Should We Blame TurboTax for Tax Code Complexity?

After another grueling tax season, my colleague Howard Gleckman is understandably frustrated with America’s complex tax code. And with instructions like this, who can blame him?:

Your ATNOL for a loss year is the excess of the deductions allowed for figuring the AMTI (excluding the ATNOLD) over the income included in the AMTI. Figure this excess with the modifications in section 172(d), taking into account your AMT adjustments and preferences (that is, the section 172(d) modifications must be separately figured for the ATNOL).

So who is to blame? Feckless politicians? High-priced lobbyists? Social engineers?

Well, yes, yes, and yes. But Howard looks deeper and asks why Americans don’t rise up against the scourge of needless complexity. Why are we so complacent?

His answer: TurboTax. By buffering us from complexity, tax preparation software allows that complexity to persist:

[T]echnology both inoculates us from much of the complexity of tax filing and reduces compliance costs. But, more importantly, it immunizes the politicians from the consequences of their decisions that lead to this madness.

Taking this to its logical extreme, Howard calls (tongue-in-cheek) for a one year moratorium on tax preparation software and, for good measure, paid preparers too.

I’m not ready to go that far. But I would like to point out that the dynamic Howard points out is everywhere around us. Give people cellphones that make it easier to call for help, and they will get into more trouble in the wilderness. Offer people low-fat cookies, and they will eat more. Put people in more fuel-efficient cars, and they will drive more. Give people software to do their taxes, and they will accept greater complexity. It’s practically a law of nature.

P.S. Over at Republic Report, Matt Stoller levels a more serious charge at Intuit, the producer of TurboTax. Quoting from its SEC filings and lobbying data from Open Secrets, he argues that the company has been lobbying against efforts to make it easier for citizens to file without the help of software.

4 thoughts on “Should We Blame TurboTax for Tax Code Complexity?”

  1. Of course, last time I tried turbotax it was unable to do my schedule C correctly and if I hadn’t done it by hand myself I would have paid many thousands of dollars more in taxes than were really due.

    I worked through it many times and it simply did not ask for all the legitimately deductible expenses, nor did it allow input for what should be on specific lines of the form.

    I wonder how many businesses went bankrupt because they relied on Turbotax? Just because it is a computer and can handle complex calculations doesn’t mean any body bothered to program it to do so properly.

  2. Give Caesar his due and let the rest eat cake. Marie sleeps well til her heads in a basket. The ruling class like their laws, it enables them to pretend control of chaos, it enables them to manipulate the rest. Blame not software for the failings of human nature, nor the poor for the tyranny of the rich.

    The taxes are immoral when squandered as they are on a global death machine and yet more vegas parties for the GSA. But the taxes are the yin to the federal reserves yang, it is the cycle by which they scrub you clean of your own efforts, the lever by which they upturn you and shake your pockets out. The process of maintaining the poor and the wealthy banking elite. without the income tax, the federal reserve act lies hollow, a gun without bullets. For who would pay the wealthy banking families to create our fiat currency Federal Reserve Notes?

    Without taxes the death machine commits suicide. Now you understand why the IRS can seize your assets without a hearing. They are omnipotent and infinite in their hunger and your wealth, your efforts, your ideas are theirs to consume without permission or recourse.

    If you think the problem is software, you aren’t even awake, let alone thinking or asking the right questions.

  3. I have to say, I used Turbo Tax this year, and I still found it confusing to do my taxes. I think Turbo Tax lessens the complexity a bit, but doesn’t completely mask it.

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