• June 2019 letter to Secretary Mnuchin led by ATR
• October 2019 op-ed by ATR
• July 2020 letter to Secretary Mnuchin led by Taxpayers Protection Alliance

Government run tax preparation, often misleadingly described by the Left as “return free filing,” would disproportionately harm low and moderate income families, according to a recent study by Progressive Policy Institute.

As this report notes, the IRS does not have the information it needs to prepare tax returns for American families. This could deprive low-income Americans from important tax credits like the child tax credit and earned income tax credit (EITC). As the report notes, correctly filing would require the IRS to have a “deep knowledge” of the personal lives of a family:

“The IRS does not have the necessary information in its databases to accurately determine a low-income taxpayer’s eligibility for EITC and/or correctly calculate the amount of credit due to the taxpayer—indeed, far from it. The EITC is based on a stew of residency, family relationship, and income limits, with complex tie breaker rules. And like a giant puzzle, it requires deep knowledge of the personal lives of people living in the same household or family unit, with who else, for how long, and what their relationships and incomes are, just for a start.”

Far-left politicians such as Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Senators Bernie Sanders (I-Vt.) and Elizabeth Warren, (D-Mass.) routinely call for the government to take over tax preparation. This would a terrible idea. While supporters of government tax preparation routinely describe it as a way to streamline tax compliance, it is not as simple as they claim. As the PPI report notes, families that claim the EITC have complex tax returns, which the government would have no way of properly administering: 

 “Oddly enough, low- and moderate-income taxpayer returns that claim the EITC have been repeatedly described as “simple” returns by advocates of having the IRS take over tax preparation. But a study by the Tax Policy Center highlights the sheer complexity of low-income tax returns, noting that ‘…eligibility for child benefits has increasingly relied on the concept of a tax unit, which has not evolved with families…. The income tax law is based on annual filing and bases the definition of a filing unit primarily on legal relationships, child residency, and support. Consequently, families that change throughout the year may have difficulty correctly determining their filing status and who can properly claim a child for the purpose of receiving child-related benefits.’”

Government tax preparation is a terrible idea and would represent a huge conflict of interest for the government. Under this system, the IRS would assess taxes owed and process payments. This could create an incentive to overcharge or withhold information from taxpayers. It would require taxpayers to have an intricate understanding of their personal finances to ensure they are not being overcharged. It would empower the IRS to collect even more personal information and could even create a new pathway for the agency to target taxpayers.

Perhaps unsurprisingly, government tax preparation is unpopular. According to polling data by the Computer & Communications Industry Association, 60 percent of taxpayers oppose government tax preparation including 45 percent that “strongly oppose.” Just 8 percent of taxpayers strongly support government tax preparation.

Not only would government tax preparation harm low-income families, but there is already a solution to tax complexity. The Free File program – a public private partnership between the IRS and tax preparation companies – provides taxpayers with adjusted gross income of below $69,000 with access to free federal tax preparation software. Since its inception, this program has been used by more than 56 million families as a way to successfully navigate tax complexity. 

Moving forward, policymakers should focus on improving Free File, rather than pushing for a government takeover of tax preparation. While the left claims that return free filing would be a simple way for the government to file and prepare tax returns for the American people, the reality is that this would be a near impossible task and would harm low and moderate income Americans.

In an exclusive to Americans for Tax Reform, here is the story of how Joe Biden told a young middle income voter that he would raise his taxes:

"My name is Nico Parisi, and I attended Joe Biden's campaign event at Coastal Carolina University on Feb. 27, 2020 in Conway, SC. As a recent graduate from the University, and as an individual who is very engaged in politics, I decided to experience what it would be like to take part in the event of an opposing political party. I had no intentions of having any interaction with anyone, which ended up not being the case.

During Biden's event, he asked the crowd, "By the way, how many of you benefited from that $1.9 trillion dollar tax cut?" As a recent college graduate making a middle class income, I raised my hand, because I did benefit from the TCJA. The tax cuts saved me nearly $1,800 a year, or roughly $150 a month. As a matter of fact, nearly 90% of that room benefited from the tax cuts, so it was amusing to see only my hand raised, of around 300+ people who attended.

Joe Biden noticed my hand in the crowd, and responded "Well that's good, I'm glad to see you're doing well already. But if you elect me, your taxes are going to be raised, not cut, if you benefited from that." I was in shock. Biden insinuated that the only way I could have benefited from the tax cuts was if I was some rich millionaire, which is false. This is an especially interesting assumption, given that I am a 22 year old, recent college graduate, who looks much younger than my age would imply."

The Tax Cuts and Jobs Act -- also known as the Trump tax cuts -- reduced middle class taxes, as noted even by left-leaning outlets:

• New York Times: "Most people got a tax cut."
• Washington Post: “Most Americans received a tax cut.”
• CNN's Jake Tapper: "The facts are, most Americans got a tax cut." 
• H&R Block: “The vast majority of people did get a tax cut.”
• CNN's Tapper also stated: "In fact, estimates from both sides of the political spectrum show that the majority of people in the United States of America did receive a tax cut."

Biden likes to lie about the Trump tax cuts by pretending the middle class didn't receive a tax cut. Biden and Kamala Harris also are on tape 22 times saying they will "eliminate", "get rid of", "repeal", and "end" the Tax Cuts and Jobs Act.

Biden was even called out by CNN for lying about the tax cuts to a Pennsylvania audience of union members. CNN slapped Biden for lying and said: "In reality, it is likely that many of the people in Biden's audience that day at the Teamsters banquet hall in Pittsburgh benefited from that tax cut."

A Biden-Harris "elimination" of the Tax Cuts and Jobs Act would most certainly impose a tax increase on middle income households.

Biden also wants to raise middle class taxes by re-imposing the much-hated individual mandate tax. He also wants to raise taxes by eliminating stepped up basis, imposing a $200 gun tax, and taxing capital gains as ordinary income for "every single solitary person." Biden and Harris also both endorsed a carbon tax.

Below are photos taken by Nico Parisi during the event where Biden told him he was going to raise taxes.

The US economy grew by 7.4 percent in the third quarter of 2020, or 33.1 percent on an annualized basis. This is the fastest pace of GDP growth ever recorded and is another sign that the economy is recovering strongly from the Coronavirus pandemic. 

This GDP growth was nearly double the previous record quarterly growth of 16.7 percent which was recorded in the first quarter of 1950.

Private domestic investment increased by 83 percent on an annualized basis in the third quarter of 2020, while personal consumption increased by 40.7 percent.

This is just the latest sign of good economic news. 11 million jobs have been recovered in the past five months after businesses were forcefully shuttered, meaning we have recovered more than half of the jobs lost. The unemployment rate is down to 7.9 percent, a comparable level to the 7.8 percent rate in 2012 under Obama.

Moving forward, we need to continue promoting pro-growth policies to ensure the economy fully recovers.

Prior to the pandemic, the unemployment rate was 3.5 percent, a 50-year low. In 2019, real median household income increased by $4,400 in 2019, or nearly 7 percent. This wage growth exceeded gains during the entire Obama administration, which was just $3,000 or 5 percent.

This economic prosperity was experienced by key demographics and income levels. For instance, African Americans and Hispanic Americans saw their median income hit record levels, while the poverty rate declined to 10.5 percent, the lowest rate in decades. The bottom 25 percent of wage earners also experienced wage growth faster than the top 25 percent of wage earners, according to the Atlanta Fed.