TurboTax’s 20-year fight to stop Americans from filing taxes for free (2019)

Original Article ↗ Hacker News Discussion ↗

History of Free Filing Efforts and Corporate Lobbying

  • Commenters note a 20+ year pattern of tax-prep firms lobbying to block or cripple government-run free filing (e.g., prior “Free File” deals, bans on IRS competition, shutting down or weakening IRS Direct File).
  • Several point out IRS Direct File piloted successfully and saved users billions, but is now being wound down under political and industry pressure.
  • Many see this as classic regulatory capture: concentrated corporate benefit, diffuse public harm.

Complexity of the US Tax System

  • Repeated theme: tax complexity is a feature, not a bug—used to create targeted incentives and loopholes, mainly benefiting those who can afford experts.
  • Others argue much complexity comes from trying to enact social policy via the tax code and from fragmented state/local systems.
  • Several non-US commenters describe PAYE and pre-filled returns where most people never “file” in the US sense, and express disbelief the US hasn’t adopted this.
  • Some insist that for simple W‑2 situations, US filing is easy and could be done on paper in minutes; others say even mild complications (multiple states, small business, investments, credits) quickly become intimidating.

Progressive vs Flat Tax and Who Really Pays

  • Long subthread debates whether a flat tax would simplify anything:
    • One side: complexity is about income categories and deductions, not brackets; flat tax mostly shifts burden from rich to poor.
    • Counterview: current complexity lets billionaires pay lower effective rates than high-earning professionals; you can get progressive outcomes with a flat rate plus fixed credits.
  • Related arguments over corporate vs individual tax burden, international tax arbitrage, and how much business should contribute compared to workers.

AI and the Future of Tax Prep

  • Some believe LLMs threaten traditional tax-prep software and will soon handle most preparation, especially where results are numerically checkable.
  • Many are wary: you shouldn’t use AI where you can’t verify the reasoning; if you must re-check everything, you might as well do it yourself.
  • Others predict AI will simply become a new intermediary and revenue stream, potentially adding complexity rather than removing it.

Alternatives, Open Source, and Nonprofits

  • Multiple mentions of cheaper or free options: FreeTaxUSA, Cash App (ex–Credit Karma), IRS Free Fillable Forms, community tools like freetofile.com, and open-source projects (Open Tax Solver, IRS Direct File code on GitHub).
  • People note the main barrier for open-source or nonprofit solutions is not math but fast-changing law and forms, requiring continuous legal and engineering work (and political headwinds).

Politics, Culture, and “Why Is This Privatized?”

  • Many tie the situation to US political culture: aversion to “big government,” strong lobbying, and a belief that privatization is inherently better—even when it clearly costs more.
  • Several explicitly blame specific parties and figures for blocking simplification, arguing that making taxes painful is an intentional strategy to build anti-tax sentiment.
  • Others invoke deeper cultural roots (e.g., Protestant work ethic, hostility to welfare) and describe the US as a de facto plutocracy where private profit routinely overrides public convenience.