Comment by tines | Hacker News Reader

Comment by tines | Hacker News Reader

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Ah, excellent, my mistake. Carry on.

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I actually just looked up the arguments against Direct File, and the Republicans who oppose it argue that the IRS has no incentive to make sure that you pay the least taxes possible, while third parties do (in order to win your business). I believe this relies on the assumption that the tax code is so complicated that not even the IRS knows what you owe, what with all the special exemptions, tax discounts, etc. and therefore it takes a market to incentivize doing the work to navigate the tax code to get the biggest discount possible.

My reply to that would be that what this really means is that the tax code is too complicated, and keeping the market involved is killing the incentive to simplify it. If it were too simple, TurboTax et al. would go out of business. If Direct File were instituted and people found that they were charged more than they should owe, then this is a pressure to simplify the tax code so that the IRS can definitively tell you the minimum taxes you should pay.

What's your take on it?

I have personally found that when the government wants more of your money through taxes, they tend to raise taxes or lower credits or do something to incentivize behavior. They don’t tend to try to confuse people into not knowing what they owe and thus only private companies can get me the lowest taxes. So I don’t find that argument persuasive.

I do think the tax code is too complicated, but don’t think that’s a conscious choice by some government official or office. It’s a result of small changes by many generations of people over long periods of time. It does seem like it could be simplified, yet the IRS also seems to know how much most people owe because it’s reflected in forms like W-2s and 1099s and such. So maybe they should just send most people a transmission telling them how much the IRS thinks they owe, and provide the refund or a bill accordingly, and whoever disagrees with the assessment can file.

If Direct File takes away too much revenue from Intuit by handling all of the simple cases, then people with more complex taxes will have to pay quite a bit for their tax software. It might not even make sense to continue producing it. Or at least that could be what Intuit lobbyists are furiously telling republican congressmen.

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