CT Blue

For some reason, I’m fascinated by the concept of “rent-seeking”, which explains so much about the way our economy works, but is so little noted by our media or our politicians, even those we normally style progressives. Here’s the latest egregious example I’ve come across, courtesy of Atrios:

H&R Block’s entire business model is premised on taxes being confusing and hard to file. So, naturally, the tax preparation company has become — along with Intuit, the company behind TurboTax — one of the loudest voices on Capitol Hill arguing against measures that make it easier to pay taxes. For example, the Obama administration has pushed for automatic tax filing, in which the IRS uses income information it already has to fill out your tax return for you. That would save millions of Americans considerable time and energy every year, but the idea has gone nowhere. The main reason? Lobbying from H&R Block and Intuit.

But H&R Block’s latest lobbying effort is even more loathsome than its opposition to automatic filing. At the company’s instigation, the Senate Appropriations Committee has passed a funding bill covering the IRS whose accompanying report instructs the agency to at least quadruple the length of the form that taxpayers fill out to get the Earned Income Tax Credit.

via Vox

H&R Block justifies its lobbying as a public spirited effort to reduce improper payments, but apparently the actual facts, which count little in this country, show that people who prepare their own returns, or have them prepared by unpaid volunteers, make fewer errors than paid preparers like H&R Block. So, this is an extremely good example of rent seeking, getting the government to craft laws or regulations that force people to pay money to private entities in return for which they get nothing, or in return for which they get far less than they would get if the government provided the service directly or it was subject to market forces, or, in this case, it was rendered unnecessary by reasonable regulation.

Here’s the definition of the word “tax” from the unabridged American Heritage Dictionary:

a usually pecuniary charge imposed by legislative or other public authority upon persons or property for public purposes : a forced contribution of wealth to meet the public needs of a government

I’d submit that this congressional action is the functional equivalent of a tax, except rather than meeting the needs of the government or the public at large, it is designed to meet the needs of corporate interests. But from the point of view of the person making the payment, there’s not a heck of a lot of difference; the government is forcing that person to spend money in a certain way, leaving him or her with less money to spend as they would otherwise spend it. In this particular case they are not absolutely required to pay tribute to H&R Block, but they are being pushed that way rather forcefully. In any event, I call it a tax: a payment that the government forces one to make.

It is often remarked that the tax burden in this country is lower than in horrible socialist countries like Sweden, where people are cursed with universal health care and other nasty things. But those calculations don’t, I’m sure, classify payments to rent-seekers as taxes. It would be interesting to know how we compare with Sweden if payments to rent-seekers were added into the mix. It should also be noted that, if we were to properly classify actions such as this gift to H&R Block as tax increases, Republicans would be, by far, the party of “tax and spend”.