President Trump’s tax plan, released in September, includes a promise to simplify the tax code. The U.S. tax system is uniquely complex with its plentiful loopholes, deductions and exemptions, laid out in a document as long as War and Peace repeated seven times. But the conversation about simplifying the tax code has gotten me thinking about another glaring absurdity of our tax system: how we file them.
There are a lot of reasons Americans hate doing their taxes. For one, the filing process is time-consuming; the IRS estimates an individual spends an average of 12 hours keeping records and filling in forms, and White House estimates have found taxes to be a national time sink of 7.6 billion hours annually, not far off from the 8 billion hours American spend stuck in traffic each year. Filing can also be expensive; the online download of TurboTax currently costs $54.99, not counting the $39.99 state filing fee and sporadic plan price hikes the software has been known to institute. If you’re less willing to puzzle through itemized deductions on your own, you’ll pay more; in 2016, using a professional preparation service cost Americans an average of $273 each.
This resource-intensive filing process is not only a regular feature of American life – it’s a feature that is becoming uniquely American. Currently, 36 countries give at least some taxpayers the option of receiving a completed tax return in the mail using income information the government already has to collect from employers anyway. If you have changes, you can make them straight on the form, and if not, you simply sign and mail your return back. In 2005, California implemented a similar pilot program, giving 50,000 residents the chance to receive state-completed tax forms in their mailbox. The satisfaction rate with the program, known as ReadyReturn, was an incredible 98%.
Despite the availability of solutions that can make taxes easier, politicians often use the annual pain Americans experience doing their taxes not to improve the process, but rather as a Trojan horse for changing the tax code in ways that forward their political agenda. President Trump, for example, promises to achieve simplification by reducing the number of income tax brackets. But, reducing the number of income brackets does much less to simplify the ordeal of taxes than it does to reduce taxes owed by high-income earners.
Regardless of how you feel about the substance of tax policy, simplifying the tax filing process would make a huge impact for relatively little effort. But real simplification, it turns out, is politically harder than it should be. The incomprehensible complexity of tax filing has created an entire industry with a vested interest in keeping things complicated. In the last five years, Intuit, the maker of TurboTax, has spent more than $12 million on federal lobbying efforts, followed closely by H&R Block’s $11 million.
By simplifying the tax filing process, not only could Congress save Americans time, money and stress, pursuing filing reform could also fundamentally improve the relationship citizens have with their government. After California’s 2005 ReadyReturn experiment, the state received overwhelmingly positive feedback, including one participant’s comment: “Wow! Government doing something to make life easier for a change.”
Good government should actively seek to improve the world for its citizens. Simplifying taxes has often been used as a smokescreen for less-popular changes in the tax code. As our leaders dive into the first major revision to the tax code in decades, any discussion of simplifying taxes should include a discussion of simplifying how we file them.
Note: This post has been revised to include correct figures for lobbying expenses by TurboTax and H&R Block.
Photo Credit: U.S. Air Force Illustration/Senior Airman Courtney Witt
Policy Analyst, Frontier Group
R.J. focuses on data privacy issues and the commercialization of personal data in the digital age. Her work ranges from consumer harms like scams and data breaches, to manipulative targeted advertising, to keeping kids safe online. In her work at Frontier Group, she has authored research reports on government transparency, predatory auto lending and consumer debt. Her work has appeared in WIRED magazine, CBS Mornings and USA Today, among other outlets. When she’s not protecting the public interest, she is an avid reader, fiction writer and birder.