Musk steals a billion dollars from low-income Americans and sends it to Intuit
I'm about to leave for a 20+ city book tour for my new novel PICKS AND SHOVELS. Catch me on Feb 14 in BOSTON for FREE at BOSKONE , and on Feb 15 for a virtual event with YANIS VAROUFAKIS. More tour dates here.
Let me tell you about the most wasteful US federal government spending I know about. It's a humdinger. You and everyone you know are mired in it for weeks, or perhaps months, every year. It will cost you, personally, thousands of dollars over your lifetime. I'm talking about filing your taxes.
Not paying your taxes. Paying your taxes is fine. It keeps the country running, though not because the government needs our "tax dollars" to pay for things. The government annihilates the money it taxes away from us, and creates new money to pay for programs. The USA needs US citizens' dollars to build highways the same way Starbucks needs its Starbucks gift cards to make lattes â that is, not at all:
I'm talking about filing your taxes. In nearly every case, a tax return contains a bunch of things the IRS already knows: how much interest your bank paid you, how much your employer paid you, how many kids you have, etc etc. Nearly everyone who pays a tax-prep place or website to file their tax return is just sending data to the IRS that the IRS already has. This is insanely wasteful.
In most other "advanced" countries (and in plenty of poorer countries, too), the tax authority fills in your tax return for you and mails it to you at tax-time. If it looks good to you, you just sign the bottom and send it back. If there are mistakes, you can correct them. You can also just drop it in the shredder and hire an accountant to do your taxes for you, if, for example, you run a small business, or are self-employed, or have other complex tax needs. A tiny minority of tax filers fall into that bucket, and they keep the tax-prep industry in other countries alive, albeit in a much smaller form than in the USA.
In the US, we have a duopoly of two gigantic tax-prep outfits: H&R Block, and Intuit, owners of Turbotax. These companies make billions from low-income, working Americans every year, charging them to format a bunch of information the IRS already has, and then sending it to the IRS on their behalf. These companies lobbied like crazy for the right to tax you when you pay your taxes.
In 2003, it looked like the IRS would start sending Americans pre-completed returns, so H&R Block and Turbotax went into lobbying overdrive, whipping up a "public private partnership" called the "Free File Alliance," that promised to do free tax prep for most Americans. But once the threat of IRS free filing was killed, they turned Free File into a sick joke. Americans who tried to use Free File were fraudulently channeled into filing products that cost money â sometimes hundreds of dollars â to use, a fact that was only revealed after the taxpayer had spent hours keying in their information. Free File sites were also used to peddle unrelated financial products to tax filers, with deceptive language that implied that buying these services was needed to file your return:
The big winner from the Free File scam was Intuit, which bought Turbotax in 1993. They made about one billion dollars per year ripping off Americans they'd promised to file free tax returns for. After outstanding work by Propublica, lawmakers and the IRS were finally pressured to create an IRS-based free filing service that would cut Intuit out of the loop. Intuit went on a lobbying blitz without parallel, giving out $3.5m in bribes in 2022 in a bid to kill the Treasury Department's study of a free filing service:
But Intut was undeterred. They came back in 2023 with a campaign to say that ripping off American tax-filers was antiracist and anyone who wanted the IRS to make filing free was, therefore, a racist:
Now, no one is forcing you to use this program. Do you have a family accountant that your grandparents started using in the Eisenhower administration? Just keep going to them. Do you like using Turbotax? Keep using it! Wanna do your own taxes? Here's the forms:
https://www.irs.gov/pub/irs-pdf/f1040s.pdf
But if you want to file your taxes for free, and you earn $125,000/year or less, here's the IRS's service:
Better use it quick, though. Elon Musk has just announced that he's killing it. Yeah, I know, no one elected him. That doesn't seem to matter to anyone, least of all Democrats on the Hill, who are still showing up for work every day and trying to engender a "spirit of comity" rather than screaming and throwing eggs:
Musk called IRS free file a "far left" program and announced that he had "deleted it." By the way, the median Trump voter's income is about $72k, meaning more than half of Trump voters qualified for free file:
If you'd like an essay-formatted version of this post to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
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The IRS will do your taxes for you (if that's what you prefer)
This Saturday (May 20), Iâll be at the GAITHERSBURG Book Festival with my novel Red Team Blues; then on May 22, Iâm keynoting Public Knowledgeâs Emerging Tech conference in DC.
On May 23, Iâll be in TORONTO for a book launch thatâs part of WEPFest, a benefit for the West End Phoenix, onstage with Dave Bidini (The Rheostatics), Ron Diebert (Citizen Lab) and the whistleblower Dr Nancy Olivieri.
America is a world leader in allowing private companies to levy taxes on its citizens, including (stay with me here), a tax on paying your taxes.
In most of the world, the tax authorities prepare a return for each taxpayer, sending them a prepopulated form with all their tax detailsâââcollected from employers and other regulated entities, like pension funds and commodities brokers, who must report income to the tax office. If the form is correct, the taxpayer signs it and sends it back (in some countries, taxpayers donât even have to do thatâââthey just ignore the return unless they want to amend it).
No one has to use this system, of course. If you have complex finances, or cash income that doesnât show up in mandatory reporting, or if youâd just prefer to prepare your own return or pay an accountant to do so for you, you can. But for the majority of people, those with income from a job or a pension, and predictable deductions, say, from caring for minor children, filing your annual tax return takes between zero and five minutes and costs absolutely nothing.
Not so in America. America is one of the very few rich countries (including Canada, though this is changing), where the government wonât just send you a form containing all the information it already has, ready to file. As is common in complex societies, America has a complex tax code (further complexified by deliberate obfuscation by billionaires and their lickspittle Congressjerks, who deliberately perforate the tax code with loopholes for the ultra-rich):
That complexity means that most of us canât figure out how to file our own taxes, at least not without committing scarce hours out of the only life we will ever have to poring over the ramified and obscure maze of tax-law.
Why doesnât the IRS just send you a tax-return? Well, because the tax-prep industryâââan oligopoly dominated by a handful of massive, ultra-profitable firmsâââbribes Congress (that is, âlobbiesâ) to prohibit this. They are aided in this endeavor by swivel-eyed lunatic anti-tax obsessives, like Grover Nordquist and Americans for Tax Reform, who argue that paying taxes should be as difficult and painful as possible in order to foment opposition to taxation itself.
The tax-prep industry is dominated by a single firm, Intuit, who took over tax-prep through its anticompetitive acquisition of TurboTax, itself a chimera of multiple companies gobbled up in a decades-long merger orgy. Inuit is a freaky company. For decades, its defining CEO Brad Smith ran the company as a cult of personality organized around his trite sayings, like âDo whatever makes your heart beat fastest,â stenciled on t-shirts worn by employees. Other employees donned Brad Smith masks for selfies with their Beloved Leader.
Smithâs cult also spent decades lobbying to keep the IRS from offering a free filing service. Instead, Intuit joined a cartel that offered a âFree Fileâ service to some low- and medium-income Americans:
But the cartel sabotaged Free File from the start. They blocked search engines from indexing their Free File services, then bought Google ads for âfree fileâ that directed searchers to soundalike programs (âFree Filing,â etc) that hit them for hundreds of dollars in tax-prep fees. They also funneled users to versions of Free File they were ineligible for, a fact that was only revealed after the user spent hours painstaking entering their financial information, whereupon they would be told that they could either start over or pay hundreds of dollars to finish filing with a commercial product.
Intuit also pioneered the use of binding arbitration waivers that stripped its victims of the right to sue the company after it defrauded them. This tactic blew up in Intuitâs face after its victims banded together to mass-file thousands of arbitration claims, sending the company to court to argue that binding arbitration wasnât enforceable after all:
But justice eventually caught up with Intuit. After a series of stinging exposes by Propublica journalists Justin Elliot, Paul Kiel and others, NY Attorney General Letitia James led a coalition of AGs from all 50 states and DC that extracted a $141m settlement for 4.4 million Americans who had been tricked into paying for Turbotax services they were entitled to get for free:
Fines are one thing, but the only way to comprehensively end the predatory tax-prep scam is to bring the USA kicking and screaming into the 20th century, when most of the rest of the world brought in free tax-prep for ordinary income earners. Thatâs just whatâs happening: the IRS is trialing a free tax prep service for next yearâs tax season:
That charm offensive didnât stop the IRS from releasing a banger of a report that made it clear that free tax-prep was the most efficient, humane and cost-effective way to manage an advanced tax-system (something the rest of the world has known for decades):
https://www.irs.gov/pub/irs-pdf/p5788.pdf
Of course, Intuit is furious, as in spitting feathers. Rick Heineman, Intuitâs spokesprofiteer, told KQED that âA direct-to-IRS e-file system is wholly redundant and is nothing more than a solution in search of a problem. That solution will unnecessarily cost taxpayers billions of dollars and especially harm the most vulnerable Americans.â
Despite Upton Sinclairâs advice that âit is difficult to get a man to understand something, when his salary depends on his not understanding it,â I will now attempt to try to explain to Heineman why he is unfuckingbelievably, eye-wateringly wrong.
âe-fileâŚis wholly redundantâ: Well, no, Rick, itâs not redundant, because there is no existing Free File system except for the one your corrupt employer made and hid âin the bottom of a locked filing cabinet stuck in a disused lavatory with a sign on the door saying âBeware of the Leopard.ââ
ânothing more than a solution in search of a problemâ: The problem this solves is that Americans have to pay Intuit billions to pay their taxes. Itâs a tax on paying taxes. That is a problem.
âunnecessarily cost taxpayers billions of dollarsâ: No, it will save taxpayers the billions of dollars (they pay you).
âharm the most vulnerable Americansâ: Here is an area where Heineman can speak with authority, because few companies have more experience harming vulnerable Americans.
Take the Child Tax Credit. This is the most successful social program in living memory, a single initiative that did more to lift American children out of poverty than any other since the days of the Great Society. It turns out that giving poor people money makes them less poor, which is weird, because neoliberal economists have spent decades assuring us that this is not the case:
But the Child Tax Credit has been systematically sabotaged, by Intuit lobbyists, who successfully added layer after layer of red tapeâââneedless complexity that makes it nearly impossible to claim the credit without expert helpâââfrom the likes of Intuit:
So yes, I will defer to Rick Heineman and his employer Intuit on the subject of âharming the most vulnerable Americans.â After all, theyâre the experts. National champions, even.
Now I want to address the peply guys who are vibrating with excitement to tell me about their 1099 income, the cash money they get from their lemonade stand, the weird flow of krugerrands their relatives in South African FedEx to them twice a year, etc, that means that free file wonât work for them because the IRS doesnât actually understand their finances.
Thatâs a hard problem, all right. Luckily, there is a very simple answer for this: use a tax-prep service.
Actually, itâs not a hard problem. Just use a tax-prep service. Thatâs it. No one is going to force you to use the IRSâs free e-file. All you need to do to avoid the socialist nightmare of (checks notes) living with less red-tape is: continue to do exactly what youâre already doing.
Same goes for those of you who have a beloved family accountant youâve used since the Eisenhower administration. All you need to do to continue to enjoy the advice of that trusted advisor isâŚnothing. Thatâs it. Simply donât change anything.
One final note, addressing the people who are worried that the IRS will cheat innocent taxpayers by not giving them all the benefits theyâre entitled to. Allow me here to simply tap the sign that says âbetween 13 and 22 percent of EITC benefits are gulped down by tax prep companies.â In other words, when you fret about taxpayers being ripped off, youâre thinking of Intuit, not the IRS. Just calm down. Why not try using fluoridated toothpaste? Youâll feel better, and I promise I wonât tell your friends at the Gadsen Flag appreciation society.
Your secret is safe with me.
Catch me on tour with Red Team Blues in Toronto, DC, Gaithersburg, Oxford, Hay, Manchester, Nottingham, London, and Berlin!
If youâd like an essay-formatted version of this thread to read or share, hereâs a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
[Image ID: A vintage drawing of Uncle Sam toasting with a glass of Champagne, superimposed over an IRS 1040 form that has been fuzzed into a distorted halftone pattern.]
Turbotax is blitzing Congress for the right to tax YOU
Every year, Americans spend billions on tax prep services, paying a heavily concentrated industry of giant, wildly profitable firms to send the IRS information it already has. Despite the fact that most other rich countries have a far more efficient process, many Americans believe that adopting this process here is either impossible, immoral, or both.
If youâd like an essay-formatted version of this post to read or share, hereâs a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:
That puts tax preparation in the same bucket as other forms of weird American exceptionalismâââlike the belief that weâre too untrustworthy to have universal healthcare, or that weâre so violent that we must all have assault rifles to protect ourselves from one another.
For those of you who arenât familiar with how they do it in, say, the UK, hereâs how it works: your employer submits all of your paystubs to the tax authorities; likewise the custodians of your pension and other people who send you money. The tax authority also knows about your major deductions, like your kids or other dependents.
The tax authority uses this information to fill in a tax return for you and they mail it to you. Itâs simple and easy to understand. If they missed some information, or if your tax status has changed, or if youâve got new deductions, you can amend this returnâââor throw it away and start over by yourself or with a tax professional.
For the vast majority of Britons, filing their tax returns takes a few minutes once a year, and itâs free. For the minority who donât fit the standard form, the system works like it does in the USâââyou either tackle it alone, or do it with professional help.
The IRS could easily do the same thing. Even in a world where many of us are being âcasualizedâ and have income coming in as independent contractors, the IRS knows about it, thanks to the 1099 form. Sure, the IRS might make mistakes, and if youâre worried about that, you can either manually review the precompleted return or pay someone to do it.
Itâs a no-brainer, or it would beâââif it wasnât for decades of lobbying by the massively concentrated tax-prep industryâââwildly profitable corporate giants like HR Block and Intuit, the parent company of Turbotax, who spent 20 years lobbying congress, spending millions to ensure that Americans would have to pay the Turbotax tax in order to pay their income tax.
The tax-prep industry couldnât have done this on their ownâââtheir astroturf campaigns were joined by a grassroots of useful idiots, betwetters like Grover Norquist and his acolytes, who openly demand that tax preparation be as difficult and painful as possible, to drum up support for their campaign to âget the US government down to the size where we can drown it in the bathtub.â
These extremists are joined by many independent tax-prep specialists, who are seemingly convinced that every taxpayer has 11 dependents, four different kinds of pension savings, and six all-cash side-hustles, two of them international. Some people do have complicated taxesâââas a writer with income from all over the world, Iâm one of themâââbut most people donât.
The point of getting the IRS to send you pre-populated tax returns isnât to deny you the opportunity to pay excellent, knowledgeable tax-prep specialists if you need themâââitâs to spare most of us from the needless expense of paying Intuit and HR Block to perform the rote form-filling by which the rake in billions in profits.
In reality, the campaign to defund the IRS isnâtâââand will never beâââabout helping âthe little guy.â As Propublicaâs IRS Files demonstrate, the defunded, shriveled IRS is a billionaireâs plaything, which is why Americaâs top 400 earners pay less tax than you do:
The commonsense utility of the IRS supplying you with prepopulated returns is so obvious that the tax-prep industry has had to really work to hold it at bay. The most successful scam was Freefile, a program cooked up by the tax-prep cartel that claimed it would provide free tax-prep to low-income Americans.
Freefile was a literal fraud: Intuit and its co-monopolists used a raft of deceptive âdark patternsâ to trick peopleâââstudents, veterans, retirees, and the poorest among usâââinto paying for services that they were entitled to use for free. Almost no one managed to find and use the Freefile offerings theyâd hidden in a locked filing cabinet in a disused subbasement behind a sign reading âBeward Of the Leopard.â
This was so obviously crooked that the companies were eventually forced to give it up, but they werenât doneâââtheir eye-watering, voluminous terms of service contained buried binding arbitration clauses that prohibited the people they ripped off from suing them:
Despiteâââor, more realistically, because ofâââthe rising fury at the tax-prep industryâs years of unchecked corruption, Intuit has actually increased its lobbying spending this year: Open Secrets reports that in 2022, Intuit showered lawmakers with a record $3.5m:
Their target? The $15m that the Inflation Reduction Act allocated to the Treasury Department to explore free tax filing. Intuitâs line is that this would be âa waste of taxpayer moneyâ and a âconflict of interestââââthe same tired boomer nonsense that Norquist has been shoveling since the Reagan administration. Once again, the proposal isnât to ban Intuit from offering tax prep servicesâââitâs to create a public option that lets people freely choose to pay for tax prep if they think they need it. Itâs a breathtaking act of paternalism to claim that weâre all sheeple, too stupid to spot the IRSâs greedy attacks on our pocketbooks.
Hereâs a choice quote from Intuit: âCreating a government run tax preparation program would be a waste of taxpayer dollars and further disenfranchise low income taxpayers. A direct to IRS tax prep system is a multi-billion dollar solution looking for a problem.â
Unsaid: the tax prep industry rakes in billions of dollars from American taxpayers every single year. The $44.8m the cartel has spent lobbying against free filing since 1998 is a fantastic investmentâââfor them. The dividends they reap from it come out of all of our pockets.
Another bargain? Hiring ex-government officials to work for Intuit, lobbying their former colleagues:
The neoliberal economistsâ theory of regulatory capture is a kind of helpless nihilism, grounded in the Public Choice Theory doctrine that says that regulators will always be captured, so we should just get rid of regulators or make them as weak as possible, so they wonât become cordyceps-ridden puppets of the industries they oversee:
But capture isnât inevitable. Sure, if you have a referee thatâs weaker than the teams, youâll never get a fair gameââânevermind what happens when the ref either used to work for one of the teams or is sure of a cushy job with them when the seasonâs over. If you want a small government, you need small corporationsâââneed to block the anticompetitive mergers and predatory conduct that lets companies grow so large that they can fit their regulators into the little change pocket in their blue-jeans.
Anyone who lived through witchhunts, torture and mass surveillance after 9/11 has good reason to want their government small enough to be accountableâââbut a doctrine of small governments and giant corporations is a plutocratâs charterâââa recipe for regulatory capture so grotesque it is indistinguishable from farce.
[Image ID: An ogrish, tophatted, cigar-chomping giant holds the US Capitol building aloft contemptuously, pinched between the thumb and forefinger of a white-gloved hand. He stands at a podium bearing the Turbotax checkmark logo, yanking a lever in the form of a golden dollar-sign. He stands before a IRS 1040 tax form.]
intuit, turbotax, irs, taxes, death and taxes, corruption, monopoly, freefile, grover norquist, regulatory capture,
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Just a reminder if you live in the US have adhd, your tax returns are due in 15 days.
Also, if you go here you'll find a list of programs that'll let you file your taxes for free that are approved by the IRS and are not TurboTax or H&R block.
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