Today the Government Accountability Office released its most recent assesment of how secure your personal tax information is within the confines of the Internal Revenue Service (IRS)….turns out, not too safe at all, especially from internal threats! Get the highlights here, and read the whole thing here.
Aside from the fact that this sort of disturbing information tends to provoke a cold sweat among taxpayers in general, it will be important to keep this report in mind when you hear the new administration begin pushing for an initiative called “Simple Return,” a system in which the IRS would prepare your taxes for you, using information you provided to them in previous years, send the return to you for review and verification, etc., and all you do is sign on the dotted line and send it back.
Austan Goolsbee, Pres-elect Obama’s chief ecomomics advisor during the campaign is gung-ho about it and it was part of the Obama’s campaign’s tax reform platform.
Here is a quick overview of how it works from the Pittsburgh Post-Gazette, quoting Simple Return advocate Joseph Bankman from Stanford University:
The government could phase in the simple return in three primary waves, he said.
The first would be single and married taxpayers who have no dependents and get most of their income from wages and no more than $100 from interest income. That group would cover 17.5 million taxpayers.
Of course, most of these taxpayers already use the IRS’ simplest forms, the one-page 1040EZ and the 1040A. Yet a free simple return would still provide a big benefit to them, Dr. Goolsbee wrote, because more than 30 percent of 1040EZ filers and 56 percent of 1040A filers pay someone to prepare their taxes.
And a lot of those fees are paid not just because people have trouble figuring out how to do their taxes, but because they simply hate having to do them, said Joseph Bankman, a Stanford University law professor who is one of the nation’s leading simple-return advocates.
“If you said ‘How much would you pay never to have to fill out a tax return again?’ ” Dr. Bankman said, “some people would say ‘I’d pay $500 a year.’ People are dying to get rid of this burden.”
Taxpayers might hate the process, but what are they giving up in terms of privacy when they shift that burden to the federal government? The initiative leads to many unanswered questions.
Who would be held responsible for any errors that might occur on the IRS’s part (and there are lots of instances of errors)? Who would hold the IRS accountable for those errors? Don’t IRS officials, whose job it is to maximize the collection of taxes, have an inherent conflict of interest here? And what about the fact that, as the GAO just told us, the IRS is woefully inept and making little significant progress toward safeguarding your precious tax information?
The article goes on to quote Joseph Bankman as saying:
And one of the biggest benefits of all from a simple return program, he said, would be renewed trust in government.
As it is now, he said, “for a lot of people, the most meaningful interaction they have with the government is to make them feel like an idiot every April 15.”
Renewed trust in government?!
As always, the argument offered by proponents always seems to boil down to “just-don’t-worry-your-pretty-little-heads-about-it” and let the kind, gentle people over at the IRS relieve you of this loathesome burden. Uh, a little 1984 sounding, isn’t it?
The federal government is mandated to collect taxes, but there is no inherently governmental role in the preparation of taxes.
Do we really need a huge new influx of bureaucrats at the IRS to create a platform for this, when they have failed miserably at their actual jobs, which is to keep our private tax information safe and confidential?
The private sector has produced a very vibrant, profitable, widely popular tax prep industry (anybody here ever heard of Quicken or TurboTax?). That industry also provides tons of free tax prep services for taxpayers who cannot afford to pay for an accountant or who simply need the help. A coalition of tax software companies, called Free File Alliance, provides free federal tax filing for anyone who makes less than $54,000 annually.
Here’s a quaint idea: How about simplifying the byzantine tax code or moving toward a flatter tax system?
Filed under: Pork
