There’s a Tax Season Villain, and It’s Not the I.R.S. | NYT Opinion

I recently learned how big of a scam it is that taxes in America are not the actual tax rate, but how we actually pay our taxes. All this in countries like the Netherlands, Japan or New Zealand, none of this exists, as if you were looking for how to pay your taxes. in Estonia you get a video less than 3 minutes long, everything should be fine, so let's confirm sending how this exists. These are places where the government operates a free Internet portal where citizens can pay their taxes in the meantime here in the United States. Filing taxes in the United States has two big problems: it is too complicated and it is too expensive.

Most of us taxpayers have to pay a private company to help us pay our taxes to the government. Collectively, we spend billions of dollars each year on this. We spend billions of our precious spring hours tracking down documents scanning wrinkled and faded receipts and just waiting for this little green number to go up right now the tax code is so complicated it doesn't work for anyone oh and we also pay emotionally we worry we wonder if we are do it right and most of us have wondered what happens if we do it wrong, so why do many other countries have it easy while we are left with the expensive, stressful and eroding version of pain taxes to understand this absurdity ? with Times editorial board writer B Appleb okay, let's do this paying taxes in the United States is tense, it's scary, but the process of doing it doesn't need to be B has been reporting on economic and tax policy in the United States for a long time , so let's let I show you how paying taxes in America has become the biggest scam you've never heard of and how some lawmakers are trying to change it.

One of the most unpleasant facts in life. You might be wondering who got all this money, why do we have 10 billion dollars. Another year of business helping people do what the government should help them do. Instead, walk me through the history of all the attempts to create a government-run portal for paying taxes, so back in the day it was a thick book, maybe you'd pick up a copy. at the local library and you worked on these complicated worksheets, either with the help of an accountant or in their lunchrooms and finally you came up with a final calculation of what you owed or what the government owed you and you mailed it in and Then Ronald Reagan gives a public speech we imagine a system where more than half of us wouldn't even have to fill out a return, we call it the no-refund system where he says we're going to offer Americans an easy way to file. statement. taxes we are going to go from this era of long and short forms to an era without forms the government is going to be the solution to your problem Reagan was serious in 1987 78,000 Americans filed their taxes using cutting edge technology these primitive modems and these old machines called like the zylog system and the Metron and it was a hopeful experiment and what could have saved us so much pain and then you know his successors basically continued to make this promise for the next two decades that Bill Clinton makes.

George Bush goes out when I took office 18 months ago, virtually every other major country in the world had the ability for citizens to go online and freely file their taxes, we didn't, and then Barack Obama when he campaigned for president in 2007. he goes ahead and makes the same promise: we will make it easier, faster and less expensive for you to file so that April 15 is not a date that creeps up with Dread every year and now we have the Biden Administration doing the same. I promise again that this story really begins during World War II, when the United States suddenly needed a lot more money to carry out this war and so needed to change the way it collected taxes and the innovation the government came up with. en It said we're going to make employers tell us how much they're paying their workers, so because your employer takes out money and pays taxes for you at the end of the year, the government already knows how much money you've made.

Know how much you have paid in taxes and therefore how much they owe you or you owe them. It's a great system. They don't know everything about your finances if you have complicated things like medical bills or investments, but for many Americans, taxes. It can be done in 15 or 20 minutes. The reason tax day is very easy in places like the Netherlands or Japan is because that's the day the government simply sends you a pre-filled form and you can approve or modify it. if you think you qualify for any credit or cancellation or if you think they did the math wrong but if you pass it it will be over in just a few minutes and your refund will be on the way but here in the US they don't.

They tell us the numbers even though they already know them and they don't even give us a platform to file our taxes, so taxpayers are left with two terrible options: either they pay a private company to do their taxes or they do it. on your own. own and this is what a high-stakes honesty test looks like, one that is terribly confusing. Where your children are actually called dependents and where your total income is determined by adding lines 1 Z 2 4 6 and 8. I mean, it's not that complicated, just get this 3 page instruction booklet on how to file your taxes, So if presidents on both sides of the aisle have been making an effort to do this, why has it failed?

I mean the one word answer is Turbo Tax, there is a company that dominates the tax preparation industry in the United States makes billions of dollars by charging Americans to help them complete their taxes makes a product called Turbo Tax that to most Americans it's practically synonymous with doing their taxes and has created an industry out of something that should be a public service, it doesn't surprise me that Turbo Tax emerged as a solution to this problem and then this private company comes and says : We will help you, we have a software product that will make your life easier and it did, it made the lives of millions of Americans easier.

Turbo Tax 100% Expert Guaranteed What happens next is the story of how we almost had what other countries have, a free and easy way to file our taxes and they almost gave it to us. by George W Bush Morning I think the early 2000s was the closest we came to having a public records system, so it's the early 2000s and the government is making a big effort to put more services online. It's a pleasure to be here to talk about it. government initiative E a number of other countries around the world were beginning to successfully move their tax filing systems online.

States were beginning to move tax filing online. There was a great demand. It had a Republican administration that supported the idea. The Bush administration tells it and the other tax preparation companies to quote, get another line of work like you are going out of business, what is your response, the company sounds the alarm, everyone knows, the moment who recognize that this is an existential threat to what is an increasingly profitable business and do everything they can to prevent it, they hire a very successful Washington lobbyist who, among other things, likes to compare himself to Darth Vader and they do something very smart, they tell the government that we will build. a free filing portal and you can stay out of this business.

This lobbying effort worked and the Bush administration agreed not to create a tax filing portal and in exchange, other tax preparation companies agreed to create a version of their software that would be available. free for low-income Americans, so it's the early 2000s and there's a regular Turbo Tax that people have to pay, but now you have this free version of the Turbo Tax that the Inuit were giving a lot to, enraged , Americans started to realize that there was a free version of their software and started using it Millions of them started using it and this is where the real shenanigans begin in Earnest, it seems like a good deal in terms of whether the tech company will make this and will provide it to you. free so what's the problem the problem is that the tech companies had no interest in doing this this was a hack a pro publica investigation found that int and others added lines of code to their free files site so it doesn't appear on More It is later also discovered that a Google search and several of the other companies did this to essentially make it invisible on the internet, then there was marketing and turbox started showing up everywhere from basketball stadiums to the Super Bowl, welcome to turbo tanks .

Halfway through they start flooding the world with the word free, that's right, turbox free edition is free, free, free, free, it feels pretty good to most people. It seemed like the government was mandating a free file version of TurboTax, but hadn't created an entirely new Entre. program confusingly called TurboTax Free Edition to divert traffic from the government option. You come to this website that's built as a free tax filing product and you start doing the work of filing your taxes correctly, you're uploading the forms you're entering. personal information, it was only after spending all these hours entering all of your information that you discovered that you can't actually file your taxes for free, that you don't qualify for the free version, all of this hidden from Google searches, it's confusing. rate the misleading use of the word free, are you confused?

That was the point. Tax preparation companies have sabotaged the free file program. They have tricked and trapped American taxpayers into paying for alternative services that should be free and are marketed as free, but in reality Don't Make Free I fell for this so many times over the years and after doing all this work I don't There was no way I could do anything but pay. What other option did I have? All this, who are the demographic of Americans? Perhaps the most susceptible to these types of misleading messages are people in the middle of the population who earn middle class salaries and have very simple taxes and the result was that by 2019, 14 million Americans were eligible to use the free software The tax filing process they had promised to do ended up paying a fee for commercial software to prepare their tax returns.

The entire technological and marketing gimmick worked so well that they actually got sued. Regulators on behalf of clients sued over it last year for 141 millions also agreed to cool overall, it's a free, free, free, fake advertising campaign, so now when you go to the site and you see the big 0 sign, there's an asteris next to it, so justice was done and the Greedy technology company learned its lesson and from then on, taxes were free. and easy, just like in Estonia in 2021, the International Institute announced that they would be walking away from their agreement with the Bush administration and would no longer offer free presentation software to low-income Americans, but in their blog post announcing This they stated that We are still committed to creating a free submission platform, no one should believe that INT will ever seriously commit to offering a free version of their core business, something that would be suicidal for a company and there is no reason to expect them to act. against their In their own self-interest, we should treat them like adults and assume that they are going to do what is best for them and that it is in their best interest to collect as many Americans as much money as possible to complete their taxes.

It's ironic to me that he often positions himself as the defender of the people. They had this whole advertising campaign showing them all the time they could save by not paying taxes. We all have different, sometimes crazy, things to deal with. We believe that people can be good at anything. Yes, even. taxes in the free market you have the right to withdraw that is the defining characteristic of the free market you don't need to buy the apples you don't need to buy the car you don't need to buy the computer you need to file your taxes, what these companies are doing is standing in the road that everyone needs to travel and collect tools, so the idea that this is a private market is ridiculous and the Bush administration was perfectly fine telling these companies to get off the road.

They aren't allowed to collect tolls here, but luckily a change could be in the air. The IRS is publishing areport this week on the possibility of a free, government-run tax filing service. The Biden Administration has funded a pilot program for the IRS to create a portal where we Americans can pay our taxes without the need for a third-party intermediary called Turbo Tax. They are ready to launch this as a small pilot for the 2024 tax

season

, but of course they are determined to avoid this or make it so impractical. and on a small scale as possible because they have a lot of money to spend, they are collecting our tax filing fees from all of us every year and using them to ensure that we have to continue paying those tax filing fees.

Bloomberg reported that as its lobbying spending has reached an all-time high, it is paying dozens of lobbyists, these lobbyists include Mitch McConnell's speechwriter Nancy Pelosi, the former chief of staff, a former Republican congressman and an adviser to Joe Biden when he was vice president, you know it's really surprising because you know the rhetoric around the IRS is so relentlessly negative that you would assume that Americans would want the protection that Turbo Tax says it offers them, but when the signs come out and ask the American people about this, both sides say we want a government option we want a free filing portal we don't understand why we have to pay to be able to pay our taxes it doesn't make any sense every time free filing comes out an army of lawyers and lobbyists well paid rises to Congress to crush This must not be allowed to happen again, but the pilot program is already in danger of ending.

House Republicans are pushing to cut $14 billion in funding for the IRS, including money for the pilot program, they say the government can't be trusted to tell Americans how much they owe the government, but this is not a partisan issue that leaders on both sides of the aisle have known for decades. that we have to make this happen, that this makes the most sense and, hopefully, this is the time to finally make it happen. I think at the end of the day, this story is about faith in government, it's about the government's ability to do what it should have been doing all along to get it right and deliver what Americans deserve, which is a way easy and free to file your taxes, this is a chance for the government to prove itself, it is a chance for the government to do right on a promise that has been broken so many times in the last 40 years and say we can do better , we are doing better, we will do well