No thank you Ocasio-Cortez and far left: Why you don't want gov't doing your taxes
The 2018 tax filing deadline has come and gone for American taxpayers and many saw a healthy tax cut this year because of the Tax Cuts and Jobs Act.
Thanks to the GOP tax cuts, overall tax liability is down 24.9 percent, according to data by H&R block, while biweekly paychecks have increased by $50. A typical family of four saw a tax cut of $2,058 in 2018, or a 58 percent reduction in federal income tax liability.
Despite this tax reduction, the code remains confusing and complex for many families. Broadly, tax compliance consumes over 8 million hours and $364.5 billion in costs, according to the National Taxpayers Union Foundation.
Far-left politicians such as Rep. Alexandria Ocasio-Cortez, D-N.Y., and Senators Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., say they have a simple solution to this tax complexity: have the government file your taxes for you. They were among the lawmakers who reintroduced legislation last week in the House and Senate that would instruct the IRS to create its own free, online tax-filing service.
Supporters describe this idea as “return free filing,” and claim it would streamline tax compliance. However, this expansion of government is entirely unnecessary, is opposed by the IRS, and would create a conflict of interest for the government.
Having the government file taxes is a terrible idea
Functionally, having the government assess and file taxes represents a conflict of interest for the agency. Under a system of government-run tax preparation the IRS would tell you how much you owe and give you the opportunity to contest.
Naturally, the IRS would have an incentive to overcharge or withhold information from taxpayers. At best, the taxpayer will contest the IRS’ calculations, and this assumes that every taxpayer intricately knows the law and has the time to figure out whether they were paying the correct amount of taxes.
California tried a government tax filing system and it was an abject failure. According to media reports, roughly 3 percent of eligible taxpayers used the system when it was first launched, and total participants topped out at 90,000 filers.
In addition, it is unlikely that government tax preparation would save taxpayers anything -- and taxpayers would shoulder additional burdens from having to challenge the agency, according to research by the Technology Policy Institute. Not to mention, who would pay for the extra services? Taxpayers, of course.
There is already a solution to tax complexity
Not only is government tax filing a bad idea, it is entirely unnecessary as a solution to tax complexity already exists, known as the Free File tax preparation program.
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This public-private partnership between software companies and the IRS has served taxpayers for the past 16 years and gives any taxpayer earning less than $66,000 per year (roughly 70 percent of taxpayers) access to quality, free and efficient online tax preparation and electronic filing services. In that time, the program has been used to file 53 million federal tax returns and has saved taxpayers an estimated $1.6 billion, according to the IRS.
The program also ensures that taxpayers are protected with the right to privacy and access to strict cybersecurity measures to prevent fraud.
Alex Hendrie is director of tax policy at Americans for Tax Reform, a free market advocacy organization dedicated to lower taxes and limited government.