It’s also difficult to see what benefits a return-free system would generate, either to taxpayers or to the IRS. First, thanks to the complexity of the U.S. tax code, the vast majority of taxpayers wouldn’t even be eligible for the return-free option. Second, taxpayers with simpler returns can already use tax-preparation software or online options for free. Does anyone seriously think the IRS version will be better?
Some U.S. states have experimented with return-free systems. So far, few have met their goals for taxpayer participation. In California, less than one percent of taxpayers have chosen to use the state’s much-ballyhooed online system.
Much of our politics today runs on bumper-sticker slogans, and the notion of a return-free tax system makes for a pretty good bumper sticker. In the real world, though, a government takeover of the tax-return business won’t eliminate tax returns, nor will it make them simple, painless, convenient or error-free. In the end, common sense and our own experiences are all we need to know the right answer here.
Consider this: Virtually every year, the government adds some sort of new wrinkle designed to make tax filing harder and more complicated. All the private sector has ever done, on the other hand, is try to make it easier.
Jeffrey A. Eisenach is a visiting scholar at the American Enterprise Institute and a managing director at Navigant Economics.