TurboTax and H&R Block famously lobby the US government to make taxes more annoying to file to drum up demand for their products.[1] But as far as I can tell, they eachonly spend ~$3-4 million a year on lobbying. That’s… not very much money (contrast it with the $60 billion the government gave the IRS to modernize its systems or the $4.9 billion in revenue Intuit made last fiscal year from TurboTax or the hundreds of millions of hours[2] spent that a return-free tax filing system could save).
Perhaps it would “just” take a multimillionaire and a few savvy policy folks to make the US tax system wildly better? Maybe TurboTax and H&R Block would simply up their lobbying budget if they stopped getting their way, but maybe they wouldn’t. Even if they do, I think it’s not crazy to imagine a fairly modest lobbying effort could beat them, since simpler tax filing seems popular across party lines/is rather obviously a good idea, and therefore may have an easier time making its case. Plus I wonder if pouring more money into lobbying hits diminishing returns at some point such that even a small amount of funding against TurboTax could go a long way.
Nobody seems to be trying to fight this. The closest things are an internal department of the IRS and some sporadic actions from broad consumer protection groups that don’t particularly focus on this issue (for example ProPublica wrote an amazing piece of investigative journalism in 2019 that includes gems like the below Intuit slide:)
In the meantime, the IRS just killed its pilot direct file program. While the program was far from perfect, it seemed to me like the best bet out there for eventually bringing the US to a simple return-free filing system, like the UK, Japan, and Germany use. It seems like a tragedy that the IRS sunset this program.[3]
In general, the amount of money companies spend on lobbying is often very low, and the harm to society that lobbying causes seems large. If anyone has examples of times folks tried standing up to corporate lobbying like this that didn’t seem to involve much money, I’d love to know more about how that’s turned out.
I haven’t deeply investigated how true this narrative is. It seems clear TurboTax/Intuit lobbies actively with this goal in mind, but it seems possible that policymakers are ignoring them and that filing taxes is hard for some other reason. That would at least explain why TurboTax and H&R Block spend so little here.
I don’t trust most sources that quote numbers like this. This number comes from this Brookings article from 2006, which makes up numbers just like everyone else but at least these numbers are made up by a respectable institution that doesn’t have an obvious COI.
In general, I love when the government lets the private sector compete and make products! I want TurboTax to keep existing, but it’s telling that they literally made the government promise not to build a competitor. That seems like the opposite of open competition.
TurboTax and H&R Block famously lobby the US government to make taxes more annoying to file to drum up demand for their products.[1] But as far as I can tell, they each only spend ~$3-4 million a year on lobbying. That’s… not very much money (contrast it with the $60 billion the government gave the IRS to modernize its systems or the $4.9 billion in revenue Intuit made last fiscal year from TurboTax or the hundreds of millions of hours[2] spent that a return-free tax filing system could save).
Perhaps it would “just” take a multimillionaire and a few savvy policy folks to make the US tax system wildly better? Maybe TurboTax and H&R Block would simply up their lobbying budget if they stopped getting their way, but maybe they wouldn’t. Even if they do, I think it’s not crazy to imagine a fairly modest lobbying effort could beat them, since simpler tax filing seems popular across party lines/is rather obviously a good idea, and therefore may have an easier time making its case. Plus I wonder if pouring more money into lobbying hits diminishing returns at some point such that even a small amount of funding against TurboTax could go a long way.
Nobody seems to be trying to fight this. The closest things are an internal department of the IRS and some sporadic actions from broad consumer protection groups that don’t particularly focus on this issue (for example ProPublica wrote an amazing piece of investigative journalism in 2019 that includes gems like the below Intuit slide:)
In the meantime, the IRS just killed its pilot direct file program. While the program was far from perfect, it seemed to me like the best bet out there for eventually bringing the US to a simple return-free filing system, like the UK, Japan, and Germany use. It seems like a tragedy that the IRS sunset this program.[3]
In general, the amount of money companies spend on lobbying is often very low, and the harm to society that lobbying causes seems large. If anyone has examples of times folks tried standing up to corporate lobbying like this that didn’t seem to involve much money, I’d love to know more about how that’s turned out.
I haven’t deeply investigated how true this narrative is. It seems clear TurboTax/Intuit lobbies actively with this goal in mind, but it seems possible that policymakers are ignoring them and that filing taxes is hard for some other reason. That would at least explain why TurboTax and H&R Block spend so little here.
I don’t trust most sources that quote numbers like this. This number comes from this Brookings article from 2006, which makes up numbers just like everyone else but at least these numbers are made up by a respectable institution that doesn’t have an obvious COI.
In general, I love when the government lets the private sector compete and make products! I want TurboTax to keep existing, but it’s telling that they literally made the government promise not to build a competitor. That seems like the opposite of open competition.