When President Trump and Republicans in Congress promoted their tax reform package last year, one repeated rallying cry was that they would make filing taxes easier for Americans. “Most Americans will be able to file taxes on a single sheet of paper,” Trump proclaimed. Treasury Secretary Steven Mnuchin went on “Fox News Sunday” to assure us that 9 out of 10 Americans would be able to fill out a postcard-size 1040 and be done with it. Mnuchin reiterated the promise this month. “It will be a postcard,” he said. “Hardworking taxpayers won’t have to spend nearly as much time filling out their taxes.”
Now both the New York Times and the Wall Street Journal have gotten a sneak peek at that “postcard.” And in something that won’t come as a shock to anyone who follows the Trump administration, it turns out this was a con.
Yes, there is a postcard. You will be able to fill it out and submit it, either electronically or by mail. But there’s a catch: The chances are decent that you will also need to fill out and submit at least some portion of the six accompanying worksheets to figure out if you are better off taking the new beefed-up standard deduction or continue taking what credits are available to you. Surprise!
See, the 1040 was not shrunk to postcard size by simplifying the filing process. Nor was it done by streamlining the tax code. Instead, deductions taken by many Americans on things such as student-loan interest and child-care credits got moved to one of those six worksheets. Want credit for putting money aside in an Individual Retirement Account? You’ll need to show that on a worksheet, too. Lucky enough to enjoy income from capital gains, stock dividends or business income? Yes, you’ll also need to fill out those worksheets and either file them electronically or mail them in with your return.
Or maybe you won’t. Some people will simply fill out the postcard and leave valuable deductions on the table.
Oh and by the way, this postcard is bigger than the typical postcard. Another con!
It doesn’t need to be this way. In many other countries, the government sends you a return that is already filled out, complete with information sent in by employers, financial services firms and others who need to report what they pay out in wages and other earnings to the government. Taxpayers can then correct errors or add other information as needed before filing.
The Trump administration somehow forgot to mention this when it talked up the postcard form last year, even though over the years there have been any number of bills demanding such a system introduced in Congress, only to go nowhere. The likely reason for the administration’s silence? The swamp, in the form of the tax-prep industry, wants no part of this kind of simplification. Companies such as H&R Block and Intuit make up an $11 billion industry, one that enjoys an almost 6 percent annual growth rate. Between 2008 and 2017, Intuit spent more than $2 million annually on lobbying. H&R Block can claim the same between 2013 and 2017. (The industry’s talking points are something to behold: Last year, an Intuit spokeswoman told NBC News that the company opposed a bill sponsored by Sen. Elizabeth Warren (D-Mass.) calling on the IRS to offer up the sort of already filled-out form common in European countries because it “minimizes the taxpayers’ engagement in the process of their own compliance.” Because Americans are desperate for “engagement” with their taxes.)
So this “postcard” isn’t about simplifying the tax code. Then again, neither were the Republicans’ tax cuts. It was a bait-and-switch, offering small, short-term cuts for the vast majority of filers, while saving the bulk of the $1.5 trillion in tax cuts for corporations and the wealthiest Americans. It’s no surprise then that most Americans claim that they have not seen any tax cut in their paycheck, and the entire effort remains resoundingly unpopular. I don’t expect a fake postcard simplification to change that. When it comes to their tax bill, Americans know a con when they see one.