Tim Hugo, the Free File Alliance’s executive director, disputes the idea that Free File isn’t working. He notes that Free File has facilitated 48 million returns in the last 13 years, which equates to $1.4 billion worth of tax software. Hugo says he "would welcome millions more … The problem I see is that people just don't know about it. The only catch is that you have to go to IRS.gov to get it." He went further, claiming that a program like Warren’s would carry risks: Return-free filing is “doing tax preparation and tax collection all in one entity,” he says. “That is a recipe for a backdoor tax increase."
Some academics argue that this idea shouldn’t be controversial, because what the agency would be doing amounts to data entry. “Pre-populating a return for these kinds of taxpayers that we're talking about, low- and middle-income taxpayers who take the standard deduction, who don't have mortgage interests or if they do they don't have enough itemized deductions to actually itemize, which is 70 percent of taxpayers, that is just scrivener’s work,” says Dennis Ventry, a professor at UC Davis School of Law. He adds, “It's not [a] sophisticated tax practice that requires paying a cent for. Taxpayers should not have to pay for that kind of work and the government is in the perfect position to actually go ahead and do that for the taxpayers.”
And as for those concerned that the IRS would start secretly extracting additional tax revenues, Bankman says that it’s easy enough to take those forms to a tax preparer or accountant. “If the private companies say, 'We're doing more for you than the government. We're adding value,' that's great—just like your accountant can say that,” he says.
Currently, both Democratic presidential candidates have voiced support for Warren’s bill. And while the program would cost taxpayers money, the net savings could be huge. Austan Goolsbee, the former chairman of Obama’s Council of Economic Advisors and a professor at the University of Chicago’s Booth School of Business, estimated in 2006 that return-free filing would save American taxpayers $2 billion. Further, once such a program is set up, the maintenance costs would be low: According to the California Franchise Tax Board, CalFile’s annual costs are about $100,000, which goes toward updating the program in accordance with any new tax legislation, and saves the state over half a million dollars a year. (For comparison, the private-sector tax-prep industry is estimated to bring in $10 billion in revenue every year.)
“What we know is that given the choice, people really like [return-free filing] … The people who used this in California loved it,” says Bankman. “I think it's a blueprint for where the government is going to go, should go in the future, and sooner or later will get there. Because it's just too stupid for us all to spend the equivalent of $50 billion a year filing our individual income taxes.”