I really like TurboTax. Before I used TurboTax, I used to pay an accountant hundreds of dollars a year to do my slightly complicated taxes. (I have been a landlord, had a home office, had freelance income and expenses, and had to depreciate some business assets). TurboTax is much cheaper and not much extra effort.
I do not like taxes. The tax code is complex, and it encourages unproductive economic activity. Also, the federal government takes way too much of people’s money and spends it poorly.
LIBERAL DC AG WITH TIES TO DARK-MONEY GIANT ACCUSED OF ‘WEAPONIZING’ POWER TO TARGET CONSERVATIVES
So when TurboTax, owned by software giant Intuit, makes it easier for me to do my taxes without overpaying, I’m grateful.
But Intuit, like H&R Block and Jackson Hewitt, has set up a business that is 100% dependent on the government. For that reason, these companies can’t be too surprised that they’ve become a political football and that many politicians, journalists, and activists are turning them into a whipping boy.
Then Hamas perpetrated the deadliest slaughter of Jews since the Holocaust- and the TurboTax lobbyists cited above apparently saw their golden opportunity https://t.co/72gFpNHOVg
— David Frum (@davidfrum) October 30, 2023
The misnamed Inflation Reduction Act included a $15 million earmark for the IRS to fund a pilot program in which the IRS would act as both preparer and receiver of Americans’ taxes. Republicans have long objected to Democrats’ efforts to boost IRS funding, and the large tax preparers have long lobbied against proposals that the IRS enter the tax-prep industry.
This dynamic created a GOP-TurboTax alliance that bore fruit in the House’s Israel bill: Republicans insisted on spending cuts to offset the emergency aid, and the House legislation put that $15 million pilot program on the chopping block.
Democrats and liberal commentators responded that Republicans care more about tax-prep lobbyists than they care about helping Israelis.
At the same time, Senate Democrats are calling for investigations into how the parent companies of Facebook and Google obtained taxpayer data from H&R Block and two other tax-prep companies.
It’s no fun being in the crosshairs of politicians and the political media. But again, if your business depends on the government, such trouble comes with the territory.
TurboTax and H&R Block depend on the government in many ways. For one, they depend on high tax rates and a complex tax code. When tax rates go down, and especially when taxes get simpler, these businesses lose money.
More intimately, TurboTax and H&R Block supported the Obama administration’s failed efforts to regulate their smaller competitors out of business.
Let’s begin with that Obama-era attempt at regulatory robbery.
You may recall that Obama, as part of his promise to shut that revolving door, issued ethics rules banning his appointees from working on issues that affected their former companies.
So, it may surprise you that Obama hired H&R Block’s former CEO Mark Ernst to run his IRS, and specifically to craft new regulations on tax preparers. It will not surprise you to learn that Ernst and Obama’s IRS wrote rules that benefited H&R Block and other large tax-prep companies, specifically by driving independent part-time tax preparers out of business.
Obama lost in court because Congress had never given the IRS the authority unilaterally to regulate tax preparation. The companies counting on big government to kill its competitors were let down.
Likewise, the big tax-prep companies took a blow when the Tax Cuts and Jobs Act simplified the tax code.
In its required filings with the Securities and Exchange Commission, H&R Block noted, “Changes in applicable tax laws have had, and may in the future have, a negative impact on the demand for and pricing of our services.”
Tax simplification “could decrease the demand or the amount we charge for our services,” H&R Block wrote in its filings.
Sure enough, when the TCJA increased the standard deduction (and thus mooting any itemized deductions), the tax preparers saw a loss in business.
H&R Block stock plummeted in 2018 when the firm announced that it was closing 400 storefronts. “Online tools and newer tax laws have increasingly lowered the complexity of filing annual tax returns for millions of American taxpayers,” reported one accounting expert.
While 46.5 million taxpayers itemized deductions in their 2017 tax returns, only about 18 million itemized their 2018 deductions.
TurboTax’s parent company, Intuit, reportedly also scrambled to make up for business that the TCJA cost the company.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
Now, big government is the companies’ foe, as the IRS wants to expand and compete against H&R Block and TurboTax.
This may or may not be a good idea, but these companies can’t curse big government — after all, that’s how they make their living.
