Musk steals a billion dollars from low-income Americans and sends it to Intuit
Forcing you to pay Turbotax to send data to the IRS that it already has is the DEFINITION of government inefficiency.
I’m about to leave for a 20+ city book tour for my new novel Picks and Shovels. Catch me on Feb 14 for free at Boskone in Boston, 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 — that is, not at all:
https://theglobepost.com/2019/03/28/stephanie-kelton-mmt/
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 — sometimes hundreds of dollars — 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:
https://pluralistic.net/2023/02/20/turbotaxed/#counter-intuit
In 2022, nearly every US state attorney general settled their lawsuits against Intuit for the Turbotax ripoff, bringing in $141m:
https://www.agturbotaxsettlement.com/Home/portalid/0
In 2023, the FTC won a case against Intuit over the scam:
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:
https://pluralistic.net/2023/09/27/predatory-inclusion/#equal-opportunity-scammers
Strangely, no one bought that one. By May, 2023 the IRS had announced its own, in-house free file program:
https://pluralistic.net/2023/05/17/free-as-in-freefile/#tell-me-something-i-dont-know
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:
https://www.irs.gov/filing/irs-direct-file-for-free
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:
https://apnews.com/article/irs-direct-file-musk-18f-6a4dc35a92f9f29c310721af53f58b16
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:
https://fivethirtyeight.com/features/the-mythology-of-trumps-working-class-support/
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:
https://pluralistic.net/2025/02/11/doubling-up-on-paperwork/#rip-freefile
