Is Money in Politics to Blame for Complicated Tax Returns?
April 13, 2015 -- With two days left until tax day, most Americans have already spent several hours finalizing their 2014 tax returns. For years, Congress has been sitting on a proposal to make it easier for people to file their taxes. The proposed bill would implement a return-free filing system, where the IRS would provide taxpayers with a filled-out form containing all of their information and estimate their taxes. The taxpayer would just have to look it over before confirming the information. Other industrialized countries like Denmark and Spain, have already adopted a similar process. In the United States, though, a few powerful companies have a large financial stake in ensuring long, complicated tax returns continue to be the norm.
Lobbying Spending Data: MapLight analysis of the money spent by tax preparation companies, including H&R Block, Intuit, which owns TurboTax, American Institute of Certified Public Accountants, Jackson Hewitt, and National Society of Accountants, lobbying Congress and federal agencies since 2011. Data Source: Clerk of the U.S. House of Representatives.
- Since 2011, the five companies and organizations have spent a combined $35 million lobbying Congress and federal agencies.
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Congressional Stock Ownership: MapLight analyzed the 2013 personal financial disclosures of members of Congress to determine which members own stock in Intuit, H&R Block, and Jackson Hewitt. Data source: Office of the Clerk, U.S. House of Representatives and Office of the Secretary of the Senate, U.S. Senate.
Eight members of Congress reported owning between $57,249 and $219,242 worth of stock combined in the three companies.
Seven members of Congress reported owning between $57,249 and $218,242 worth of stock combined in Intuit.
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To search MapLight's Personal Financial Disclosure Database click here.
Campaign Contribution Data: MapLight analyzed campaign contributions from the political action committees (PACs) of tax preparation companies and trade associations representing public accountants including H&R Block, Intuit, the National Society of Accountants, and the American Institute of Certified Public Accountants to all congressional candidates between January 1, 2009, and December 31, 2014. Data source: Federal Election Commission (FEC).
Click allow images to see a detailed chart of campaign contributions from tax preparers to members of Congress.
In 2011, Rep. Jim Cooper (D-TN) introduced a bill that would have streamlined tax returns for most individuals. The so-called “return-free” filing bill never even came up for a vote in the House Ways and Means Committee, which has jurisdiction over the IRS. Sen. Ron Wyden (D-OR) and Sen. Dan Coats (R-IN) included the proposal in their failed 2011 tax reform bill. Rep. Cooper’s office said congressional inaction was due, in part, to opposition from tax preparation companies like Intuit and H&R Block.
The average member of the House Ways and Means Committee received, on average, 2.8 times more money ($7,072) from the tax preparation industry compared to the average member of the House of Representatives ($2,509) during the 2014 election cycle.
Since Rep. Cooper’s 2011 bill to streamline individual tax returns died, the industry has increased its campaign contributions, and Congress has not considered any other return-free filing proposals.
Since 2011, the tax preparation industry has contributed nearly $2.6 million to congressional candidates.
During the 2014 election cycle, seven of the top 10 recipients of campaign contributions from the tax preparation industry were either in congressional leadership or served on the committees that oversee the IRS.
The top recipient of tax preparation funds, Sen. Pat Roberts (R-KS), is a senior member of the Senate Finance Committee and received $18,999 from the tax preparation industry during the 2014 election cycle. As the chairman of the Senate Agriculture Committee, Sen. Roberts also oversees the Commodity Futures Trading Commission, which in October 2014 issued a proposed new code of conduct for accountants.
The chairman of the House Ways and Means Committee, Rep. Paul Ryan, was the third highest recipient of funds from the tax preparation industry, receiving $16,100 during the 2014 election cycle.
The average member of the Senate Finance Committee received, on average, 1.5 times more money ($10,818) from the tax preparation industry compared to the average senator ($6,905) during the last six years.
Top Recipients of Campaign Contributions from the Tax Preparation Industry during the 2014 election cycle.
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Background: Congress has failed to consider any other return-free filing proposals since Rep. Cooper’s bill died. Instead, members have introduced bills to prevent return-free filing from spreading. Rep. Zoe Lofgren (D-CA) and Rep. Eric Cantor (R-VA) introduced a bill in 2007 to limit the proposal. The bill died, and Rep. Cantor eventually left Congress. But Rep. Lofgren has continued to receive campaign contributions from the tax preparation industry including from Intuit, whose Mountain View, CA headquarters are not far from Rep. Lofgren's San Jose-based district. During the 2014 election cycle, Intuit was Rep. Lofgren's third highest campaign contributor.
Since failing to consider return-free filing, Congress has focused its attention on regulating fraudulent paid tax preparers, which the industry supports. In 2010, the IRS announced a plan to require paid tax preparers to receive certification before being allowed to charge a fee for filling out tax returns. Intuit and H&R Block supported the program. In February 2014, though, a federal appeals court struck down the IRS program, concluding the agency did not have the authority to regulate paid tax preparers.
Earlier this year, Sen. Wyden and Rep. Steve Cohen (D-TN) introduced bills that would authorize the IRS to certify paid tax preparers. Several states, including Oregon and California, already subject paid preparers to such a process. In 2012, 82 million Americans paid a professional to prepare their taxes. H&R Block is a strong supporter of this type of legislation, and even testified in support of a similar bill last year.
Lobbying Methodology: MapLight analysis of federal lobbying disclosure filings from the Clerk of the U.S. House of Representatives between January 1, 2008, and March 31, 2015. Lobbying totals represent money paid by an organization to each lobbying firm for services on all issues. Organizations report total lobbying expenses as a lump sum, which includes both in-house lobbying expenses and amounts paid to (and reported by) lobbying firms that they employ. MapLight calculates a given organization's in-house lobbying expenses by subtracting the total income reported by the lobbying firms that it employs from the company's total reported expenses. In general, filers may round their spending and expenses to the nearest $10,000, and we treat the designation of "Less than $5,000" as a value of $0. MapLight updates its lobbying database daily to capture amendments. Full reports are due on the 20th day of January, April, July, and October.
Personal Financial Disclosures Methodology: MapLight analysis of 2013 personal financial disclosures for members of the 113th Congress. Data source: Office of the Clerk, U.S. House of Representatives and Office of the Secretary of the Senate, U.S. Senate. Senate and House rules require the disclosure of assets belonging to the filers' spouses and/or dependent children, and these assets are included in the analysis. This analysis specifically investigates stocks and does not include other types of assets such as corporate bonds, notes, or bank deposits. This analysis was supplemented with data available from the Center for Responsive Politics at opensecrets.org.
Campaign Contributions Methodology: MapLight analysis of campaign contributions to all congressional candidates from the political action committees of the five companies and trade associations in the tax preparation industry from recently available FEC data from January 1, 2009 - December 31, 2014. Jackson Hewitt does not appear to operate a political action committee.
MapLight is a 501(c)3 research organization that tracks money's influence on politics.