more of a pain a tax is for the taxpaper, the more they think about disliking taxes. But it doesn't realistically go that far: We do all sorts of things to make paying taxes easier for folks. Gasoline prices include all taxes (from federal down to sales tax). Payroll taxes are deducted from your paycheck. Stores collect sales tax instead of you sending it to the government. Prepaid phone plans still have taxes included and renters don't pay for property tax directly.And so on.
> Doing taxes keeps citizens aware of the tax burden imposed upon them by the government.
https://theweek.com/articles/825902/how-republicans-trapped-...
I'm 40 and have never had to do a tax return, I get a summary at the end of the year and a breakdown on each pay slip and that's pretty much it.
It's one of those silent services that government does so well it pretty much disappears into the background.
Only in exceptional circumstances does a normal waged employee have to have anything to do with taxes.
Until I was self-employed in my 30s I never filled out a tax form. Some people never do.
You're being swindled in the US.
Norway just asks upfront. Yes, I have to try to predict what I'm going to make that year, but yes, I can update it if I change jobs. Marriage, children, etc all gets factored in. If I don't change things, I think it stays the same. The vast majority of folks don't have to self-assess like Americans do, and thinking that we need to do it more seems to be more leaning towards an attitude of Exceptionalism - which seems to be just as much an excuse as it is something folks have pride in.
We're being swindled in the US by a lot of things. Tax prep as you mentioned, but also health care guaranteed sick pay, fair minimum wages, etc...
But half the country is actually in favor of maintaining all this.
Even the information they do have is not all available on your account transcript until mid/late summer.
With some substantial investments they could probably generate pre-filled forms for the simple cases by late March. I’d support that, even though it wouldn’t help me at all.
https://fr.wikipedia.org/wiki/T%C3%A9l%C3%A9d%C3%A9claration...
In the past years banks and companies give tax related information to the tax authority so for lots of people the online tax form is already 100% filled and correct.
For the past year tax filling I just had to add to the web form renting income, tax deducible donations, and that was it.
For the tax system it was developped with lots of free software, and support purchased to French IT companies. It was hosted on a big (for the time) linux server farm.
Here are a few interviews and slides by the director of this project, unfortunately in French (didn't check automated translations, might work):
https://www.toolinux.com/article/jean-marie-lapeyre-copernic...
http://www.supelec-rennes.fr/sic/JOURNEES/05_10_20/lapeyre.p...
The free software community in France was very happy to see one major ministry doing this kind of projects at the time.
Reasons you might need to interact with the income tax system here:
1. You have significant (>€5000) non-employment income.
2. You worked for less than 12 months and are claiming your tax refund.
3. You disagree with the government assessed tax reciept (which is based on what your employer fills in).
For 90% of people then, they don't need to interact with it. Their employer reports their income, deducts an appropriate amount of taxes, and sends it to the government. End of process.
How does your employer know what "the appropriate amount of taxes" is? In the US I have always had trouble setting this to where I'm not at least 5% off in one direction or the other, and I know more than my employer about what my withholding rate should be.
Tax deduction at source is a common concept in a lot of countries, incl. dissimilar ones like India and the NL, where I have both worked. Super convenient and frictionless for the vast majority of employees.
That's my question, how does an employer or taxing authority know what that amount is? My employer doesn't know my withholding status until I tell them via a W-4, and that doesn't take into account how the appropriate amount to withhold may change due to my spouse's income. Is the taxation scheme just different in most European jurisdictions?
Edit: corrected a brain fart (see below)
You don't send the W-4 into the IRS; you give it to your payroll department.
(Taxable income in each bracket * tax rate for each bracket) - (annual tax credits / number of annual payments from your employer).
If you're married and want to be taxed as a couple, you simply send the documentation as such to the tax office after your wedding.
You can tell your employer and they'll try adjust appropriately in payroll, or you can not tell them and the government will send you a tax refund at the end of the year for the partner with the higher tax bracket. It's optional to be taxed as a couple, so presumably you're opting into it because it will reduce your tax obligations, so there shouldn't be a case where you have to pay more because you're married. The same applies for tax credits that you don't want to tell your employer about.
So that's one difference. I have never sent the IRS proof of our marriage, and they have never requested it. I simply updated my wife's name and our filing status in the year we got married.
> (Taxable income in each bracket * tax rate for each bracket) - (annual tax credits / number of annual payments from your employer)
> You can tell your employer and they'll try adjust appropriately in payroll, or you can not tell them and the government will send you a tax refund at the end of the year for the partner with the higher tax bracket.
I'm confused by this. Are tax brackets always individual in Ireland? The reason I need to specify additional withholding is because each of our income withholding calculations starts from the lowest bracket and tops out at a bracket below our actual top marginal rate, which is determined by adding our incomes.
The tax rates for a single person will be:
30000 @ 20%
remainder @ 50%
You earn 40000. Your spouse earns 20000.
Example 1:
You are taxed seperately. Your employer takes 11000 of your gross and sends it to the government. Your spouse's employer takes 4000 of their gross and sends it to the government. Your total tax payment is 15000.
Example 2:
You opt in to join taxation. Your employers have no idea you are married, but the tax office does (because you sent them documentation to opt in for joint taxation). The government then assesses your tax as a couple and realises your joint income falls into the lower tax bound, and your tax should only be 12000, but you paid 15000. You get a refund of 3000.
Example 3:
Same as above, but you tell your employer. You can add up to min(26300, spouse's income) to your standard rate tax bracket. Your spouse needs to inform their employer to deduct the same from theirs. You tell your employer you are transferring 10000 from your spouse's tax bracket to yours.
Your employer's payroll now works out your tax as 40000 * 20% = 8000. Your spouse's employer works out their tax as 20000 * 20% = 4000. You pay 12000 exactly.
Example 4:
Same as above, but only one of you informed your employer, you committed tax fraud, your employer filled out the form wrong, whatever. You get a tax bill for however much under your tax liability as a pair that your combined tax payments were.
Example 5:
Your income is 25000, your spouse's income is 25000. Regardless of whether you are assessed individually or seperately, your tax is 10000. Your employers deduct 5000 each.
Of course, there's various tax credits you can apply for and you can inform your employer to deduct them from your payments or apply for them at end of year from the government. These can only decrease your tax bill, not increase it, so I'm not sure how you'd end up with an unexpected bill. There's also a higher base standard rate for married person to compensate for not being able to completely share your tax bands for the year (a measure intended to gain some extra tax income from couples with one high earning person and one person with a very small income, I guess).
1) far less deductions/carve outs in tax law, or ones that people can use without contacting the tax service. Eg pensions and charity contributions deducted by employer, so tax is calculated. Charity contributions paperwork for one off donations dealt with by the charity (Gift Aid scheme)
2) "tax code" five digits representing your tax status, that the tax office will give your company to update calculations when your status changes. Possibly starting from a phone call from you. Eg using marriage tax laws.
3) tax summary P60/P45 provided by your last employer(required by law) that you can give your next employer so they calculate correctly
Sounds complicated, but it's all geared towards moving the burden to employers who just pay for payroll software, for everybody else it is very simple.
It's an approximation based on your revenue (and they know how much they'll pay you). At end-year everything is tallied all proper and as taxpayer you either have to pay the missing bits (if you have extra revenues which weren't accounted for by your salary) or you receive a wire transfer from the state (if you had deductions which weren't taken in account e.g. dependents or whatever).
That still raises the question, though, of how your employer knows enough about your tax situation to not significantly over or under withhold. If my wife and I just relied on the basic IRS calculations on the W-4 and didn't specify additional withholding by dollar amount we would end up owing thousands, possibly over $10,000, the following April (before penalties). How do Ireland and others avoid that?
A lot of people in the software industry specifically might have significant investments, shares, maybe rental income, etc, and then you do need to specifically inform the government about those, but this isn't the case for the 90%.
I just try to make sure I hit the safe harbor withholding amounts every year (100% or 110% of last year's tax liability, depending on income level) and then otherwise just minimize withholdings.
Still, I'm trying to understand how a system like Ireland's, which from this description doesn't have anything like a W-4, works without being significantly off in many cases at the end of the year.
Reasons for deviations on the final tax would be non-income taxes/deductions (selling stock, income or deductions from interest).
[1] https://over-ons.belastingdienst.nl/themas/digitalisering-en...
https://github.com/etalab/calculette-impots-m-source-code
You have each year code in the repo.
edit: save_ferris linked to an excellent story below: https://www.propublica.org/article/filing-taxes-could-be-fre...
For some strange reason they won’t send you a refund if you’re eligible.
https://www.irs.gov/individuals/understanding-your-cp268-not...
Last year a Turbotax glitch (combined with my inattentiveness!) accidentally marked my local taxes as belonging to my home state – this made it appear like I paid significantly too much for local taxes. I filed and happily but surprisingly expected a large refund. Instead, I received a more typical refund and a letter from the Dept. of Revenue showing that the state had amended my return to match their records and that no further action was required.
My taxes could be this simple every time. What a bummer that they aren't.
I did it by hand and screwed up the IA one somehow. =(
They eventually sent me the corrected form and a refund I was actually due.
It was like drawing the Monopoly card "Bank error in your favor. Collect $200."
EDIT: it just sends you to the free version of turbo tax and has links for the competitors heh
IRS's own service was discontinued after an agreement with tax preparation companies that they would provide such a service (the IRS Free File Program) if your AGI is below 69k (nice).
Which they do, but try to hide as much as they can via negative SEO and various dark pattern, so that you unknowingly get directed towards "free" offers which quickly require you to pay.
There's plenty of information all over the net. And I thought I remembered LWT doing an episode on that recently, but apparently it was Patriot Act… in what I now learn was the last episode, that would certainly explain why it's been so long I've seen an episode pop up in my feed.
It's too bad. I thought it was a really worthwhile show.
---
[0]: https://variety.com/2020/tv/news/hasan-minhaj-patriot-act-ca...
But Intuit probably owns all of the decision makers somehow. Which to me means that there needs to be radical government reform.
I actually believe that government and money need to be radically modified and modernized.
There is an OSS tax solver here: https://opentaxsolver.sourceforge.net/
Only does IRS, not state, works fine for me so far.
And it does seem to have a few states, at least in text form.
I've been using them for years. It would cost most people $10-20 for fed 1040a and state taxes, extra help is available for extra money. In an income tax-free state I paid $0 to file my federal return and have it direct deposited to my bank account. No dark patterns.
And their privacy policy was decent. I was not happy with what I saw on Intuit's site, especially given the data I'd be trusting them with.
Perhaps energy should be directed at the actual tax code complexity rather than software built to help navigate filing.
Ted Cruz's tax plan would have practically eliminated the need for TurboTax-type software. https://taxfoundation.org/details-and-analysis-senator-ted-c...
But, let's not forget what Milton Friedman had to say about tax reform: https://www.youtube.com/watch?v=TruCIPy79w8
They spent more than 1.2 million in direct lobbying against California's online tax preparation & declaration system pilot (ReadyReturn) between 2001 and 2010.
It's hard to tackle the complexity of the tax code when the company you're defending here has spent millions to keep it complex and out of the hands of the government.[0]
The "tax complexity" argument is a red herring when talking about tax prep. The US government could absolutely offer free tax filing services to taxpayers without the help of private industry and also without needing to simplify the tax code. I'm not saying that the complexity of the tax code isn't a problem, but it's out of scope here. The idea that the complexity of the US tax code standing in the way of better filing options for taxpayers has absolutely no merit when companies are spending millions to fight legislation that gives the government the ability to offer its own tax prep software.
This is rent-seeking behavior on the part of private industry, plain and simple.
0: https://www.propublica.org/article/filing-taxes-could-be-fre...
That is because they could pre-populate much of the W2/1099/stock sales/etc data since its all being reported to the IRS from other organizations. For the vast majority of people it could be as simple as logging into a web site and clicking "no" to a bunch of questions like "did you have more than 20k of medical bills last year", and then "I accept" at the bottom where it prints your final tax. As I understand it, that is how some other countries handle their taxes..
Someone has never worked in government contracting or developing Software from Government Committee
a IRS Tax Software would look more than the universally hated Unemployment Systems, or the government healthcare markets
Not a easy to use streamline system
If you want something to be inefficient, have the government do it
> However, I am a realist
Choose one.
You totally do have choice to not pay your taxes, just like you have a choice to not pay your rent or mortgage or renege on other kinds of private contracts. The making those choices may lead to outcomes that aren't good for you, but it doesn't mean you have no choice.
I happen to think the government should impose taxes, and tax evasion is a moral failing, but I also recognized people were born into a contract with the government, and I'm not going to argue that's fair.
The government does not, indeed, waylay a man in a lonely place, spring upon him from the road side, and, holding a pistol to his head, proceed to rifle his pockets. But the robbery is none the less a robbery on that account; and it is far more dastardly and shameful.
--Lysander Spooner
Yes, but I like civil society, infrastructure, paved roads and what little social safety net we have in this country, so...
Maybe it's extortionate, but the entire premise of government and the social contract is extortionate to a degree.
Sad reality is most private roads are better maintained than the public roads which driving to my home everyday is like a obstacle course.
Then there is the fact the vast majority of Roads (in the US) are paid for not with Income taxes but with User Fee's such as Gas Taxes, Car Registration, Wheel Taxes, Tire Fee's, Sales Taxes on Cars, and many other sources
But hey let keep up with the narrative that with out income taxes we would all be driving on mud paths
Then please stop using the things we fund with them. Roads, GPS, etc.
edit: transcript from an NPR interview where Norquist takes this position: https://www.npr.org/transcripts/521132960
Money, taxes, and the crime of theft are all creatures of the law. Taxes aren't theft because that would be a literal contradiction. Taxes are just part of the rules about how money operates.
I should also note that 1) the law isn't just what some individual or other feels is natural, 2) I'd imagine that primitive law that defines theft also defines obligations to the community (which are analogous to taxes).
Would you rather have a system that’s inefficiently built by a government or one efficiently built by a private company that illegally extracts fees from users, as the FTC alleges Intuit has done? What’s the point of being obsessed with “efficiency” when the company screws end users anyway?
I support the FTC's actions to go after intuit, but I have filled my taxes every year for many decades and not used Turbo Tax.
OTOH, you have to remember that the IRS is already developing a fairly complex bit of software which allows the tax companies to "e-file" the tax returns. Then they are verifying those companies results in house against the data they already have. At which point, apparently the returns are either rejected, or assigned some kind of weight for a human inspector to come along and review for whether a formal audit should be undertaken.
So, its quite possible that cutting out the e-file portion and replacing it with a webUI actually simplifies things.
Consider that your opinion on what is "universally hated" is mostly shaped by the sources of information that you consume. Yours happens to be wrong. Overall the country views ObamaCare ~50% favorably, with some specific parts close to 90% approval.
> Following Republican efforts to repeal the Affordable Care Act (ACA) in the summer of 2017, KFF Health Tracking Polls have found a slight uptick in overall favorability towards the 2010 health care law. The most recent KFF Tracking Poll shows over half of the public (52%) hold favorable opinions of the ACA while about four in ten (41%) hold a negative opinion of the law. [1]
> Some 55% of Americans support the ACA, a record high since the law went into effect a decade ago, according to a recent report by the Kaiser Family Foundation, while 37% of the 130,000 respondents in the nationally representative poll hold unfavorable views. [2]
> But the election of Donald Trump and efforts by Republicans to repeal the ACA have boosted the law’s popularity. Since November 2016, on average, 49.4% of the public has had a positive view of the law, compared with 41.6% who view it unfavorably. [3]
[1] https://www.kff.org/health-reform/poll-finding/6-charts-abou...
[2] https://www.marketwatch.com/story/the-affordable-care-act-is...
[3] https://www.ajmc.com/view/how-has-public-opinion-on-the-aca-...
I support the ACA, but when you implement the benefits in a law and repeal or ignore most of the new taxes and mandates, that will happen.
In addition, medical insurance makes no sense as a risk-pooling strategy, as everybody consumes some medical care annually, and the average cost of care consumed is greater than the amount most people can pay. There has to be something else going on.
Rather, the individual mandate was zeroed out in 2017: https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act_of_2017
The Cadillac tax has been delayed, seemingly indefinitely: https://en.wikipedia.org/wiki/Cadillac_insurance_plan
The employer mandate was delayed.
The Independent Payment Advisory Board was canceled: https://en.wikipedia.org/wiki/Independent_Payment_Advisory_B...
The nutrition labeling requirements were delayed from 2010 to 2018.
There are many other more technical provisions that have been delayed as well. It is easy to find many relevant sources online, though it's hard to keep them up to date because many delays just continue! https://cgsnet.org/ckfinder/userfiles/files/ACA_Delays_at_a_...
Clearly I was not commenting on ACA but on the Websites people use to Sign up for Government Subsidized Plans under the ACA which have continually been reviewed poorly by the people needing to use them.
The government is more than capable of accomplishing tasks. There is no inherent reason why government is incapable of doing anything but a corporation is capable of doing everything!
If you design a system to fail from the outset and it doesn't work, then they achieved the goal. So really, the government nailed it. And the better part is they nailed it for people who feel the way you do. It's literally a self-fulfilling prophecy of politically-motivated people who don't believe in the ability of the government to get anything done working as hard as possible to make sure that the government doesn't do a good job.
I'm sure many other governments around the world do the same.
So how exactly does Ted's plan to simplify the tax code have anything to do with filing in the first place if the organization you're backing up your argument with doesn't even support doing away with private tax prep? You think the tax code is gonna be simplified to the point that Intuit just lays down and says "welp, no more money to be made here, the market solved itself out of a revenue stream"?
0: https://taxfoundation.org/pre-filled-forms-solution-tax-comp...
https://priceonomics.com/the-stanford-professor-who-fought-t...
https://www.npr.org/sections/money/2017/03/22/521132960/epis...
It isn't like that though. The IRS has nearly all the pieces it needs, if not all the pieces, to create a system like the UK, where they just send you your return and you sign it unless you think there's a mistake. But that system doesn't exist because of companies like Intuit who lobby hard to prevent it from existing.
In essence, Turbotax is solving a problem that Intuit is creating (or at least lobby to prevent anyone from fixing it).
Some things would need to change to make this statement true. Stock brokers and portfolio managers would have to be forced to stop reporting gains without basis. Without the basis the IRS has no idea what your gains were.
So, yes, such people are already using the simplest possible form, but ease of filing is a big deal, and I suspect many people are like me and use online filing software for that just as much as ease of filling out the forms.
I also only just realized that the IRS no longer just mails everybody a form 1040 and instruction book.
Fidelity reports the basis in a supplement section in the same damn document. Moving them together would be trivial, but I've been told the law is forcing them to do it this way (they didn't tell me that, I just read that somewhere. Not sure if it's true).
As someone said, almost no one has investments. If you remove 401k, it's a tiny fraction of people. If the only thing I'd have to do to file my taxes would be going online, finding the list of my sales and needing to add the cost basis then click submit, it would still be a huge improvement compared to what we have now.
Still, it's a problem that's pretty easily solved.
Unfortunately very few people seem to understand that government, intrinsically, is inefficient and bad at everything it does. This can not be avoided or changed it is the natural state of a monopoly.
They seem to be able to recognize that when a large corporation that has become monopoly that is bad for people, however they fail to recognize that government is the worst kind of monopoly as unlike a corporation, they have the legal authority to put you in a cage if you refuse them, and kill you if you resit the governments attempt to put you in that cage.
This is a laughably false statement. It's easy to find stories of government projects that came in ahead of schedule and under budget, but you have to look for them because those stories don't get nearly as much attention as the inverse.
Take the Hoover Dam, for example. That was one of the most ambitious infrastructure projects in American history, and came in years ahead of schedule, and millions under budget.[0] Google around infrastructure publications and you'll find dozens more stories like this.
To say that every thing a government does is bad is to fundamentally ignore reality, which is that no, not everything the government does is bad. You can never be taken seriously making sweeping generalizations like that.
0: https://www.marketplace.org/2010/05/28/why-we-might-not-have...
The entire purpose of project was because the government needed to find something for thousands of unemployed men to do. It was literally the definition of "busy work"
Further the budget was massively reduced because they did not have to concern themselves with minor things like environmental impact, or worker safety...
I hope that is not your only shinning example of government as it is very much tarnished by the stain of blood
Arguably, this high-level decision making is the only part that the government did, and should receive credit for, as the Six Companies consortium actually executed the construction.
It's unfortunate that these arguments often involve people talking past one another; governments (being made up of people) are obviously capable of good outcomes. They're also capable of generating bad or inefficient outcomes. Those two latter points are where I think there is value in the discussion: is a governmental act moral, and does it increase efficiency (in the sense of humanity prevailing against its default state).
I agree with this, but couldn't it also be applied inversely? If a government project experiences cost overruns due to a private contractor poorly estimating the project, shouldn't blame also be placed on said contractor? Success is so often privatized and failure socialized.
And yet, we need it to work well if we want things like property rights, functioning markets, public safety, law and order and so on. So why not focus on how it could become better, instead of giving up on it?
https://www.nytimes.com/2017/04/14/opinion/filing-taxes-in-j...
They don't know what a given taxpayer owes. They can estimate based on various filings, but there is some stuff that is only reported by the taxpayer when filing. That said, it isn't an excuse to push all the work onto the taxpayer when almost all of what a typical taxpayer needs to fill out could be pre-populated.
> we're forced to spend hours tracking down documents and hoping we didn't mess up and get audited
That the IRS audits taxpayers is evidence that it doesn't ever conclusively know what some people were supposed to pay in a given year, let alone by 15APR of the following year.
I’ve used them for about 20 years and every year it’s a hassle to find a reasonable price, figure out what they call the product I need each year. I spend as much time trying to figure out what to buy and clicking “no” as I do filing my taxes.
This is as a customer that uses them once a year and that’s it.
If they just sold a clean product, then it would be fine. But they are asshole marketing / rent seeking quite a bit.
Lots of non-savvy friends buy the $200 version instead of the free or $50 version because of the way intuit markets within their product about buying audit protection and what not.
It also infuriates me that their boxes software costs less than the web site. I think companies that sell physical copies of software for less than the website version are jerks. Obviously, they can do this, it’s legal, and people fall for it. But I would feel bad doing this and I think anyone who does this is a bad person.
Therefore, I hate intuit and will switch in an instant when I can.
Two years ago the paper form for standard federal 1040 was cut to about 1/4th its previous length. It's happening, just slowly.
(Yes, I still use the paper forms yearly for both federal and state. I've never seen any software as necessary for filing taxes...)