Reason Roundup

Tax-Prep Cronyism Revealed in IRS Emails

Plus: Texts encouraging suicide yields charges again, California fires, Rep. Katie Hill and #MeToo politics, impeachment news, and more...

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zumaamericastwentyone977786 | Igor Golovniov/ZUMA Press/Newscom
(Igor Golovniov/ZUMA Press/Newscom)

Tax industry cronyism revealed in IRS emails. The Internal Revenue Service let companies that profit from charging for income tax preparation services write rules that kept free filing options away from American consumers.

Emails obtained by ProPublica suggest that the IRS was working with tax-industry group Free File Alliance in a way that benefited a few big tax businesses over U.S. taxpayers.

Under a public-private partnership program known as Free File, the IRS agreed "not to create its own tax filing system that would pose a threat to the industry's profits," ProPublica reports.

Free File was championed by tax-prep software king Intuit and other big players in the industry. These companies agreed to provide some free tax filing options and limit their marketing of paid options in exchange for the IRS not offering its own free filing option. The arrangement also wound up giving Free File Alliance members free rein to write the rules the program would play by.

It hasn't worked out great. "The program has been declining for years, with less than 3% of eligible Americans using it this year," reports ProPublica. And much of this comes from the fact that tax-prep companies haven't been too keen on making free services known or easily usable.

It's understandable why these private businesses wouldn't want to make a better free product to compete with the paid services they're offering. But it doesn't make sense why the IRS would enthusiastically agree to let them control the free-filing game.

If history is any indication, a government-developed free-file system would probably suck and isn't the answer. But neither is a crony-capitalist alliance that lets a few big players in an industry write all the rules, stifling the kinds of competition and innovation that could truly benefit consumers.

FREE MINDS

Rep. Katie Hill's resignation and #MeToo politics. I wrote about both today in a column at The Daily Beast, arguing that we must apply sexual standards equally to male and female bosses and politicians.

Defenders of Katie Hill are right to see misogyny and right-wing media malpractice contributing to her resignation from Congress. But in focusing on those factors, they risk looking past the California Democrat's own actions in engaging in the kind of relationship rendered inexcusable by many proponents of the #MeToo movement and mainstream feminism: one between an older boss and a younger subordinate.

If the goals of these movements are to mean anything, then we must evenly apply principles when women are implicated as well as grapple with the gray spaces here.

And if people don't like the outcome when rigid rules are applied to women, then perhaps it's time to rethink the rigidity of those rules in the first place. (More here.)

FREE MARKETS

California fires (and resulting blackouts) are harming millions of people. Wildfires are once again raging in Northern California, causing power blackouts, and the fact that millions are suffering as a result "show just how many nodes of failure Americans are willing tolerate or even encourage," writes Tyler Cowen at Bloomberg. "The practical and moral failings in this matter are so numerous it is hard to know where to start."

FOLLOW UP

Impeachment inquiry gets official. House Speaker Nancy Pelosi said a formal vote by the full House on whether to conduct an impeachment investigation will take place sometime this week. Meanwhile, U.S. Army Lt. Col. Alexander S. Vindman, the White House National Security Council's expert on Ukraine, is scheduled to testify before House impeachment investigators today.

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