CEPR logo

Fact-based, data-driven research and analysis to advance democratic debate on vital issues shaping people’s lives.

Center for Economic and Policy Research
1611 Connecticut Ave. NW
Suite 400
Washington, DC 20009

Tel: 202-293-5380
Fax: 202-588-1356
https://cepr.net

Close

On This Page

Elon Musk and his “super-high IQ” DOGE team have apparently put the IRS’s Direct File program in their gunsights. Direct File is a free and simplified program that would allow the vast majority of taxpayers to quickly do their taxes without paying fees to a tax preparation service.

The program saves taxpayers time and money, as well as much anxiety. We know that tens of millions of people stew over their tax forms, finding them complicated, and worry that they may make mistakes leading to large fines or even worse. (Who knows, the current administration could send people to prison in El Salvador for errors on their tax returns.)

We also know that people spend a huge amount of money paying for tax filing services like H&R Block. Last year the total was $50 billion in accounting and tax filing fees. While most of this came from higher income people with complicated returns, many ordinary workers coughed up hundreds of dollars to get someone to do their taxes for them.

If Musk and the DOGE team really cared about efficiency, Direct File would be their dream. It’s a low-cost program that provides a huge service. If this proves a success (the reviews to date are great), then the IRS could look to go further.

Many countries have long had a system where the government prepares your tax return for you. They then send the form to you and indicate either the return you will receive or the money you still owe. If you believe they made a mistake, you indicate the error and provide the necessary documentation. This would remove all the pain in filling out tax returns for tens of millions of people. Why wouldn’t we want that here?

The answer is the $50 billion that people spend on filing taxes and accounting services. This is income for H&R Block, Turbo Tax, and others in the tax preparation business. It seems that the Trump administration is more interested in protecting the profits of these companies than in actual efficiency or in saving taxpayers’ money. That’s not a surprise, but it is very unfortunate.