It’s story time.
So tax season rolls around, and you wonder why taxes are so damn complicated, to the point that paying someone or something to help with your taxes is an attractive proposition. You would like to save the money you would spend on tax prep, but slogging through worksheets of impenetrable bureacratese is bad enough that you’ll pay money for accountants or tax software.
Now look at Sweden, who has return-free filing. The government sends people their prefilled return, the people take a look and sign off if it’s correct, and for most people it takes minutes, instead of the hours it took me to do my taxes. You only need pay for tax help if you want to do weird things.
Now look back at my country: the large tax preparation conglomerates have an incentive to oppose the existential threat to their business model in return-free filing. If they can both keep return-free filing from being implemented, and ensure the tax code is complicated enough that people have to get help, then they can push people to give them money with malicious UX.
With only mild public will to save a few hours a year, and an industry lobby to ensure those few hours stay unsaved, the outcome seems obvious. Companies will lobby for a bigger tax prep market, get money from the bigger market, and then lobby some more, ad infinitum.
It’s a compelling story, but I haven’t done the rigorous legwork of figuring out how true it is. However, for this post will accept it as true, so we can focus on what happens next.
In particular, I pay for tax prep software but feel bad about feeding the grand tax prep loop. What can I, a private citizen, do to nudge the nation towards getting an IRS that can implement magical return-free filing?
In this case I’m going to be lazy, not think too hard about ways to take more direct action, and simply look for nonprofits already operating in this space.
I mildly endorse the Institute on Taxation and Economic Policy and the Tax Policy Center. Both are either aligned with my politics or neutral. Unfortunately they are both general tax non-profits, with only tangential focus on return-free filing.
A quick note on nonprofit structures: a 501(c)(3) organization is the usual nonprofit, with donations to the organization being tax deductible. However, 501(c)(3) organizations have the restriction that they can’t attempt to directly influence legislation or campaign for candidates. Instead, explicitly political organizations are covered under 501(c)(4) (social welfare organizations), for which donations are not tax deductible.
So, a somewhat common structure seems to be split between a backend 501(c)(3) organization that does the non-partisan analysis and support work, and if there are outcomes that support a certain policy decision, a sibling 501(c)(4) that pushes those specific policies. This doesn’t seem to prevent the 501(c)(3) organizations from being clearly tilted one way or another: one of the organizations below I donated to stated “we’ll show how proposals to restructure or dismantle progressive income taxes will affect people across the income spectrum”, maintaining just that shade of plausible deniability.
However, with the recent tax bill restructuring, it’s a lot harder to hit the standard deduction ($12000), so if you were going to donate to something, maybe it’d make sense to donate to 501(c)(4)s instead. Personally, I’m trying to blow past the standard deduction so I’m primarily interested in the 501(c)(3)s, but I’ll note when there is a 501(c)(4) associated with the below organizations.
My methodology was super non-rigorous, politically biased, and not terribly in-depth.
- I drew from notes accumulated over the past year, which I made whenever I ran across a possible tax-related non-profit.
- I searched Google for other sources I may not have stumbled across randomly, and were prominent enough to be found with search terms like “tax nonprofit”.
- I searched Charity Navigator for charities related to taxes, skimming the list and cherry picking the ones I thought looked good.
Once I got a list of charities, I tried to answer some questions:
- Are they a 501(c)(3) or a 501(c)(4)? Remember, donations to one are tax deductible, donations to the other aren’t.
- What sort of work did they do? As we’ll see, there are some non-profits doing noble work, but it’s work that isn’t addressing the root causes.
- What do their financials look like? For example, if they’re sitting on lots of cash, it’s less pressing to donate to them.
- Do their goals align with mine?
Ideally, I would do a quasi-GiveWell-ian impact analysis, convert everything to something like QALY/$ but for something like “policy movement/$”, and figure out which charities were doing the best work and had funding shortfalls. However, I neither have the skill nor time to do that, and mumbles something about perfect being the enemy of good.
What I’m donating to
- Both parent institutes are 501(c)(3), so donations are tax deductible.
- They do mainly do modeling work, as well as produce educational materials. I like the high level suggestions in 10 ways to simplify the tax system because they acknowledge that there are trade offs to these simplifications. They also do bog-standard economic education, like how plastic bag taxes work, but an educational center can’t live on more advanced concepts alone.
- The TPC is a… joint sub-institute?… of the Urban Institute and Brookings Institute. Both are well off: The Urban Institute has $101M in income (Charity Navigator entry), and the Brookings Institute has $108M in income (Wikipedia, 2016; weirdly, couldn’t find them on Charity Navigator). Unfortunately, it’s not clear how donations/assets are allocated to the TPC specifically.
- The materials produced by the TPC are not clearly partisan: their reporting on the TCJA was remarkably even handed. They do mention return-free tax filing (1, 2), but it doesn’t appear to be a core pillar of their agenda. This isn’t such a big problem, because no one makes return-free filing a core part of their agenda. Additionally, from Wikipedia both parent institutes are regarded as not especially partisan.
So, the TPC seems to be doing even-handed policy analysis work, with the downside that it is hosted by institutions already well funded relative to other charities.
TPC’s donation page; you may need to specify that you are earmarking a donation for the TPC when donating to either parent institute.
- ITEP is a 501(c)(3), with a sibling 501(c)(4) organization Citizens for Tax Justice (CTJ).
- ITEP does modeling and advocacy work. For example, recent articles include “The 35 percent corporate tax myth” and “The best way to radically simplify tax filing”, the latter of which touches on return-free filing.
- ITEP has $3.4M in contributions, $2M in expenses, and $2M in assets (Charity Navigator). The CTJ is much smaller, with $292k in assets and $212k in income (Charity Navigator).
- At some point the CTJ split off from ITEP, probably to maintain 501(c)(3) status for ITEP. However, it’s easy to see how the ITEP leans, with the above article on the Corporate Tax Myth, and with CTJ’s even clearer articles “What the GOP is really thinking” and “The wealthy don’t need more breaks”. Plus, my donation receipt from ITEP calls out “progressive income taxes”.
In short, ITEP is more focused specifically on tax policies, with a progressive bent I generally support, and fewer resources than TPC (especially CTJ).
There’s a class of 501(c)(3) organizations focused on helping local low income folk fill out their tax returns. It’s a noble cause, but it’s not getting at the root of the problem, which is that they need to fill out returns at all.
These are charities that are confusing in some way, or have goals inimical to mine.
- Tax Analysts are a 501(c)(3) organization.
- They produce tax analysis briefs, as their name implies.
- For a tax-focused charity, they have a ton of money: $68M in assets, and $48M in income (Charity Navigator).
- The briefs and positions within seem even handed, so my problem is not with the position of the charity. No, it’s with Tax Notes: it appears that the charity is somehow linked to a subscription service for tax briefs, which is provided to tax professionals and other parties interested enough to pony up thousands of dollars for analyses. For example, “Tax Notes Today” is $2,500 annually. I’m confused about whether Tax Notes is feeding into the Tax Analysts income above, which would make sense given their large asset pool. Working under that assumption, it seems like Tax Analysts don’t need my money.
This is one of the first results that show up if you search for “tax charity”.
However, the ATR’s main (only?) goal is to lower taxes, period. Then, their Taxpayer Protection Pledge page is full of GOP pull quotes, making it clear who their demographic is, as if the banner “4,000,000 Americans (and counting) will receive Trump Tax Reform Bonuses” (complete with “Click here to see the employers paying bonuses!”) wasn’t clear enough.
I mean, I guess the maniacal focus on LOWER TAXES is refreshing in its clarity, but that’s not what I want.
The Tax Foundation is a 501(c)(3), and is correspondingly less on the nose about their target demographic than ATR. However, there are some clear indicators which way the Tax Foundation leans: the article “Tax Reform Isn’t Done” talks about making provisions of the recent Tax Cut and Jobs Act permanent, and their donation page has a pull quote from Mike Pence.
So the TCPI is a 501(c)(3) (Charity Navigator), but there’s no donation page on their website. What? What charity doesn’t want your money?
Looking at their about page makes it clear that the TCPI is affiliated with The Tax Council, and on their home page is the quote “Our membership is comprised of (but not limited to) Fortune 500 companies, leading accounting and law firms, and major trade associations.” Which makes it clear that they don’t need your dinky public donation, because they have industrial support.
Even if they did accept donations, a part of The Tax Council’s mission is “… contributing to a better understanding of complex and evolving tax laws…” with nary a note about simplifying those tax laws, or at least simplifying how people do their taxes.
 ↑ What I should have done is look for other people trying to answer the same question, especially in an EA style. I did not do this, partly because honestly, I didn’t really expect a strong showing, and partly because I had just finished doing my taxes and I didn’t want to keep doing research. I would appreciate it if you let me know about stronger posts/guides on this topic.
 ↑ But is it ever impossible for me to not accept bad premises?
 ↑ This is a little disingenuous: I expect most people have simpler returns than I do. If I only had one W-2, I would have spent much less time on my taxes.
 ↑ That said, I would be shocked if the balance of evidence worked out that return-free filing was negative for American citizens.
 ↑ Not using the tax prep industry seems like an obvious first step, except I would be piling a lot of suffering on myself for little gain. I usually check my federal return numbers with Excel 1040, but this year is the first time I couldn’t get my tax return within the same ballpark as the numbers given by the tax prep software. I could have sacrificed a weekend to figure out what was going on, but fuck that.
 ↑ This is your periodic reminder that action space is really wide, and doing the lazy thing is sometimes much less effective than doing any direct action.
 ↑ “We never said that the effects would be bad“, seems to be the implied response to people charging it with partisan mongering.
 ↑ I’ll probably spend more time writing and editing this post than I will have spent on actual research.
 ↑ The article also references Elizabeth Warren’s return-free bill, which does raise a question about why I don’t donate directly Elizabeth Warren. I remember her advocating for weird policies, but apparently my go-to dumb policy I thought she backed was her anti-vax position, which was either blown out of proportion or reversed at some point. So, basically no reason.
 ↑ Unfortunately they don’t seem to have their IT locked down tight, since I found a almost certainly surreptitious CoinHive install on their site.
 ↑ Even if the articles can be inanely focused on the minutia of policy: when I was doing my research, the Tax Analysts featured articles list was full of articles about the grain glitch, a tax loophole.
 ↑ Plug for Sarah’s post about the intertwining of politics and aesthetics, Naming the Nameless, which partially explains why the ATR uses language usually reserved for last generation click bait and aggressive ads.
 ↑ I haven’t really been following along with the TCJA, and don’t have a strong opinion on the specific policy changes, so it’s more of a gut-level identity-based dislike of the support of the TCJA. Yes, yes, this is why we can’t have nice things.