I had thought that Patrick McKenzie claims here, that lobbying by intuit is not the reason why US tax filing is so complicated, and actually it’s because of a republican advocacy group, that doesn’t want to simplify tax filing, because that would be a stealth tax hike.
But rereading the relevant section, I’m confused. It sounds like the relevant advocacy group is in favor of simplifying the tax system, and in particular, removing withholding?
It is widely believed in the tech industry that the reason the United States requires taxpayers to calculate their own tax returns, which is not required in many peer nations, is because Intuit (who make Turbotax, the most popular software for doing one’s taxes) spends money lobbying policymakers to oppose the IRS creating a competing product. People who believe this have a poorly calibrated understanding about the political economy of taxation in the American context.
I will have to take notice about uncontroversial but politically inflected facts about the world we live in to describe why you must use the software you use. If you’d prefer to not get politics mixed in with your finances and software, mea maxima culpa. That said, a democratically accountable government which deputizes the private sector to achieve state aims is invariably subject to the political process, and this is on net a good thing. To the extent one has a complaint about the outcome, one’s complaint is not with some unaccountable or corrupt actor in a smoky backroom somewhere. It is with one’s countrymen.
In particular, the tech industry zeitgeist that blames Intuit for us needing tax preparation software fails to understand the preferences of Congressional representatives of the Republican Party. Any fairminded observer of U.S. politics understands the Republicans to be institutionally extremely interested in tax policy (and tax rates in particular), in the sense that doctors are interested in heart attacks. Their most recent platform includes the quote “Republicans consider the establishment of a pro-growth tax code a moral imperative. More than any other public policy, the way the government raises revenue—how much, at what rates, under what circumstances, from whom, and for whom—has the greatest impact on our economy’s performance.” This is far from the only flag proudly planted by the elected representatives who enjoy the enthusiastic support of about half of Americans for their views on tax administration.
The specific policy implications of those shared values are frequently outsourced, in a fashion extremely common in Washington and critical to your understanding of U.S. politics. Washington has an unofficial ecosystem of organizations and public intellectuals who, by longstanding practice, have substantial influence on policy. When a Republican candidate promises to voters that they are anti-tax, as their voters (particularly in primaries) demand they must be, the thing they will offer in support of that is “Grover Norquist gave me a passing grade.”
Norquist runs Americans for Tax Reform, a non-profit political advocacy group which opposes all tax increases. ATR is institutionally skeptical of withholding, because they believe that withholding allows one to increase taxes by stealth. I don’t think it is excessively partisan to say that, if one phrases that claim a bit more neutrally as “withholding increases tax compliance by decoupling public sentiment and policy changes,” the people who designed the withholding system would say “I’m glad the National Archives makes our design documents so accessible. We wrote them to be read!”
And, relevant to the question of whether Intuit controls U.S. tax policy: it can’t, because that would imply they have wrested control from Norquist. Norquist considers a public filing option a tax increase by stealth and opposes it automatically. (I offer in substantiation ATR’s take on a specific policy, which was bolded for emphasis in the original: “Americans for Tax Reform rejects the use of unauthorized taxpayer dollars being used to expand the IRS into the tax preparation business and urges states to reject participation in the program.” You can find much more in the same vein.)
Interesting! How did Norquist/Americans for Tax Reform get so much influence? They seem to spend even less money than Intuit on lobbying, but maybe I’m not looking at the right sources or they have influence via means other than money?
I’m also somewhat skeptical of the claims. The agreement between the the IRS and the Free File Alliance feels too favorable to the Free File Alliance for them to have had no hand in it.
As to your confusion, I can see why an advocacy group that wants to lower taxes might want the process of filing taxes to be painful. I’m just speculating, but I bet the fact that taxes are annoying to file and require you to directly confront the sizable sum you may owe the government makes people favor lower taxes and simpler tax codes.
As to your confusion, I can see why an advocacy group that wants to lower taxes might want the process of filing taxes to be painful. I’m just speculating, but I bet the fact that taxes are annoying to file and require you to directly confront the sizable sum you may owe the government makes people favor lower taxes and simpler tax codes.
This is what I remembered the piece as saying, but unless I’m misreading it now, that’s not actually in the text.
I had thought that Patrick McKenzie claims here, that lobbying by intuit is not the reason why US tax filing is so complicated, and actually it’s because of a republican advocacy group, that doesn’t want to simplify tax filing, because that would be a stealth tax hike.
But rereading the relevant section, I’m confused. It sounds like the relevant advocacy group is in favor of simplifying the tax system, and in particular, removing withholding?
Interesting! How did Norquist/Americans for Tax Reform get so much influence? They seem to spend even less money than Intuit on lobbying, but maybe I’m not looking at the right sources or they have influence via means other than money?
I’m also somewhat skeptical of the claims. The agreement between the the IRS and the Free File Alliance feels too favorable to the Free File Alliance for them to have had no hand in it.
As to your confusion, I can see why an advocacy group that wants to lower taxes might want the process of filing taxes to be painful. I’m just speculating, but I bet the fact that taxes are annoying to file and require you to directly confront the sizable sum you may owe the government makes people favor lower taxes and simpler tax codes.
This is what I remembered the piece as saying, but unless I’m misreading it now, that’s not actually in the text.