While they don’t make me as upset as Christmas shopping ads before Halloween (or Thanksgiving) the pre-tax season ads by tax preparers like H&R Block and Jackson-Hewitt do make me sad. It’s not because it reminds me that I need to grind over my own returns in a few weeks, but rather because so many people are throwing away money the likely really need.
These tax preparers have transformed over the years. They started out touting themselves as “experts in the complexities of tax forms and laws” and that they could do all the work–while you make better use of your time. Then as the first tax software programs hit the market, they shifted their position to “we will get you the maximum rebate”. Then as the internet allowed people to file on-line, they started offering “instant refunds”–providing you with what was basically an advance on your actual refund–which would cost you not just their prep fee but also an interest charge in the double-digit APR.
But now that governments make payments via direct deposit in just a couple of weeks, the new marketing tactic is “get your refund now–before you even file!”. I’m guessing they look at your last tax return, figure that you are going to make about the same this year, and provide you with a high-interest loan based on a projected refund. And because there are so many people desperate to have that money in their hands immediately, they are more than willing to take less than they deserve.
What’s also sad is that these preparers should really be helping people set up their withholdings so that they get a much smaller–or not even any–refund. We have become so trained to think that getting back thousands of dollars in February or March is this great economic windfall–when it would be very easy to have that money in your pocket all year long. How big a difference would it make for that family to have an extra 200 or 300-bucks a month every month–instead of waiting a year to collect it.
But what is most depressing seeing those ads this year is that we had a chance to pretty much put those companies out of business with the original tax reform measure from House Speaker Paul Ryan. I never bought into the “you can do your taxes on a postcard” promise–but there was a real chance to greatly simplify the filing process–and give nearly everyone additional tax relief. But then Democrats hijacked the narrative by making a big deal out of every individual deduction that was being eliminated–even though the doubled standard deduction would have covered student loan interest, mortgage interest and teachers buying their own school supplies write-offs and then some.
So instead we are stuck with a system that still takes more than it has too–and third parties that take even more from people that don’t know any better.
