I recently learned how big of a scam taxes in America are, not the actual tax rate, but how we actually pay our taxes, all of this. In countries like the Netherlands or Japan or New Zealand, none of this exists. Like if you search how to pay your taxes in Estonia, you get a video that is less than three minutes long. “Should be all fine. So let’s confirm. Submit.” What? How does this exist? These are places where the government operates a free — “Free.” “Free.” — internet portal where the citizens can pay their taxes. Meanwhile, here in the United States, filing taxes has two huge problems. It’s too complicated. And it’s too expensive. The majority of US taxpayers have to pay a private company to help us pay our taxes to the government. Collectively, we spend billions of dollars every year doing this. We spend billions of our precious spring hours tracking down documents, scanning crinkled, faded receipts and just hoping that this little green number goes up. “Right now, the tax code is so complicated, so complex, it is not working for anybody.” Oh, and we also pay emotionally. We worry. We wonder if we’re doing it right. And most of us have wondered what happens if we do it wrong. So why is it that a bunch of other countries have it easy, whereas we get the expensive, stressful, time-eroding version of paying taxes? To understand this absurdity, I teamed up once again with the Times editorial board writer Binya Appelbaum. OK, let’s do this. “Paying taxes in America is tense. It’s scary. But the process of doing it doesn’t need to be.” Binya has been reporting on economic and tax policy in America for a very long time. So let me show you how paying taxes in America has become the biggest scam you’ve never heard about and how some lawmakers are trying to change it. “One of the most unpleasant facts of life, taxes.” “You may be wondering, who got all this money?” “Why we have a $10 billion-a-year-plus business in helping people do what the government should be helping them do instead.” Walk me through the history of all the attempts to make a government-run portal to pay taxes. “So in the before times, it was a thick book. You picked up a copy maybe at the local library. And you worked through these complicated worksheets, either with the help of an accountant or in their dining rooms. And you eventually arrived at a bottom-line calculation of what you owed or what the government owed to you and put it in the mail. And then Ronald Reagan gives a public address.” “We envision a system where more than half of us would not even have to fill out a return. We call it the return-free system.” “In which, he says, we are going to deliver to Americans an easy way to file taxes. We’re going to move from this era of long forms and short forms to an era of no forms. The government is going to be the solution to your problem.” Reagan was serious about this. In 1987, 78,000 Americans filed their taxes using cutting-edge technology, these primitive modems and these old machines called like the Zylog System and the Mitron. And it was a hopeful experiment in what could have saved us so much pain. “And then his successors basically continued to make this promise for the next couple of decades. Bill Clinton makes it. George Bush goes out —” “When I took my job 18 months ago, virtually every other major country in the world had the ability for citizens to go online and freely file their taxes. We didn’t.” “And then Barack Obama, when he’s campaigning for president in 2007, he goes ahead and he makes the same promise.” “We’ll make it easier, quicker, and less expensive for you to file a return, so that April 15th is not a date that is approached with dread every year.” “And now we have the Biden administration making that same promise once more. This story really begins during World War II when the United States needed a lot more money, all of a sudden, to conduct this war. And so it needed to change the way that it collected taxes. And the innovation that the government came up with is it said, we’re going to get employers to tell us how much they are paying their workers.” So because your employer takes money out and pays taxes for you, at the end of the year, the government already knows how much money you’ve made. They know how much you’ve paid in taxes and, thus, how much they owe you or you owe them. “It’s a great system.” They don’t know everything about your finances if you have complicated stuff like medical bills or investments. But for a lot of Americans — “Taxes could be done in 15 minutes or 20 minutes.” The reason why Tax Day is a breeze in places like the Netherlands or Japan is because that’s the day when the government just sends you a pre-populated form. You can either approve it or you can amend it if you think you qualify for some credit or write-off or if you think they did the math wrong. But if you approve it, you’re done in just a few minutes. And your refund is on its way. But here in the U.S., they don’t tell us the numbers, even though they already know them. And they don’t even give us a platform to file our taxes on. So taxpayers are left with two dreadful choices. They either pay a private company to do taxes for them or they do it on their own. And here’s what that looks like. A high-stakes honesty test, one that is horribly confusing, where your children are actually called dependents, and where your total income is actually determined by adding lines 1z, 2b, 3b, 4b, 6b, 7 and 8. I mean, it’s not that complicated. Just get ahold of this 113-page instruction booklet on how to file your taxes. So if presidents from both sides of the aisle have been making an effort to do this, why has it failed? “I mean, the one word answer is —” “Intuit TurboTax.” “There is a company that dominates the tax preparation industry in the United States. It makes billions of dollars by charging Americans to help them complete their taxes. It makes a product called TurboTax, which, for most Americans, is practically synonymous with doing your taxes. And it has made an industry out of something that ought to be a public service.” It’s no surprise to me that TurboTax cropped up as a solution to this problem. “And so this private company comes along and says, we’ll help you. We have a software product that will make your life easier. And it did. It made millions of Americans’ lives easier.” “Intuit TurboTax, 100 percent expert guaranteed.” What happens next is the story of how we almost had what they have in other countries, a free and easy way to file our taxes. And it was almost given to us by George W. Bush. “Morning.” “I think the early 2000s were the moment when we came closest to having a public filing system.” So it’s the early 2000s. And the government is making this big effort to put more services online. “It’s a pleasure to be here to talk about the e-government initiative.” “A number of other countries around the world were beginning to successfully move their tax filing systems onto the internet. States were beginning to move tax filing onto the internet. There was a huge demand for it. You had a Republican administration backing the idea.” The Bush administration tells Intuit and the other tax-prep companies to, quote, ‘Get another line of work.’ Like, you’re going out of business. What is their response? “The company sounds the alarms, all hands on deck moment. They recognize this is an existential threat to what is an increasingly profitable business. And they do everything that they can to prevent it. They engage a very successful Washington lobbyist, who, among other things, is fond of comparing himself to Darth Vader. And they do something very clever. They say to the government, we’ll construct a free filing portal. And you can stay out of this business. This lobbying effort worked. And the Bush administration agreed to not make a tax-filing portal. And in return, Intuit and other tax-prep companies agreed to create a version of their software that would be available for free to lower-income Americans. So it’s the early 2000s. And you’ve got regular TurboTax, which people have to pay for. But now you have this free version of TurboTax that Intuit was providing. Much to Intuit’s chagrin, Americans started catching on that there was a free version of their software. And they started using it. Millions of them started using it. And this is where the real shenanigans start in earnest. It seems like a good deal in terms of, well, if the tech company will do this and will provide it for free, then what’s the problem?” “The problem is that the tech companies had absolutely no interest in doing this. This was a trick.” A ProPublica investigation found that Intuit and others added lines of code to their free file site. “So that it doesn’t appear in a Google search. And several of the other companies are also found later to have done this to make it invisible, essentially, on the internet.” Then there was their marketing. Intuit and TurboTax started appearing everywhere, from basketball stadiums to the Super Bowl. “Welcome to the Intuit TurboTax halftime.” Then they start flooding the world with the word “free.” “That’s right. TurboTax free edition is free. Free. Free. Free. Free.” “It feels pretty good.” To most people, this looked like the government-required free file version of TurboTax. But no. Intuit had created an entirely new program confusingly called TurboTax free edition to divert traffic from the government option. “You arrive at this website that is billed as being a free tax-filing product. And you begin to do the work of filing your taxes, right? You’re uploading forms. You’re inputting personal information.” It was only after you spent all of these hours putting in all of your information that you discover that you actually can’t file your taxes for free, that you don’t qualify for the free version. All this hiding from Google searches, the confusing branding, the deceptive use of the word “free” — are you confused? That was the point. “Tax-prep companies have sabotaged the Free File program. They’ve tricked and trapped American taxpayers into paying for alternative services that should be free. That are marketed as free. But in fact, they don’t make free.” I fell for this so many times over the years. And after doing all of this work, there was no way I was going to do anything but pay. What other choice did I have? All of this? Who were the demographic of Americans that are maybe most susceptible to this kind of deceptive messaging? “It’s the middle of the population, people who are earning middle-class salaries, who have very simple taxes.” And the result was that by 2019, 14 million Americans that were eligible to use the free tax filing software that they had promised to make ended up paying a fee for commercial software to prepare their tax returns. All the technological and marketing deception worked. So much so that they actually got sued. Regulators on behalf of customers sued Intuit last year for $141 million. They also agreed to cool it on the whole free, free, free false advertising campaign. So now when you go to the site and you see the big $0 sign, there’s an asterisk next to it. So justice was served. And the greedy tech company learned its lesson. And from then on, taxes were free and easy, just like in Estonia. In 2021, Intuit announced that they were walking away from their deal that they made with the Bush administration. They would no longer offer a free filing software to low-income Americans. But in their blog post announcing this, they claim that they’re still committed to making a free filing platform. “Nobody should believe that Intuit is ever going to seriously commit to offering a free version of its core business. That would be suicidal for a company to do. And there’s no reason to expect them to act against their own self-interest. We should treat them like adults and assume that they’re going to do what’s best for them. And what is best for them is to charge as many Americans as much money as possible to complete their taxes.” It’s ironic to me that Intuit often positions itself as like the advocate for the people. They have this whole ad campaign showing them all the time that they could save by not doing taxes. “We all have different, sometimes crazy things to deal with. We believe people can be good at anything. Yes, even taxes.” “In the free market, you have the right to walk away. That’s the defining feature of the free market. You don’t need to buy the apples. You don’t need to buy the car. You don’t need to buy the computer. You do need to file your taxes. What these companies are doing are standing astride the highway that everybody needs to travel and collecting tolls. And so the idea that this is a private market is ludicrous. And the Bush administration was quite rightly saying to these companies, get off the highway. You are not allowed to collect tolls here.” But luckily, there might just be change in the air. “The I.R.S. is releasing a report this week on the possibility of a free government-run tax filing service.” “The Biden administration has funded a pilot program for the I.R.S. to create a portal where we Americans can pay our taxes without the need of a third-party middleman called TurboTax. They’re set to launch this as a small pilot for the 2024 tax season. But of course —” “They are determined to prevent this or to make it as impractical and small scale as possible. Because they have lots of money to throw at it. They’re collecting from all of us, every year, our fees for filing taxes and using them to ensure that we have to continue paying those fees to file taxes.” Bloomberg reported that Intuit’s spending on lobbying has hit an all all-time high. It’s paying dozens of lobbyists. These lobbyists include Mitch McConnell’s speechwriter, Nancy Pelosi’s ex-chief of staff, a former Republican congressman and an adviser to Joe Biden when he was vice president. “You know, it’s really striking. Because the rhetoric around the I.R.S. is so unremittingly negative that you might assume that Americans would want the protection that TurboTax says it is offering to them. But when pollsters go out and ask the American people about this, both parties say we want a government option. We want a free-filing portal. We do not understand why we need to pay in order to pay our taxes. It doesn’t make any sense.” “Each time free file came up, an army of well-paid lawyers and lobbyists descends on Congress to squash it. This must not be allowed to happen again.” But the pilot program is already in danger of ending. House Republicans are pushing to cut $14 billion in funding for the I.R.S., including the money for the pilot program. They say that the government can’t be trusted to tell Americans how much they owe the government. But this isn’t a partisan issue. Leaders from both sides of the aisle have known for decades that we need to make this happen, that this is the sensible thing to do. And hopefully, this is the moment to finally make it happen. “I think, at the end of the day, this story is about faith in government. It’s about the ability of the government to do what it should have been doing all along, to do it well and to deliver what Americans deserve, which is an easy and free way to file their taxes. This is a chance for the government to prove itself. It’s a chance for the government to make right on a promise that it has broken so often over the last 40 years and to say, we can do better, we are doing better, we’re going to do this right.”