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Monday, December 7, 2009
5:36 PM EST
Ryan Ellis

Obama Tax Panel to Create "Public Option"
Boondoggle in Tax Return Preparation

There's a lot of talk in Washington these days about a so-called "public option" in healthcare.  It would be a bad thing, because it would create a taxpayer-subsidized competitor to private sector insurance companies.  Most people suspect that, over time, this subsidization would incent people to enroll with the "public option" over private providers.

The "public option," therefore, is simply single-payer health insurance with an additional step to make it less obvious.

It might surprise you that the Obama Administration is looking to do something similar with, of all things, tax preparation.  Former Federal Reserve Chairman Paul Volcker is heading up a commission to reform both the tax code and tax administration.  The final report was due out this month, but has been delayed until after the holidays.

It's widely expected that a new "public option" for tax preparation will be included in the recommendations.  Like its health insurance cousin, a tax-prep public plan would eventually cripple the private sector tax preparation industry.

Why should you care?  Well, if the IRS (or another government agency) is preparing your tax return, all the many gray areas of a return would be ruled in favor of the government (that is, in favor of higher taxes).  Think of it like a football officiating crew hired by the home team.  Would you want to play on that field?

As we get closer to the release date, ATR will have a "Fact of the Day" on why private tax preparation is good for taxpayers, and why a government-run tax prep regime would be a stealth tax increase.

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