Restructuring the tax process might benefit Americans

Photograph courtesy of Grizzly Staff

Thomas Bantley

thbantley@ursinus.edu

With April 15 behind us, Americans have had our annual reminder that taxes are often a pain. Even those who advocate for more government spending financed through taxes are annoyed at how burdensome filing taxes can be. There is a reason why so many people find tax
day miserable: Americans waste billions of dollars and millions of hours per year filing their taxes. However, it does not have to be this way, because there is a very simple solution to this issue. The IRS could file Americans’ taxes for them.

The idea sounds strange but is actually quite reasonable. The IRS already knows the incomes of most Americans and probably knows what most Americans are going to owe. Hypothetically, the IRS could send you a tax return with what you make and what you owe and you can make changes as you see fit. Importantly, if you don’t want to complicate your taxes, then you could just sign off on the tax return and you’re done.

Some economists believe this plan could work. Austan Goolsbee, an economist at the University of Chicago and tax expert, estimates that having the IRS prepare the taxes of Americans could save $2 billion and 225 million hours per year for the American people. This is a simple idea with many supporters – among them Representative Alexandria Ocasio-Cortez, President Obama, and the late President Reagan.

However, despite the support, pushes in Congress to simplify taxes keep failing, for two reasons: first, there is the issue of lobbying. Firms whose business is to help Americans file taxes, such as H&R Block and Intuit, lobby congress to oppose tax simplification measures in order to stop the IRS from destroying their business. For example, H&R Block and Intuit spent $6.6 million dollars on government lobbying related to the IRS and tax issues, and both the firms also contributed $16,000 to House Ways and Means Committee chair Representative Richard Neal of Massachusetts over the last two election cycles.

In addition, there is the issue of ideology. There are some conservatives and libertarians in the United States who truly despise taxes and view them as illegitimate government overreach. As a result, they oppose measures
to simplify taxes because people won’t join their anti-tax movements if taxes are easy to pay and non-burdensome. The anti-tax movement has a vested interest in having taxes be as burdensome and hard to pay as possible. This is an issue in congress as we speak. The misleadingly named Taxpayers First Act (H.R.5444), a bipartisan bill that has been floating around congress for the last 2 years, bans the IRS from automatically preparing tax returns for the American people. A ridiculous bill like this needs to be stopped.