2-node-supercomputer.net 2022-03-20

Tax Preparation Incentives

Taxes! Again! Tax preparation software! Ugh!

I already expounded the flaws and inefficiencies of the American tax season here. Why tax preparation companies lobby for a complex tax system, how the IRS could do it more efficiently, how Americans waste hours every year on their taxes.

The upshot (downshot?) is that tax preparation companies have an incentive to prevent the tax system from getting better, because if it was good, they wouldn't be needed.

The best fix is to fix the incentive. What kind of entity or business model would have the incentive to lobby for a better system? What company would benefit form a nicer tax system?

Maybe one of the small preparation companies, if they think they can get a government contract to do it for the IRS.

Or, most small businesses that wouldn't have complicated taxes.

And individual tax payers.

Not much in the way of anyone who thoroughly understands the current tax system.

However, there is one hope: charities. United Way has myfreetaxes.com. They are powered by one of them tax preparation companies, but, ultimately, their incentive is to make it is easier to pay taxes. Unfortunately, as a charity, they don't have the same clout as a business, and, I believe, they are forbidden from lobbying.