Why doing your taxes is much harder than it ought to be

April 15, 2013

Here is the most exasperating thing about Tax Day: It may be a stressful time of elaborate paperwork and large sums paid to a tax preparer -- but it doesn’t have to be that way.

For millions of Americans, the IRS already knows most, or even all, of what it needs to know to enable you to complete your income taxes. Your employer reports how much it paid you in wages to the taxman; your brokerage firm reports how much stock dividend income you received; your bank tells the IRS how much you paid in deductible home mortgage interest.


What if the IRS filled it out for you? (Daniel Acker/BLOOMBERG)

So wouldn’t it be great if you could log into IRS.gov and see a form with all that information already plugged into a 1040? You could then add or update any other relevant information (say, a charitable deduction that did not get reported), and hit “send.” For millions of people with relatively simple tax situations, filing annual income taxes would be no more punishing than paying a parking ticket online -- certainly not much fun, but not an onerous, soul-sucking experience, either.

There have been bipartisan proposals in Congress to create exactly such a program of “return-free filing,” including a 2011 bill proposed by Sens. Ron Wyden (D-Ore.) and Dan Coats (R-Ind.). It seems like the kind of sensible, modest thing the government can do to make peoples’ lives quite a bit simpler.

What stands in the way, according to a persuasive investigation last month by ProPublica and NPR, is in no small part lobbying by “Big Tax,” the companies that sell tax preparation software and services. Intuit, the maker of TurboTax software, has spent $11.5 million lobbying in the past five years -- more, ProPublica’s Liz Day notes, than Apple or Amazon.  They frame their opposition as “Stop IRS Takeover,” as their trade associations' campaign  calls itself.

The tax preparers make common cause with conservatives who say they oppose the measures because they want to ensure that the government doesn’t simply send people a “bill” for their taxes in a way that could be intimidating. As Grover Norquist of Americans for Tax Reform wrote in a letter opposing the Wyden-Coats bill, which would have created an “EasyFile” system for paying taxes, “It creates a conflict of interest,” in that the IRS has an interest in maximizing taxes collected and thus may steer people toward paying more than they truly owe, and that it would eventually make income taxes more like a hard-to-challenge bill from the government rather than something the taxpayer affirmatively comes up with.

"The clear goal of this measure is to raise taxes in a way that leaves politicians with clean hands," wrote Norquist. "If the IRS can, through Easyfile, continually rule against taxpayers and ratchet up tax liabilities, taxes can continue to rise without legislated tax hikes."

But it doesn’t take much imagination to think that Norquist may be neglecting to mention some deeper reasons for opposition to an EasyFile policy.

Conservatives want taxes to be as low as possible. April 15 is now likely the day when anti-tax sentiment is the highest; I generally don’t mind paying what I owe the government to keep itself running, but after spending the weekend dealing with the vagaries of the income tax system, was in high dudgeon about taxes myself.

So anything that makes doing taxes dramatically easier would take away the source of average voters’ discontent with taxes. That’s particularly true of the many middle and lower-income voters who pay little or no federal income tax (remember the 47 percent?), but in the current system still have the hassle of filing a tax return. In many cases pay Intuit or H&R Block nicely for the privilege.

In truth, tax rates and tax complexity are completely different questions. But in terms of the popular view of taxes, the two issues tend to get intermingled. And a voter who had to spend hours upon hours gathering up documents and working with a tax preparer in order to pay their income taxes might be receptive to anti-tax rhetoric even if the rate they paid was pretty low.

In other words: If tax day were just like any other day, might the people who are actually the biggest beneficiaries of the current income tax code—middle and lower income families—might lose a big reason to be angry about taxes. Which, if you’re Grover Norquist, is not a terribly appealing possibility.

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Brad Plumer · April 15, 2013