With President Trump pursuing tax reform soon, Democrats and Republicans are likely to spar on legislation. But one current proposal could unite both sides.
One little-known piece of legislation filed by Senator Elizabeth Warren (D-Massachusetts) would make filing federal tax returns a lot easier for a vast majority of Americans by not requiring taxpayers to file a return at all. The Tax Filing Simplification Act of 2017, which Sen. Warren introduced in mid-April with ten other co-sponsors, would mainstream the idea of “return-free filing,” intended to save Americans’ time and money when it comes time to file taxes.
Return-free filing, as defined by the non-partisan Tax Policy Center, would involve the government doing its own accounting of each American’s tax liability based on estimates from paychecks and other income. A pre-filled return would then be sent to each taxpayer, whereupon a taxpayer could either sign off on the return sent to them by the government and pay the amount listed, or opt to file their own tax return.
According to the Institute on Taxation and Economic Policy (ITEP), the proposal isn’t something exclusively supported by Democrats. The idea has received bipartisan support as recently as 2011, with Senators Ron Wyden (D-Oregon) and Dan Coats (R-Indiana) — who is currently President Trump’s Director of National Intelligence — both supporting a return-free filing proposal dubbed “EasyFile,” and with former Republican President Ronald Reagan supporting the idea in a 1985 speech.
Despite the broad support from both parties, lobbyists working on behalf of tax preparation companies like H&R Block and Intuit (creators of TurboTax) have been pressuring members of Congress to oppose return-free filing, as those companies stand to lose significant revenue if tax preparation is simplified for the vast majority of Americans. ProPublica and NPR reported in 2013 that Intuit alone spent nearly $12 million on lobbying Congress between 2008 and 2013, which is more than tech giants Amazon and Apple spent in that period.
“Tax Day has become an opportunity for corporations to profit off of confusion over our complicated tax code. That is wrong,” Senator Bernie Sanders (I-Vermont) said in a public statement following the filing of Warren’s bill. “The Tax Filing Simplification Act would end the absurdity of Americans having to pay private companies hundreds of dollars to pay their taxes. We must make tax filing as easy as possible, not direct profits to private companies at the expense of working families.”
As of this writing, there has not yet been any committee action on Warren’s bill.
Matthew P. Robbins is an economics reporter for Grit Post covering wages, budgets, and taxes. He lives in Chicago, Illinois with his husband and two cats.