By Mecca Fowler
Editor’s note: The opinions expressed here are those of the authors. View more opinion on ScoonTV.
Tax time is here and depending on who you are in this country, it could be a welcomed breeze or a horrific nightmare. What should be a free and easy thing to do (and is in most developed countries) is very time-consuming and cumbersome. The worst part about this is that the Internal Revenue Service (IRS) and tax preparation businesses intentionally make it more difficult and costly to file tax returns each year.
The tax system in the United States is ten times more expensive than the tax systems in 36 other nations with strong economies that use return-free filing, according to the Tax Policy Center Organization. A 2010 White House-commissioned panel estimated that taxpayers in the United States spend 7.6 billion hours and $140 billion per year filing taxes, the Economist reported. The expenses of complying with federal income tax laws are substantial, and they are especially unwanted for many middle-class taxpayers with straightforward tax situations.
Tax expert Beverly Moran says that this is a consequence of the relationship between the commercial tax preparation industry that lobbies Congress to maintain the current system.
“Almost 20 years ago, Congress directed the IRS to provide low-income taxpayers with free tax preparation, “Moran said. “The agency responded in 2002 with “Free File,” a public-private partnership between the government and the tax preparation industry. As part of the deal, the IRS agreed to not compete with the private sector in the free tax preparation market.”
This means that although filing is free for many who make under a certain amount, the explanation of forms, schedules and other complexities of taxes are not covered in this scope of free filing.
In 2006, economist Austan Goolsbee proposed a “simple return” solution that would streamline how tax filing is done in an abstract paper published by the Brookings Institution. The IRS already has much of the information and data that it requests at the time of your filing, so why double the work? Why can’t the IRS simply use the data it already has to process tax filings on our behalf.
According to Goolsbee, approximately two-thirds of taxpayers have returns that do not itemize their deductions, making them simple to file. “Frequently, all of their income is solely from wages from one employer and interest income from one bank,” the abstract says. “For almost all of these people, the IRS already receives information about each of their sources of income directly from their employers and banks. The IRS then asks these same people to spend time gathering documents and filling out tax forms, or to spend money paying tax preparers to do it.”
Joseph Bankman, a professor of tax law at Stanford Law School, has also urged the government to develop a tax preparation system that would dramatically cut the time and cost of filing taxes for ordinary people. He helped create a system called ReadyReturn that precalculates some residents’ state tax returns.
Many solutions have been offered by experts and scholars. These ideas seem brilliant and the perfect way to modernize how we file our taxes. However, our government seems hellbent on making lobbying dollars a priority over the interest and ease of everyday citizens. The opposition to tax preparation reform has been mostly from conservatives who claim to favor less government intervention in our everyday lives.
Key stakeholders in the commercial tax preparation industry have bulldozed over any efforts to reform its industry. Tax preparers such as H&R Block and Intuit TurboTax have fought “return-free filing” proposals for years because it allows the IRS to considerably simplify taxes for over 60 million people by providing pre-populated returns.
Between 2008 and 2013, Intuit spent approximately $11.5 million on federal lobbying, according to ProPublica. Even though Intuit’s lobbying covers a wide range of subjects, the company’s reports specifically state that it “opposes IRS government tax preparation.”
If taxes were simpler and less complicated, you would likely not need someone else to do them for you, saving you time and more money. The costs become an even heavier burden if you just so happen to work for yourself or own your own business. Besides the time spent to gather the pertinent documents to file taxes, the idea of having to pay money to file a document that is already giving away your money to the government seems asinine.
If we as a country are expected to comply with filing taxes for the rest of our lives, the least the IRS could do is move past the archaic methods and systems that they have in place. We have more than enough technological developments for this country to make it easier for its citizens to pay taxes.
The system is exploitative and does more harm than good in its current form.
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