This weekend, I’ll pay TurboTax $20 or whatever it is to help me do my taxes (yeah, I’ve procrastinated). I’ll pay for them to automatically enter in my information from last year, rather than having me retype it all. But, it’s well worth it. TurboTax is great software and paying your taxes without any help is a huge pain.
And Intuit, which publishes TurboTax, likes it that way. This isn’t a new observation, but with Tax Day looming I want to quote a New York Times piece from 2010, about a California program that basically did your taxes for you, and then let you verify the completed form:
With little money to finance the project, and over the objections of the tax-preparation software lobby, [California] began a small pilot project to offer a pre-filled state tax return, called ReadyReturn, to a small sample of taxpayers with simple returns for the 2004 tax year.
The pilot was a hit. Why wouldn’t the government include all the information it already knows to make filing easier?
But as Harvard’s Lawrence Lessig detailed in his recent book Republic, Lost, when the program’s supporters tried to expand it the next year, they ran into significant opposition. As Lessig explains:
Why? From whom? Well, not surprisingly, from those who benefit most from a world where taxes are complex: consumer tax software makers, who sell programs to consumers to make completing complex taxes easier.
From the Times:
California has budgeted only $10,000 for getting word out. The meagerness of the funds allotted for the ReadyReturn program reflects the strength of its political opponents, Mr. Chiang said. The most vigorous opposition comes from companies that sell tax-preparation software, “principally, Intuit,” [the state’s controller] added.
There are a bunch of relevant takeaways here. Lessig’s is the need to decrease the influence of money in politics, so that narrow interests can’t prevent changes to law that further the public good. Another is that as companies get larger, they seek to preserve themselves by any method necessary, and their interests don’t necessarily align with the greater good.
Yet another is that while more often it’s government holding back private innovation, the reverse can happen, too. In the case of TurboTax, a private company is preserving its business model at the expense of government innovation.