Who’s Profiting From Keeping Your Taxes Complicated?

Shutterstock | Jat306

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Filing your taxes can be time-consuming, confusing, and expensive. That’s no accident. A wide array of special interests and lobbying groups have spent millions ensuring that they can continue to profit off of your frustrating filing experience, and it’s working. Congress is now considering passing a law that would make it illegal for the IRS to offer its own free filing software, even as tax preparation companies are making headlines for ripping off taxpayers.

If you earn less than $66,000 you are eligible to use a free filing service. But of the 70% of Americans that are eligible, only 3% use a free filing service. Why so few? Recent reports by ProPublica revealed that Turbotax and H&R Block hide their free tax services from showing up in Google searches and instead direct you to their paid version. These companies are taking advantage of an overly complicated system and the people who can’t afford to pay someone to do it for them.

When you Google their free programs and you’re only offered links to their paid programs so it’s no surprise that the number is so low. Though these companies technically provide a free service, it’s hidden within their website. Turbotax and H&R Block are deliberately misleading people to trick them into paying for a service that’s intended to be free.

This needless complication almost exclusively hurts the poor and middle class. Avoiding tricks by corporations looking to pad their profit margins by any means necessary shouldn’t be a part of figuring out your taxes, and for the extremely wealthy it isn’t. Expensive tax lawyers and accountants do all the dirty work. They find loopholes and tax credits that allow the wealthy to pay a low rate, or no taxes at all.

Meanwhile, low-income Americans are left to navigate the byzantine tax structure often missing out on tax benefits they are eligible for. Of those who are eligible for the earned income tax credit (EITC), 20% never receive benefits. People qualify for the EITC based on low-income levels – these are people who need these credits, and it’s a failure of our system that so many people aren’t getting the help being offered to them.

If our tax structure was easier to understand, everyone could enjoy the privileges that are only available to the wealthy. The average taxpayer spends 11 hours filing their returns, an incredible waste of time that is completely unnecessary.

It doesn’t have to be this way. The IRS already has our information. It could create an easier way to file. And as it turns out, other nations already do this. In tiny Estonia it only takes 5 minutes to file your taxes. In Sweden you receive a card with your information on it and all you have to do is check if it’s correct.  

Painless tax filing would benefit everyone… everyone but those in the business of tax simplification. Naturally Intuit, the maker of Turbotax, spent $13 million lobbying against free filing and tax simplification during the last five years. Thanks to the unparalleled power of money in our political system, Turbotax can lobby to keep taxes frustratingly complicated so they can continue to trick people into paying for a free service.

The only people that benefit from this kind of privatization are shareholders and CEOs. Trying to work with these private companies to offer free filing was a good start, but it wasn’t enough even before they started hiding free file programs from the public. When users are being tricked into paying for a free service, it’s clear this program has failed. It’s time to take the next step forward. We’re calling for Congress to step in, shut down the corporate-supported Taxpayer First Act and offer a truly free tax service that works for all Americans. No tricks, no misleading links, no corporate handouts.

 

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