In several European countries, filing tax returns is a near-automatic process: instead of painstakingly calculating figures yourself, the government estimates what you owe based on wage and bank account data that it already collects, and you make any necessary adjustments. Why isn't there a similar "returns-free filing" system in the US? According to a report in ProPublica, the primary culprit could be Intuit, the maker of popular returns software TurboTax.
Reagan and Obama both proposed a returns-free system
Intuit has spent over $3 million lobbying Washington in each of the past two years — more than Apple, Amazon, or Yahoo — including bills that sought to make it possible for US taxpayers to file pre-filled returns. As ProPublica points out, this shouldn't be a partisan issue; Ronald Reagan endorsed the returns-free system in a speech on tax reform, and President Obama campaigned on the promise that many Americans would be able to do their taxes in "less than five minutes."
Intuit says that it has lobbied against returns-free filing because it doesn't "increase compliance" among taxpayers, and argues that taxpayers "deserve the right" to the voluntary compliance system so that they can "keep more of their hard-earned money." The company points to its support of Free File, a partnership between the IRS and several tax software companies that lets people on low to moderate incomes do their returns online for free.
"If you don't trust the government, you don't have to do it."
But critics of the company's lobbying point out that the IRS wouldn't be doing much — if any — extra work under a returns-free system, and that taxpayers would always have the option of filling out their returns the old way if they disagreed with the government's assessment. "It's voluntary," says Austan Goolsbee, who was chief economist on the Obama administration's Economic Recovery Advisory Board. "If you don't trust the government, you don't have to do it."