ATR President Grover Norquist yesterday testified before the Obama Debt Commission (video and testimony transcript will be up later today).  Because we were only given 36 hours to prepare and 4 minutes to speak, it was impossible to condemn every bad idea for higher taxes and bigger government.  However, there is one that the Commission might be tempted to consider that's deserving of a closer look.

It's long been a pet project of liberal think tanks to advocate for a "public option" (a la the healthcare debate) for tax preparation.  That is, they would like the government to offer free or reduced-cost tax preparation.  Some even go so far as to advocate a "return-free" system where most taxpayers would get mailed a pre-filled tax return, and it would be up to them to challenge the tax bill.

Not surprisingly, there's only one reason these liberal politicians and policy wonks want to see this--tax revenue goes up.  They'll tell you it's because everybody (including tax preparers) cheats.  The reality is that a Bigfoot-sized government tax preparer would be just too intimidating to take on.

Think about your own situation.  Suppose you got a $50 tax bill followup letter from the IRS.  Would you pay it., or take time away from your life, job, and family to fight a monolythic bureaucracy with unlimited resources to fight you back?  Now multiply this times 140 million tax returns, and you get the idea why this tax hike scheme is so attractive.

In reality, tax preparation is an assertion by the taxpayer of his or her estimated tax liability.  It should be up to the IRS to challenge the assertion of the taxpayer, not the other way around.  To socialize tax preparation (which would be the effect of this policy, much as a public option in health care would have destroyed private insurance over time) would reverse the dynamics of how our entire tax system works.

And that's precisely what the Obama Debt Commission needs to avoid if the goal is to prevent America looking a lot more like Greece.

Posted by Ryan Ellis on Thursday, July 1, 2010 2:25 PM EDT

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