Warren Proposal Would Leave Poor Americans at Mercy of IRS
March 24, 2017
This article appeared in The Hill on March 8, 2017
If you believe the IRS should be even more expensive, inefficient and bloated, Massachusetts Sen. Elizabeth Warren has a plan for you.
Last year, Warren concocted the so-called “Tax Filing Simplification Act.” The scheme actually puts the federal government in the tax preparation business. With Tax Day approaching, the senator appears to be dusting off the proposal for another go.
Warren’s legislation would “direct the Internal Revenue Service (IRS) to develop a free, online tax preparation and filing service that taxpayers can use to prepare and file their taxes directly with the federal government.”
Not surprisingly, Warren’s plan socialist-style bureaucracy has garnered the backing of socialist Sen. Bernie Sanders (I-Vt.) and several other misguided members of the U.S. Senate.
Apparently Warren and her band of supporters aren’t aware of what most Americans already know: Free tax prep and e-filing services are widely available. In fact, thanks to a public-private partnership between the IRS and the tax software industry, 70 percent of all Americans already have access to free tax preparation and filing. The federal bureaucracy created by Warren’s bill would obliterate these successful partnerships.
Clearly, Warren’s proposal is little more than a solution in search of a problem.
What actually is a problem, however, is the clear conflict of interest created by the proposal. The IRS exists for the purpose of collecting taxes – and snagging as much tax money as possible in the process. Putting the agency in charge of tax preparation creates serious concerns over how the IRS could possibly look out for the best interest of Americans on its tax prep side when its overall goal is to squeeze every last dime out of taxpayers.
It creates a scenario where the fox is guarding the hen house. And it will harm poorer taxpayers the most.
Wealthier Americans will be able to continue to hire tax attorneys and accountants to reduce their tax burdens. Because Warren’s proposal would kill the market for free and low-cost tax prep solutions, however, lower income Americans would be out of luck. Their only option will be to rely on the IRS to try to lower their tax bill – to the IRS. Good luck with that.
Thanks to private competition, a rich marketplace of options currently exists for Americans hoping to prepare and file their taxes at little or no cost. The Tax Filing Simplification Act won’t improve those options. In fact, it will dry them up, forcing taxpayers to rely on a stale federal bureaucracy that will be motivated to collect more in taxes, not protect them from being overtaxed.
If Warren actually wants to make it simpler for Americans to file their taxes, she’s going about it all wrong. Rather than adding another layer of bureaucracy to the already bloated and wasteful IRS, she should consider pushing comprehensive tax reform efforts that would make taxes fairer and less burdensome. And she should embrace, rather than destroy, the exciting array of solutions already available for Americans looking to do their taxes on the cheap.
When it comes to simplifying taxes, making the IRS even more expensive, less efficient and more menacing is never the right solution.