Taxes get more taxing every year
Death and taxes.
Both are inevitable (unless you have an account in the Caymans). Both are generally unpleasant affairs.
However, only one of them is way more complicated than it needs to be. (The former is usually a pretty cut and dry kind of deal … unless you live in Florida.)
Tax Day fell on a Sunday this year, which meant procrastinating preparers had until Tuesday to file their tax returns with the federal government. Anyone who has ever prepared their own taxes knows that the worst part of Tax Day is the impossibly annoying task it is.
(That is, unless you’re of the tri-corner hat persuasion; in that case, the worst part of Tax Day is being asked to pay your fair share for being part of a civil society with functioning infrastructure and not some hellish ungoverned third-world hellscape.)
Even if you use TurboTax, doing your own taxes means finding a bunch of forms — sent to you by banks, employers, charities, etc. And once you’ve found everything (seriously, next year I’m going to get organized) then you chug along until the inevitable question that requires you to try and decipher instructions that require a Rosetta Stone in Federalese. Then, when all is said and done and you’ve wasted a Saturday afternoon, you hit submit and pray you didn’t input something incorrectly and get an audit for your trouble.
(Yes, I realize that instead of complaining I can pay H&R Block to do my taxes for me, but after one or two visits you realize you’re just paying someone else to input your information into what is essentially TurboTax while you watch. Seems a tad silly to me.)
But let’s step back for a minute. The only reason people pay their taxes is fear. That’s because you know that if you don’t fess up to how much money you made, the IRS is going to come knocking. (Unless you’re rich enough to afford a team of accountants who can abuse loopholes, that is.)
So how does the government know how much money you made? Simple: they get copies of the same forms that your bank/employer/mortgage company/etc. sent to you.
So if the IRS already has that information, why do you have to go through the effort of filling out the forms to tell them what they already know? If you think about it logically, you’re doing work that isn’t needed.
Take those wonderful W-4 forms you get every year, for example. Currently, you and the IRS get a copy, and then you fill out a form with the information and the IRS checks to make sure you’re not lying.
Seems a tad inefficient, no? The IRS could easily fill out the relevant forms with the information from your employer, say, and then send you the form for you to double check. Then you just have to pay taxes you owe or tell them where to send your refund.
Boom, taxes done.
This isn’t some pipe dream. This is 2012; we have the technology to pull this off. And the technology to do so cost effectively, to boot. So why doesn’t the IRS just bill you for your taxes just like the hospital sends you a bill or the contractors sends you an invoice?
The dark side of capitalism, baby.
Think about it for a second. Tax prep companies like Intuit, the maker of TurboTax ($3.85 billion in revenue) and H&R Block ($3.87 billion in revenue) have everything to lose if the IRS makes doing your taxes a breeze. After all, their entire business is based on the fact that you can’t do your taxes without them.
These companies are a large part of the reason taxes remain so tough, because they have fought tooth and nail to keep them that way. (Yes, the government bears some of the blame, too, but not all.)
This is a good time to consider the case of the ReadyReturn pilot program in California, which was a state government initiative with a goal at making taxes less onerous. For the small group of taxpayers in the study, ReadyReturn allowed the state to essentially do their taxes for them. Then they were sent a bill to verify. Easy, breezy. Those in the pilot program loved it. The program’s supporters tried to expand it … and hit a brick wall of opposition.
That opposition came from the only people who want taxes to remain difficult: TurboTax and H&R Block. So if it was so popular, and the government has no vested interest in making taxes hard, how were the tax prep people able to block a program that makes a universally dreaded necessity simpler?
Cash money.
All it took was the right palms to be greased and the right campaigns to get contributions and ReadyReturn has been mired in obscurity ever since. Other attempts to simplify the process of paying your taxes have run into a similar gauntlet of well-heeled lobbyists intent on the status quo.
It’s one thing when the private sector gets ahead based on superior products and services; it’s a completely different thing when they use their financial clout to cheat. And that’s what this is. ReadyReturn is an example of how the government can do something better than the private sector — and the private sector killed it. Instead of getting easier taxes that are done for us, we get to keep shelling out $75 or more to have our taxes done for us.
For those who complain about government inefficiencies and how Washington needs to be run more like a big business, this is an important lesson: Big business is worried about its own bottom line, not you.
If you’d like him to do your taxes for you, Brandon Szuminsky can be reached at bszuminsky@heraldstandard.com.