How the Maker of TurboTax Fought Free, Simple Tax Filing
To those saying "We should be more like Sweden/Finland!", I'd ask whether those countries have a tax system that is also based on using tax credits and deductions to lower your tax due? I don't know the tax codes in those countries but my guess is that, because they use the tax entity-created system, they do not have such a complicated tax code as the US.<p>In the US, you have two sides of this: (1) the IRS, and (2) CPAs, CPA firms, and software firms like Intuit who profit from helping customers file taxes. The question always is, "Why would I pay someone to file my taxes?" The answer is, "If they can save you more than their fee, it's worth it." In other words, if they charge $100 but save you $101 in "tax due", you have a net "win" of $1 thus you should hire a professional. Why does this work?<p>For the CPAs, CPA firms, and software firms like Intuit, you have a professional who is taking your money and offers a reasonable expectation that, as a result of using their software, you will save more money than you pay in fees because they will help you find deductions and tax credits that you would've been hard pressed to find yourself. These companies compete in a free market for your money, both with other software companies and with CPAs/CPA firms. The "winner" (for a particular user/client) is the one who (a) has the best reputation of not getting you audited, and (b) who gets you the best price:deduction ratio.<p>On the other hand, you have a government entity whose sole charge is to collect revenue. Is their system going to be designed to help you get as many deductions as possible? Are they going to prompt you to deduct moving expenses (just to pick one example)? Maybe, maybe not. The question is legit though and thus causes us all to say, "Wait a minute... maybe, since there is a financial incentive for them not to show me deductions, that they will hide some of that (or make finding it as complex as the tax code)."<p>If Intuit/et al help you save $5000 in taxes this year by helping you deduct all that you can, Intuit/et al do not make one penny more - that money simply stays in your pocket. And you probably smile, buy a new car/vacation/etc. And you certainly tell your friends, "You should use Intuit!" If the IRS helps you save $5000 that you would have otherwise paid (b/c you did not fully deduct all that you could have), then the IRS loses $5000. That in and of itself highlights the problem. Do you trust the IRS to say, "It's okay if we lose $5000 - you're happy, right? That's what matters!"? Of course not. Having the separation works in the US for this clear conflict of interest.<p>Again - I don't know the tax code of the Euro countries but I'd be interested to hear if they have a similar setup and how they work around this. It's logical to think that the IRS could invest $500 million building such a system and then no one uses it because paying $30 to Intuit/etc results in a higher refund for the above reasons...