In The Media
POLITICO: The Dawn Of Direct File
03. 11. 2024
Economic Security Project releases a report arguing that the initiative will be a boon to taxpayers.
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The article originally appeared in Politico.
THE DAWN OF DIRECT FILE: The IRS is fully launching the pilot program of its own government-run tax filing system this week, after initially allowing federal employees to test out the portal.
The private tax preparation industry and conservative groups have fiercely opposed the Direct File program, arguing it’s an unnecessary use of government resources. Now, supporters of the idea are releasing new research arguing that the initiative will be a boon to taxpayers.
The Economic Security Project’s report also finds that Direct File will be an incredibly efficient use of government resources — taxpayers, the group said, would gain $106 in benefits for every dollar spent on the program, through both savings on filing fees and increased access to tax breaks.
Overall, the report from Gabriel Zucker from Code for America and Bharat Ramamurti, the former deputy director in President Joe Biden’s National Economic Council, found that taxpayers would save some $23 billion through both added tax credits and fewer compliance costs once Direct File reached maturity.
Zucker and Ramamurti acknowledge that they assume the program will be quite popular with taxpayers in reaching those findings, but they also stress that the government’s return on investment would remain strong even if a more modest number of taxpayers use Direct File.
Other interesting findings:
—The report assumes that Direct File will prepopulate tax forms — fill out the forms for you, in other words — in the not-so-distant future. Key Democratic lawmakers like Sen. Elizabeth Warren (D-Mass.) have been calling for the IRS to take that step, noting it happens in other countries. But groups on the right, where distrust of the IRS remains quite high, would almost certainly fight such a move.
— Zucker and Ramamurti’s argument that Direct File will allow taxpayers to claim more in tax benefits is in direct tension with the reasoning of opponents of the initiative, who maintain that the IRS — as the government’s revenue collector — has a vested interest in maximizing a taxpayer’s bill.
“A wealth of research suggests that Direct File could help millions of low-income households claim their tax credits by providing a free and simplified tax filing option,” Zucker and Ramamurti write.