I was surprised how much I enjoyed reading this. Although it's necessarily opinionate d(the lead author was part of the Direct file team) it comes off as very even-handed, giving equal consideration to successes and failures, and addressing the partisan political environment in factual terms.
It's unusually well-written, providing lots of key details or dropping in relevant context without ever losing sight of the big picture and the looming deadlines. I expected to just read the executive summary and then skim the rest, but it held my attention the whole way through.
I disagree wholeheartedly that there isn’t much to study. Direct File was actually a resounding success, especially when you consider how much difficulty governments tend to have shipping good software products. There is a lot of good information in here that government entities can learn from.
Including how and why it died. That is an important lesson for the entire governmental enterprise, including all decision-makers, to learn: that government CAN deliver something good and one single person should not be in totalitarian control
> That is an important lesson for the entire governmental enterprise, including all decision-makers, to learn: that government CAN deliver something good and one single person should not be in totalitarian control
This is only a major epiphany to proponents of a US-based ideological current, and mostly the result of anti-communist cold war propaganda. The rest of the world is well aware that state projects can and do succeed more than they fail.
I think it speaks to doing things "the right way". Direct file could have been mandated by Congress, but it wasn't. Instead it only directed the IRS to do a "study" as a "voluntary agency initiative". That left full control of whether it should be done in the hands of the IRS and the executive branch.
More concretely and timely for this discussion - the beneficial ownership registry was passed in the 2021 NDAA by congress and signed by Biden. So there's a law on the books that FinCEN needs to collect the ownership data for all US companies to prevent money laundering.
This week, Bessent decided that the signature policy of the Corporate Transparency Act, a bipartisan effort to stymie cartels and foreign oligarchs, would not only be stopped, but they instructed FinCEN to delete all the records they've already collected.
Easily the most lawless gang of corrupt bureaucrats that have ever held office in the US.
Not a funding issue per se, but Congress also passed a law requiring that the "Epstein files" be released by December 2025. Yet here we are, ~9 months later, and the Republican administration is still violating the law's deadline and its requirements not to black out the names of people who aren't trafficking-victims.
Meanwhile, Republican legislators are looking at the people responsible and *checks notes* ... rewarding them with powerful government jobs. [0]
It didnt happen because Intuit lobbied against it like their business model was in existential crisis. The canary is that inappropriate power imbalances will ruin even the most hard one feats of human collaboration and effort. Its like learning about why jaywalking became a crime, or why recycling is a consumer’s respobsibility. Edit: So I'm about as original as a model can be as I went to go fact check myself and I basically cliff noted an AI summary for yall pre-gen.
I doubt this is the reason. In this particular case, it's more likely that a company such as Turbotax paid a sufficient sum of money to the President or one of his family members in exchange for this consideration.
Congress authorized a study, not a full blown system, or even a working prototype. No taxpayers should have ever been allowed to use it to file a tax return.
Despite Congress appropriating only $15M to do the study, the program managed to blow through at least $41M, likely more.[1] This included advertising costs in some states to encourage taxpayers to use the system.
This would be like your boss asking you to send him an email about the pros and cons of adding a feature, and you going and implementing the feature, pushing it to production, and then asking customers for feedback on it.
Whether or not the feature was a success is 100% irrelevant. That’s not how things should be done. We are a nation of laws, and even if the program was a smashing success, there needs to be accountability.
Just an aside on the design rather than the content:
I was wondering for a while about the greenish and yellow bars on the margins of the page, but I'm pretty sure that those are padding to make the document work well on both US letter paper and A4 at the same time! The text area is A4 proportions, so if it were printed, zoomed to size on that paper, the sidebars would simply disappear.
No doubt this is a common technique that I'm just noticing for the first time.
Anyone wheeling and dealing along in the shadows between "politics" and "deliverable, functioning product" should read it. Or, I guess, paste the link into Claude or ChatGPT and ask it to summarize for them, lessons learned in bullet points and how it could apply to $their_job.
But I'm generally a weirdo who finds these kinds of reports fascinating, so don't purely go on my recommendation.
They lost 18 months in decision-making, compressing their development timeline.
I am not seeing it happen yet but I wonder if this will be the main AI SDLC improvement: you can analyze a ton of docs, build prototypes smoothing the decisions for non-technical stakeholders, and compress development so much that it might actually absorb all the other inefficiencies.
Very basic analysis by da bot says it costs the government roughly 226$ per filing vs a private company 40$.
Would love to hear the opposite argument but the point I first saw online is saying the same, that it cost more tax payer money to run than it saved those tax payers.
Scale problem? Open to hearing the opposite argument.
It was a pilot and was open to a small subset of taxpayers. It was intentionally not benefiting from economy of scale to incrementally deliver value rather than probably badly trying to hit every use case the first go around.
The cost per filing criticism is generally posited in bad faith, by people who don’t understand incremental software delivery, or both
Your "226" includes the one-time initial development costs. You're comparing $40/yr in perpetuity versus something like $220 once, $6/yr after that - and I suspect the actual costs of running the system are far lower.
Again, assuming the government can outcompete on price vs private industry.
It's a real point but I don't know an example of that happening elsewhere. The US government outcompeting private industry is exactly why communism doesn't work
You’ve already received the answer to this. The platform was already built. There’s every reason to think it would require only very small operating costs from now on, whereas a company has every reason to maintain profit margins with a fixed price.
The government outcompetes the private sector in almost everything it gets into. Healthcare, mail delivery, fire relief, and far more. The private sector is all about slashing quality and raising prices.
It’s not communism. It’s literally how most of the rest of the developed world file their taxes.
Given taxes are a government system, and one that’s complicated enough that you shouldn’t expect the average tax payer to need to understand it nor have the money to afford an accountant, it’s actually insane to argue that this should be operated in the private space.
This is exactly the kind of thing the government should operate in capitalist societies.
Those who fund their government branches are generally doing better than those who are not. America being the prime recent example of this.
And those who’s government places policies which benefit their voters generally have a better quality of life than those who accept lobbying, and corruption dictate government policies.
Why should a malicious third party have our financial records? Why would a third party know filing reqs better than the IRS?
They already know the data anyway. Other countries have done this for decades already, cheaply.
Is this fixed cost per filling, or does it include cost of developing the system? I somehow doubt that for all Americans to fill taxes it would cost 6.5b$ (163x40)
I think its like building a bridge analogy, when it costs you to use ferry only 0.01% of price of the bridge. But when its built its essentially free and ferry goes out of business.
Yes that I'd like to hear. It's possible it would be cheaper over time if we assume tax filling is artificially held at a higher price by companies but competition says that shouldn't be true.
But also, the "bridge" is built? There are tons of companies already doing this.
Even if that's true, there's no reason it can't be streamlined over time. The true scaling problem is profit. The government has an interest in accurate tax collection -- not collecting a service fee.
the billion dollar tax prep industrial complex as a group spends the most lobbying dollars on tax policy -- in particular, suppressing any effort eliminate or even reduce filing complexity -- and lobbying ops like theirs don't happen because their service's value to tax payers speaks for itself
I mean it's right there in the price? Not doing rocket science analysis here.
I do wonder on the point of making it complicated on purpose though. Like is there actual evidence of that? Government naturally makes all sorts of stuff overly complicated all on its own.
This ignores the time cost of having to find the right private company to file your taxes (everyone loves price shopping!) and manually funnel all your data into it, data the government probably already has. Tax prep costs me at least an entire day of my time every year.
P.S. When citing that you had AI do a basic analysis of something, specifying what you analyzed and which AI you used would be nice so other people can reproduce it or dig deeper.
The government inefficiency is in doing the small pilot program and using those costs as per filing costs. Of course it's going to cost more if you only do a handful of them. The first iPhone cost a hojillion dollars to make, but Apple sells them for $1,000 and make a ton of money at that price point because they've made millions of them. This is so true for government spending that the shipyard building aircraft carriers did a press release begging congress to buy two at once because it would be cheaper than buying one and then waiting a long time and then buying a second one anyway.
Governments regularly do things cheaper than private industry. And regularly do things more expensively.
Turns out, governments can be efficient and run things well. You just have to tune the incentive structure correctly.
(Aside, I don't care about cheaply as an axis nearly much as I care about "for the benefit of many". I'd take expensive programs that help everyone, every time.)
Public transit is a great example. Pretty much every attempt to privatize transit worldwide has resulted in, if not failure and subsequent deprivatization, at least higher prices and worse service for the people using the service.
The interstate highway system, which replaced a complex system of partially privately owned roads, is another.
In most countries, healthcare is another great example. And arguably education as well - public schooling produces generally pretty good results worldwide for not that much money per student, and outside the US, higher education is often public and incredible value for money.
US public transit is a finacial disaster far beyond any other country.
Road maintenance is normally cheaper/faster with private.
Healthcare is a can of worms but you could be right. The real problem with public health is what happens when these gov can't afford it anymore. US is likely in the wrong now but I want to see the results 50yrs from now when social spending cannot keep up with rising costs and decreasing taxes in EU (population collapse).
Would you like to see how private industry would handle city water system, and how much subscriptions would cost? They probably could do it cheaper, but they would charge the hell out of the end consumer as profit. Because thats the idea of private industry - profit.
The biggest issue with Direct File is the conflict of interest created by having the government who benefits from your tax payment also prepare the return for you.
Given the massive amount of IRS shenanigans over the years, it is easy to imagine certain groups unfavored by the government conveniently being led to file returns that cause them to miss out on subsidies they are actually eligible for, or to pay higher taxes based on filing their return in correct but unfavorable ways resulting in higher tax payments than necessary.
This risk is particularly high given that the program was intended for and marketed to low income filers who typically rely on their tax preparer as an advocate to ensure their tax payment is as low as legally possible.
As other comments have mentioned, the program also exceeded statutory authority. Congress authorized the IRS to study a direct file system, not implement one on a permanent basis. It is a good thing when our government is restrained after it oversteps legal boundaries.
This is especially true in the case of this program because it was being intentionally implemented on a massive scale in order to make it politically unpopular to shut down. A program that allows 10% of all tax payers in 25 states is obviously much more than a study.
> The biggest issue with Direct File is the conflict of interest created by having the government who benefits from your tax payment also prepare the return for you.
The amount of distrust in the USA is truly bonkers. What about the conflict of interest for the tax preparers, actual companies with profit as a motive wanting nothing more than to pretend it's all complicated.
As the document says, the government prefilling your return is commonplace in many countries. And it actually makes sense when they already have the data. Less work for the taxpayer, fewer mistakes resulting in fewer cases in need of investigation. Everyone wins here...
> This risk is particularly high given that the program was intended for and marketed to low income filers who typically rely on their tax preparer as an advocate to ensure their tax payment is as low as legally possible.
Over 30% of returns don't even owe federal taxes [1]. So when they file, and get a $1000 credit, it's really crappy to then have to pay $100 or so of that to a tax preparer.
> to make it politically unpopular to shut down
So the government doing something people like is... Bad?
Until you’ve had an IRS audit you truly can’t even imagine. I hope you never have a similar experience that knocks those rose tinted glasses off your head.
A buddy of mine took the home office deduction for a few years in the late 1990’s. He read the law and was in compliance with it. The IRS audited him and claimed he was not eligible. He lawyered up and spent thousands of dollars fighting it. He was ultimately successful, but his subsequent distrust of government was entirely merited.
Tax preparers at least have incentives to compete with each other on price and quality of service. They also often guarantee return accuracy. Tax law can be complicated and there are legitimate questions about how to treat certain kinds of income or expenses. These are questions you really don’t want the government making unilaterally.
And if you really hate tax preparers, you can always file a paper return for free using forms available from the post office, as my father and I do to this day. And honestly, if a taxpayer doesn’t owe federal taxes, submitting a paper form 1040 is the simplest route. Slap your W2 income on there and fill the rest out and you’re done. No fees, just a stamp and envelope.
A direct file system will inevitably morph into a black box where the government tells you an arbitrary tax liability amount and 99% of taxpayers just accept it at face value and pay it. You really see no problems with such a system?
Arguments of the form “everybody else is doing it, can’t be that bad” are not compelling, in my opinion. Slavery was common everywhere for a long time. I suppose that made it a good thing?
The government entrenches its power by implementing programs that hand out benefits at the cost of your liberty. Those benefits are always popular, and the loss of liberty is only realized after it is far to late to ever get it back.
But hey, the government claims people saved an average of $240 a year and 6 hours of tax preparation time because of this system. What a smashing success!
TLDR, this is not for you. No one is forcing you to use it. The people that did use it were apparently happy with it.
> Tax preparers at least have incentives to compete with each other on price and quality of service. They also often guarantee return accuracy.
> He lawyered up and spent thousands of dollars fighting it. He was ultimately successful, but his subsequent distrust of government was entirely merited.
So your friend filed himself, or his tax preparer didn't back him up?
The US tax code is very complicated and claiming deductions seems to be a national sport. I'm sure there are plenty of deductions taken that might not be illegal but questionable.
However, your example here wouldn't be what this service was aimed at to begin with. If the bottom 90% or so of filers can use this because their incomes are simple (paycheck, some savings, standard deduction) why would that need to be done by a tax preparer?
> You really see no problems with such a system?
I do not because it won't be a black box anymore than your tax preparer is a black box. Again, think of this as for the simple returns. If you claim standard deduction and have only a W2, it will only be a black box if you're unable to do the simplest of math.
> Arguments of the form “everybody else is doing it, can’t be that bad” are not compelling, in my opinion.
Counter argument being, if the rest of the world does it differently, shouldn't that mean there might be some reflection needed?
For your slavery example, that's why it's no longer a thing?
> The government entrenches its power by implementing programs that hand out benefits at the cost of your liberty. Those benefits are always popular, and the loss of liberty is only realized after it is far to late to ever get it back.
I'm going to make a guess that you've never lived outside of the US.
> But hey, the government claims people saved an average of $240 a year and 6 hours of tax preparation time because of this system. What a smashing success!
If it means that the lowest incomes now get their $1000 dollar credit and get to keep it, I think that's a lot of money for a lot of them.
I was not a fan of Direct File (I think it could have been much better!) but it was objectively in the success bucket:
- ~$50M all-in to build which sounds egregious but is small for a government project
- mostly good outcomes
- ~4y to pilot which also sounds egregious for a single moderate-complexity web app but again is practically lightspeed for a government project
People blame it getting shuttered on Trump but this is both a misread and a fundamental misunderstanding of how the government operates. The entire federal government is deliberately paced and primarily driven by a combination of politicals, regulation, budget, Congressional policymaking, and program staffing. The hammer on this was always going to fall,
[1] Congress has maintained a "buy over build" policy since literally the Cold War. Ironically the first policy here (1965) was to buy computers from ADP instead of custom-building them. The most impactful "buy commercial" policy (1996) was also IT focused. This was literally codified in several parts of the FAR, and if we're going to be blaming admins, the Trump admin has actually weakened the FAR with the RFO and would be on the other side of this issue.
[2] This policy is also the foundation upon which IT contractors like Palantir are built, if you've ever wondered "wtf do they do" they are a commercial contractor that builds custom software for government. So agencies get their custom stuff, Congress is happy they bought commercial, and the only loser is the taxpayer who overpaid a factor of 3-5x. To their credit, Palantir is a huge improvement on the status quo, because they charge by use cases and outcomes, whereas traditional SI's operate on a staffing model and a combination of high wrap rates and perverse incentives with billable hours creates horrible outcomes and ballooning costs. Anyways, there are a lot of commercial vendors that this work "could have" gone to and didn't. It would also have been really easy for them to shop this out because this was shaped really well for GSA MAS or STARS III.
[3] When you build things internally with e.g. 18F, one agency is typically the "customer" and pays the other agency (afaik 18F program is nested under the White House). So this really sucks when they walk away; 18F earned a reputation for building things through pilot, blogging about it, puffing their cheeks in the media, sending a bill to the agency, and then running off to the next shiny thing as engineers tend to do. As an agency you save a bit of money initially but now you are left with something nobody knows how to maintain, you have to hire contractors to do it, which by nature has to be a staffing contract, and then the wrap rate alone wrecks you. This happens all the time with commercial vendors, usually when they are outsized or don't get renewed, but obviously upsetting when it happens internally.
[4] The author of this piece was part of the team and so as you'd expect this piece is exceptionally biased. The reality is that the IRS self-assessed the maintenance as low and everybody who reports on this treats this as fact when it was not a GAO estimate, which is what carries any actual weight, it was internal IRS estimates and a single independent that mainly assessed call center volume not the actual system. Not only does their reputation precede them here, but their own spend on buildout (~$30M on contractors to help) contradicts the low maintenance narrative. We may never see a GAO estimate here, but the contract would almost certainly go out to TrussWorks, all government contracting data is public and you can look up for yourself how much TrussWorks typically charges the IRS whether directly or thru ATI's vehicles as subawards.
Eh, government should not be in the business of maintaining digital infrastructure, regardless of how capable it might be. As much of it as possible should be contracted out to 3rd parties.
Profit motives in infrastructure are a bad idea. See Thames Water in the UK, for instance. It always introduces a perverse incentive where if the company in control of the infrastructure can extract an extra million in profit by making everything less efficient and costing everyone else involved a billion, it's still in that company's interest to do so.
This is a prime example of that. H&R Block, etc, benefit from there not being direct file by around $3bn in revenue or around $750m in profit. Rough sums on the time saved by direct file if everyone used it is 8h * average wage * taxpayers, which seems to be approximately $44bn. i.e. in axing direct file, it has "created" $3bn in economic activity to the private infrastructure-owner (the intermediary between you and filing your return), but at the cost of $44bn in lost time & therefore lost activity (the other things you could have been doing) to the rest of the economy.
Infrastructure is not the economy. Infrastructure is the thing the economy runs on top of / has to use. Given that it is the role of government to govern the economy, it is the role of government to ensure that the infrastructure is running well (be the custodian of the infrastructure).
Arguing the other side, digital infrastructure shouldn't be such a complicated domain that it is out of the reach of governments. This is the authority we trust to build our roads, water/sewer system, electric grid, and virtually every other meaningful physical infrastructure. Why should digital infrastructure be out of bounds?
The only alternative is inserting a third party, one that has full access to all your financial information, an extraordinary level of trust for a private sector that has shown unrelenting loyalty to investors over customers. That shouldn't be necessary for the average filer, assuming a bare minimum of competence, like one might assume for the only country to put a human on the moon and bring them safely home.
>This is the authority we trust to build our roads and virtually every other meaningful physical infrastructure in our civic life.
Trusting the government to be able to do something is not the same them actually doing it, nor is it the same as them doing it well. With roads the people using them have much more incentive in maintaining them than the government. What a person experiences driving down the road everyday is just a statistic to the government.
How about the electric grid and our water/sewer systems, is it reasonable to trust the same entity that manages those vital services to build a basic web form?
> Trusting the government to be able to do something is not the same them actually doing it, nor is it the same as them doing it well.
You are absolutely right. My point is not that the government has proven its competency in this domain, it is whether we should expect it.
The monetary incentives for the most governments don't exist to run projects efficiently, so I don't think it is realistic to expect it. The government can just print money or steal money via taxes to cover up inefficiencies. And since government bureaucracy tends to force things to move at a glacial pace that will be reflected in how it executes projects.
This is so wrong I literally don't know where to start.
Governments have as much incentive as anyone else to save money. I shouldn't even need to type this but raising taxes is unpopular and tends to cause people to get voted out of office.
People need to stop repeating thise weird talking points about "the government" and its incentives. It's a big, complixated entity made up of literally millions of people all of whom have different motivations and incentives and non-government employees affect those not just in the super obvious way by voting but by every interaction we have with anyone who works there.
>raising taxes is unpopular and tends to cause people to get voted out of office.
This is missing the point. If you got rid of taxes altogether it would reveal what really is being propped up tax money as opposed to actually being valuable enough to exist on its own.
>complixated entity made up of literally millions of people all of whom have different motivations and incentives
Which is why it's important to get the big incentives correct. Otherwise one of these actors will waste resources since expecting people to do the right thing without incentives does not scale.
> With roads the people using them have much more incentive in maintaining them
Are you implying the random people driving down a road also do the maintenance on it? What? How is this any different from literally any other government service?
>Are you implying the random people driving down a road also do the maintenance on it?
I'm implying that the people and businesses along a private road pay another company to come in and do maintenance. Unlike government modes you don't have to wait until whenever the government feels like fixing road.
The government has to maintain some infrastructure to get this sort of thing done. Whether digital or analog. And if it contracts it out, it needs to oversee it. So no matter how it is done, the government has to pay.
You could just light the money on fire instead and get the same result. Contractors routinely screw the tax payer. I once had a job in one of these third parties where the entire operation was effectively defrauding the tax payer by claiming 1hr jobs would take 40.
You seem to be under the impression that the government itself doesn't have the same problem. Government agencies often over bill, over budget. They have an incentive to pad everything and to never lower costs because their budget will be lowered otherwise. Contractors on the other hand, have to compete with other contractors so while they can try to over bill, if they bill too much the government has an incentive to switch contractors.
> They have an incentive to pad everything and to never lower costs because their budget will be lowered otherwise.
Sure, but in the absence of widespread corruption (which until now, the US has been relatively clear of) they don't just get to go home with that budget in their pocket. They're still paid on standardized pay scales. Any extra budget still gets spent on the actual org or project, with the exception of random things like travel or office supplies.
The contractor takes home every extra dollar as profit.
I don't disagree at all that neither system is perfect, of course, but just saying.
You are absolutely correct, billable hours are perverse incentives and wrap rates border on predatory, but this status quo is Congressionally mandated and buy commercial as a policy is generally bipartisan.
Do you think the government should allow electronic filing of taxes?
Because if the government is going to accept returns electronically instead of through the physical mail, then it should accept them without requiring an intermediary.
Interestingly, it does this for corporations, but not for individuals.
Gee, I wonder why.
Personally, I think that (a) the government needs to have my PII to process my taxes, and that (b) having the government require me to also hand my PII to a third party in order to pay taxes is a big fucking security nightmare.
The site that was killed was the IRS direct file site.
The webform is through the free file alliance, aka Turbotax and friends.
The API requires you to jump through a million hoops. Heaven help you if the reason you want to use the API is because you are behind on your taxes, because that will signal that you are not of good character.
Speaking of being behind on your taxes, you have to use paper for any but the last three years of returns anyway.
We have such a long history of really famous examples of big, successful government mega projects: hoover dam, interstate highways, manhattan project, apollo program... even the freaking panama canal was a government project.
I was surprised how much I enjoyed reading this. Although it's necessarily opinionate d(the lead author was part of the Direct file team) it comes off as very even-handed, giving equal consideration to successes and failures, and addressing the partisan political environment in factual terms.
It's unusually well-written, providing lots of key details or dropping in relevant context without ever losing sight of the big picture and the looming deadlines. I expected to just read the executive summary and then skim the rest, but it held my attention the whole way through.
There isn’t much to study - it didn’t succeed or fail on the merits - someone didn’t like it because he didn’t create it so it got axed.
I disagree wholeheartedly that there isn’t much to study. Direct File was actually a resounding success, especially when you consider how much difficulty governments tend to have shipping good software products. There is a lot of good information in here that government entities can learn from.
Including how and why it died. That is an important lesson for the entire governmental enterprise, including all decision-makers, to learn: that government CAN deliver something good and one single person should not be in totalitarian control
> That is an important lesson for the entire governmental enterprise, including all decision-makers, to learn: that government CAN deliver something good and one single person should not be in totalitarian control
This is only a major epiphany to proponents of a US-based ideological current, and mostly the result of anti-communist cold war propaganda. The rest of the world is well aware that state projects can and do succeed more than they fail.
I think it speaks to doing things "the right way". Direct file could have been mandated by Congress, but it wasn't. Instead it only directed the IRS to do a "study" as a "voluntary agency initiative". That left full control of whether it should be done in the hands of the IRS and the executive branch.
> Direct file could have been mandated by Congress, but it wasn't.
Something being mandated by Congress is no protection at times:
* https://en.wikipedia.org/wiki/United_States_Agency_for_Inter...
(Or the Constitution for that matter it seems.)
More concretely and timely for this discussion - the beneficial ownership registry was passed in the 2021 NDAA by congress and signed by Biden. So there's a law on the books that FinCEN needs to collect the ownership data for all US companies to prevent money laundering.
This week, Bessent decided that the signature policy of the Corporate Transparency Act, a bipartisan effort to stymie cartels and foreign oligarchs, would not only be stopped, but they instructed FinCEN to delete all the records they've already collected.
Easily the most lawless gang of corrupt bureaucrats that have ever held office in the US.
https://thehill.com/business/6025347-treasury-repeals-benefi...
Not a funding issue per se, but Congress also passed a law requiring that the "Epstein files" be released by December 2025. Yet here we are, ~9 months later, and the Republican administration is still violating the law's deadline and its requirements not to black out the names of people who aren't trafficking-victims.
Meanwhile, Republican legislators are looking at the people responsible and *checks notes* ... rewarding them with powerful government jobs. [0]
[0] https://www.citizen.org/article/todd-blanche-the-epstein-fil...
Yeah that would have protected it /s
It had talented software engineers involved including with the marketplace. It succumbed to political forces
It didnt happen because Intuit lobbied against it like their business model was in existential crisis. The canary is that inappropriate power imbalances will ruin even the most hard one feats of human collaboration and effort. Its like learning about why jaywalking became a crime, or why recycling is a consumer’s respobsibility. Edit: So I'm about as original as a model can be as I went to go fact check myself and I basically cliff noted an AI summary for yall pre-gen.
I doubt this is the reason. In this particular case, it's more likely that a company such as Turbotax paid a sufficient sum of money to the President or one of his family members in exchange for this consideration.
Then there is that to study
Congress authorized a study, not a full blown system, or even a working prototype. No taxpayers should have ever been allowed to use it to file a tax return.
Despite Congress appropriating only $15M to do the study, the program managed to blow through at least $41M, likely more.[1] This included advertising costs in some states to encourage taxpayers to use the system.
This would be like your boss asking you to send him an email about the pros and cons of adding a feature, and you going and implementing the feature, pushing it to production, and then asking customers for feedback on it.
Whether or not the feature was a success is 100% irrelevant. That’s not how things should be done. We are a nation of laws, and even if the program was a smashing success, there needs to be accountability.
1. https://home.treasury.gov/system/files/131/Report-Replacemen...
> We are a nation of laws
Have you considered doing stand-up comedy?
Just an aside on the design rather than the content:
I was wondering for a while about the greenish and yellow bars on the margins of the page, but I'm pretty sure that those are padding to make the document work well on both US letter paper and A4 at the same time! The text area is A4 proportions, so if it were printed, zoomed to size on that paper, the sidebars would simply disappear.
No doubt this is a common technique that I'm just noticing for the first time.
A fascinating , yet sad, post-mortem.
Anyone wheeling and dealing along in the shadows between "politics" and "deliverable, functioning product" should read it. Or, I guess, paste the link into Claude or ChatGPT and ask it to summarize for them, lessons learned in bullet points and how it could apply to $their_job.
But I'm generally a weirdo who finds these kinds of reports fascinating, so don't purely go on my recommendation.
They lost 18 months in decision-making, compressing their development timeline.
I am not seeing it happen yet but I wonder if this will be the main AI SDLC improvement: you can analyze a ton of docs, build prototypes smoothing the decisions for non-technical stakeholders, and compress development so much that it might actually absorb all the other inefficiencies.
Very basic analysis by da bot says it costs the government roughly 226$ per filing vs a private company 40$.
Would love to hear the opposite argument but the point I first saw online is saying the same, that it cost more tax payer money to run than it saved those tax payers.
Scale problem? Open to hearing the opposite argument.
It was a pilot and was open to a small subset of taxpayers. It was intentionally not benefiting from economy of scale to incrementally deliver value rather than probably badly trying to hit every use case the first go around.
The cost per filing criticism is generally posited in bad faith, by people who don’t understand incremental software delivery, or both
Ok but why even make it? 40$ per taxpayer filing vs the government doing it with our taxes.
I doubt it's going to beat private industry's price.
It's not a bad faith argument though. If it cost the gov 40$ or it cost a tax payer 40$ what's the difference?
Your "226" includes the one-time initial development costs. You're comparing $40/yr in perpetuity versus something like $220 once, $6/yr after that - and I suspect the actual costs of running the system are far lower.
If you read further you'll see that in 2025 they spent $40 million additional and served 300000 people - so $130/user?
The metrics for this project don't sell it - the politics do. You'll either love it or hate it.
Again, assuming the government can outcompete on price vs private industry.
It's a real point but I don't know an example of that happening elsewhere. The US government outcompeting private industry is exactly why communism doesn't work
You’ve already received the answer to this. The platform was already built. There’s every reason to think it would require only very small operating costs from now on, whereas a company has every reason to maintain profit margins with a fixed price.
The government outcompetes the private sector in almost everything it gets into. Healthcare, mail delivery, fire relief, and far more. The private sector is all about slashing quality and raising prices.
It’s not communism. It’s literally how most of the rest of the developed world file their taxes.
Given taxes are a government system, and one that’s complicated enough that you shouldn’t expect the average tax payer to need to understand it nor have the money to afford an accountant, it’s actually insane to argue that this should be operated in the private space.
This is exactly the kind of thing the government should operate in capitalist societies.
Most of the developed world aint doin so hot
Those who fund their government branches are generally doing better than those who are not. America being the prime recent example of this.
And those who’s government places policies which benefit their voters generally have a better quality of life than those who accept lobbying, and corruption dictate government policies.
Why should a malicious third party have our financial records? Why would a third party know filing reqs better than the IRS? They already know the data anyway. Other countries have done this for decades already, cheaply.
Is this fixed cost per filling, or does it include cost of developing the system? I somehow doubt that for all Americans to fill taxes it would cost 6.5b$ (163x40)
I think its like building a bridge analogy, when it costs you to use ferry only 0.01% of price of the bridge. But when its built its essentially free and ferry goes out of business.
Yes that I'd like to hear. It's possible it would be cheaper over time if we assume tax filling is artificially held at a higher price by companies but competition says that shouldn't be true.
But also, the "bridge" is built? There are tons of companies already doing this.
They made it to start somewhere. How to start without starting? Just like when a startup has crappy unit-economics, then refines and scales to better.
Also, where can I get tax software for $40? Even freetaxusa isn't free.
Even if that's true, there's no reason it can't be streamlined over time. The true scaling problem is profit. The government has an interest in accurate tax collection -- not collecting a service fee.
da troof soshul bot?
the billion dollar tax prep industrial complex as a group spends the most lobbying dollars on tax policy -- in particular, suppressing any effort eliminate or even reduce filing complexity -- and lobbying ops like theirs don't happen because their service's value to tax payers speaks for itself
I mean it's right there in the price? Not doing rocket science analysis here.
I do wonder on the point of making it complicated on purpose though. Like is there actual evidence of that? Government naturally makes all sorts of stuff overly complicated all on its own.
> I mean it's right there in the price? Not doing rocket science analysis here.
That's been answered in at least one other reply
> I do wonder on the point of making it complicated on purpose though. Like is there actual evidence of that?
- https://apnews.com/article/irs-free-file-tax-returns-391ded1... - https://www.propublica.org/article/inside-turbotax-20-year-f...
> Government naturally makes all sorts of stuff overly complicated all on its own.
By all means let me put a couple of things aside so I can debate this corny gospel for hours n' hours ...
Go back to reddit if you don't want to chat
This ignores the time cost of having to find the right private company to file your taxes (everyone loves price shopping!) and manually funnel all your data into it, data the government probably already has. Tax prep costs me at least an entire day of my time every year.
P.S. When citing that you had AI do a basic analysis of something, specifying what you analyzed and which AI you used would be nice so other people can reproduce it or dig deeper.
The government inefficiency is in doing the small pilot program and using those costs as per filing costs. Of course it's going to cost more if you only do a handful of them. The first iPhone cost a hojillion dollars to make, but Apple sells them for $1,000 and make a ton of money at that price point because they've made millions of them. This is so true for government spending that the shipyard building aircraft carriers did a press release begging congress to buy two at once because it would be cheaper than buying one and then waiting a long time and then buying a second one anyway.
https://www.navsea.navy.mil/Media/News/Article-View/Article/...
Kinda a hard argument to say the government can do something cheaper than private industry.
Governments regularly do things cheaper than private industry. And regularly do things more expensively.
Turns out, governments can be efficient and run things well. You just have to tune the incentive structure correctly.
(Aside, I don't care about cheaply as an axis nearly much as I care about "for the benefit of many". I'd take expensive programs that help everyone, every time.)
What do they do cheaper?
Public transit is a great example. Pretty much every attempt to privatize transit worldwide has resulted in, if not failure and subsequent deprivatization, at least higher prices and worse service for the people using the service.
The interstate highway system, which replaced a complex system of partially privately owned roads, is another.
In most countries, healthcare is another great example. And arguably education as well - public schooling produces generally pretty good results worldwide for not that much money per student, and outside the US, higher education is often public and incredible value for money.
US public transit is a finacial disaster far beyond any other country.
Road maintenance is normally cheaper/faster with private.
Healthcare is a can of worms but you could be right. The real problem with public health is what happens when these gov can't afford it anymore. US is likely in the wrong now but I want to see the results 50yrs from now when social spending cannot keep up with rising costs and decreasing taxes in EU (population collapse).
Would you like to see how private industry would handle city water system, and how much subscriptions would cost? They probably could do it cheaper, but they would charge the hell out of the end consumer as profit. Because thats the idea of private industry - profit.
Not saying private do everything but if they already are and it's cheaper why screw with it?
Charging a consumer or taxing them, what's the difference
Take the bridge analogy. Why screw with the ferry business and build a bridge?
The biggest issue with Direct File is the conflict of interest created by having the government who benefits from your tax payment also prepare the return for you.
Given the massive amount of IRS shenanigans over the years, it is easy to imagine certain groups unfavored by the government conveniently being led to file returns that cause them to miss out on subsidies they are actually eligible for, or to pay higher taxes based on filing their return in correct but unfavorable ways resulting in higher tax payments than necessary.
This risk is particularly high given that the program was intended for and marketed to low income filers who typically rely on their tax preparer as an advocate to ensure their tax payment is as low as legally possible.
As other comments have mentioned, the program also exceeded statutory authority. Congress authorized the IRS to study a direct file system, not implement one on a permanent basis. It is a good thing when our government is restrained after it oversteps legal boundaries.
This is especially true in the case of this program because it was being intentionally implemented on a massive scale in order to make it politically unpopular to shut down. A program that allows 10% of all tax payers in 25 states is obviously much more than a study.
> The biggest issue with Direct File is the conflict of interest created by having the government who benefits from your tax payment also prepare the return for you.
The amount of distrust in the USA is truly bonkers. What about the conflict of interest for the tax preparers, actual companies with profit as a motive wanting nothing more than to pretend it's all complicated.
As the document says, the government prefilling your return is commonplace in many countries. And it actually makes sense when they already have the data. Less work for the taxpayer, fewer mistakes resulting in fewer cases in need of investigation. Everyone wins here...
> This risk is particularly high given that the program was intended for and marketed to low income filers who typically rely on their tax preparer as an advocate to ensure their tax payment is as low as legally possible.
Over 30% of returns don't even owe federal taxes [1]. So when they file, and get a $1000 credit, it's really crappy to then have to pay $100 or so of that to a tax preparer.
> to make it politically unpopular to shut down
So the government doing something people like is... Bad?
1: https://www.ntu.org/foundation/tax-page/who-doesnt-pay-incom...
Until you’ve had an IRS audit you truly can’t even imagine. I hope you never have a similar experience that knocks those rose tinted glasses off your head.
A buddy of mine took the home office deduction for a few years in the late 1990’s. He read the law and was in compliance with it. The IRS audited him and claimed he was not eligible. He lawyered up and spent thousands of dollars fighting it. He was ultimately successful, but his subsequent distrust of government was entirely merited.
Tax preparers at least have incentives to compete with each other on price and quality of service. They also often guarantee return accuracy. Tax law can be complicated and there are legitimate questions about how to treat certain kinds of income or expenses. These are questions you really don’t want the government making unilaterally.
And if you really hate tax preparers, you can always file a paper return for free using forms available from the post office, as my father and I do to this day. And honestly, if a taxpayer doesn’t owe federal taxes, submitting a paper form 1040 is the simplest route. Slap your W2 income on there and fill the rest out and you’re done. No fees, just a stamp and envelope.
A direct file system will inevitably morph into a black box where the government tells you an arbitrary tax liability amount and 99% of taxpayers just accept it at face value and pay it. You really see no problems with such a system?
Arguments of the form “everybody else is doing it, can’t be that bad” are not compelling, in my opinion. Slavery was common everywhere for a long time. I suppose that made it a good thing?
The government entrenches its power by implementing programs that hand out benefits at the cost of your liberty. Those benefits are always popular, and the loss of liberty is only realized after it is far to late to ever get it back.
But hey, the government claims people saved an average of $240 a year and 6 hours of tax preparation time because of this system. What a smashing success!
TLDR, this is not for you. No one is forcing you to use it. The people that did use it were apparently happy with it.
> Tax preparers at least have incentives to compete with each other on price and quality of service. They also often guarantee return accuracy.
> He lawyered up and spent thousands of dollars fighting it. He was ultimately successful, but his subsequent distrust of government was entirely merited.
So your friend filed himself, or his tax preparer didn't back him up?
The US tax code is very complicated and claiming deductions seems to be a national sport. I'm sure there are plenty of deductions taken that might not be illegal but questionable.
However, your example here wouldn't be what this service was aimed at to begin with. If the bottom 90% or so of filers can use this because their incomes are simple (paycheck, some savings, standard deduction) why would that need to be done by a tax preparer?
> You really see no problems with such a system?
I do not because it won't be a black box anymore than your tax preparer is a black box. Again, think of this as for the simple returns. If you claim standard deduction and have only a W2, it will only be a black box if you're unable to do the simplest of math.
> Arguments of the form “everybody else is doing it, can’t be that bad” are not compelling, in my opinion.
Counter argument being, if the rest of the world does it differently, shouldn't that mean there might be some reflection needed?
For your slavery example, that's why it's no longer a thing?
> The government entrenches its power by implementing programs that hand out benefits at the cost of your liberty. Those benefits are always popular, and the loss of liberty is only realized after it is far to late to ever get it back.
I'm going to make a guess that you've never lived outside of the US.
> But hey, the government claims people saved an average of $240 a year and 6 hours of tax preparation time because of this system. What a smashing success!
If it means that the lowest incomes now get their $1000 dollar credit and get to keep it, I think that's a lot of money for a lot of them.
I was not a fan of Direct File (I think it could have been much better!) but it was objectively in the success bucket:
- ~$50M all-in to build which sounds egregious but is small for a government project
- mostly good outcomes
- ~4y to pilot which also sounds egregious for a single moderate-complexity web app but again is practically lightspeed for a government project
People blame it getting shuttered on Trump but this is both a misread and a fundamental misunderstanding of how the government operates. The entire federal government is deliberately paced and primarily driven by a combination of politicals, regulation, budget, Congressional policymaking, and program staffing. The hammer on this was always going to fall,
[1] Congress has maintained a "buy over build" policy since literally the Cold War. Ironically the first policy here (1965) was to buy computers from ADP instead of custom-building them. The most impactful "buy commercial" policy (1996) was also IT focused. This was literally codified in several parts of the FAR, and if we're going to be blaming admins, the Trump admin has actually weakened the FAR with the RFO and would be on the other side of this issue.
[2] This policy is also the foundation upon which IT contractors like Palantir are built, if you've ever wondered "wtf do they do" they are a commercial contractor that builds custom software for government. So agencies get their custom stuff, Congress is happy they bought commercial, and the only loser is the taxpayer who overpaid a factor of 3-5x. To their credit, Palantir is a huge improvement on the status quo, because they charge by use cases and outcomes, whereas traditional SI's operate on a staffing model and a combination of high wrap rates and perverse incentives with billable hours creates horrible outcomes and ballooning costs. Anyways, there are a lot of commercial vendors that this work "could have" gone to and didn't. It would also have been really easy for them to shop this out because this was shaped really well for GSA MAS or STARS III.
[3] When you build things internally with e.g. 18F, one agency is typically the "customer" and pays the other agency (afaik 18F program is nested under the White House). So this really sucks when they walk away; 18F earned a reputation for building things through pilot, blogging about it, puffing their cheeks in the media, sending a bill to the agency, and then running off to the next shiny thing as engineers tend to do. As an agency you save a bit of money initially but now you are left with something nobody knows how to maintain, you have to hire contractors to do it, which by nature has to be a staffing contract, and then the wrap rate alone wrecks you. This happens all the time with commercial vendors, usually when they are outsized or don't get renewed, but obviously upsetting when it happens internally.
[4] The author of this piece was part of the team and so as you'd expect this piece is exceptionally biased. The reality is that the IRS self-assessed the maintenance as low and everybody who reports on this treats this as fact when it was not a GAO estimate, which is what carries any actual weight, it was internal IRS estimates and a single independent that mainly assessed call center volume not the actual system. Not only does their reputation precede them here, but their own spend on buildout (~$30M on contractors to help) contradicts the low maintenance narrative. We may never see a GAO estimate here, but the contract would almost certainly go out to TrussWorks, all government contracting data is public and you can look up for yourself how much TrussWorks typically charges the IRS whether directly or thru ATI's vehicles as subawards.
Eh, government should not be in the business of maintaining digital infrastructure, regardless of how capable it might be. As much of it as possible should be contracted out to 3rd parties.
Profit motives in infrastructure are a bad idea. See Thames Water in the UK, for instance. It always introduces a perverse incentive where if the company in control of the infrastructure can extract an extra million in profit by making everything less efficient and costing everyone else involved a billion, it's still in that company's interest to do so.
This is a prime example of that. H&R Block, etc, benefit from there not being direct file by around $3bn in revenue or around $750m in profit. Rough sums on the time saved by direct file if everyone used it is 8h * average wage * taxpayers, which seems to be approximately $44bn. i.e. in axing direct file, it has "created" $3bn in economic activity to the private infrastructure-owner (the intermediary between you and filing your return), but at the cost of $44bn in lost time & therefore lost activity (the other things you could have been doing) to the rest of the economy.
Infrastructure is not the economy. Infrastructure is the thing the economy runs on top of / has to use. Given that it is the role of government to govern the economy, it is the role of government to ensure that the infrastructure is running well (be the custodian of the infrastructure).
Arguing the other side, digital infrastructure shouldn't be such a complicated domain that it is out of the reach of governments. This is the authority we trust to build our roads, water/sewer system, electric grid, and virtually every other meaningful physical infrastructure. Why should digital infrastructure be out of bounds?
The only alternative is inserting a third party, one that has full access to all your financial information, an extraordinary level of trust for a private sector that has shown unrelenting loyalty to investors over customers. That shouldn't be necessary for the average filer, assuming a bare minimum of competence, like one might assume for the only country to put a human on the moon and bring them safely home.
>This is the authority we trust to build our roads and virtually every other meaningful physical infrastructure in our civic life.
Trusting the government to be able to do something is not the same them actually doing it, nor is it the same as them doing it well. With roads the people using them have much more incentive in maintaining them than the government. What a person experiences driving down the road everyday is just a statistic to the government.
How about the electric grid and our water/sewer systems, is it reasonable to trust the same entity that manages those vital services to build a basic web form?
> Trusting the government to be able to do something is not the same them actually doing it, nor is it the same as them doing it well.
You are absolutely right. My point is not that the government has proven its competency in this domain, it is whether we should expect it.
>we should expect it.
The monetary incentives for the most governments don't exist to run projects efficiently, so I don't think it is realistic to expect it. The government can just print money or steal money via taxes to cover up inefficiencies. And since government bureaucracy tends to force things to move at a glacial pace that will be reflected in how it executes projects.
This is so wrong I literally don't know where to start.
Governments have as much incentive as anyone else to save money. I shouldn't even need to type this but raising taxes is unpopular and tends to cause people to get voted out of office.
People need to stop repeating thise weird talking points about "the government" and its incentives. It's a big, complixated entity made up of literally millions of people all of whom have different motivations and incentives and non-government employees affect those not just in the super obvious way by voting but by every interaction we have with anyone who works there.
>raising taxes is unpopular and tends to cause people to get voted out of office.
This is missing the point. If you got rid of taxes altogether it would reveal what really is being propped up tax money as opposed to actually being valuable enough to exist on its own.
>complixated entity made up of literally millions of people all of whom have different motivations and incentives
Which is why it's important to get the big incentives correct. Otherwise one of these actors will waste resources since expecting people to do the right thing without incentives does not scale.
> With roads the people using them have much more incentive in maintaining them
Are you implying the random people driving down a road also do the maintenance on it? What? How is this any different from literally any other government service?
>Are you implying the random people driving down a road also do the maintenance on it?
I'm implying that the people and businesses along a private road pay another company to come in and do maintenance. Unlike government modes you don't have to wait until whenever the government feels like fixing road.
Explain your reasoning at least.
The government has to maintain some infrastructure to get this sort of thing done. Whether digital or analog. And if it contracts it out, it needs to oversee it. So no matter how it is done, the government has to pay.
Don't you care about the actual outcome at all? Even if the government does a better job, you still prefer a third-party organization?
You could just light the money on fire instead and get the same result. Contractors routinely screw the tax payer. I once had a job in one of these third parties where the entire operation was effectively defrauding the tax payer by claiming 1hr jobs would take 40.
You seem to be under the impression that the government itself doesn't have the same problem. Government agencies often over bill, over budget. They have an incentive to pad everything and to never lower costs because their budget will be lowered otherwise. Contractors on the other hand, have to compete with other contractors so while they can try to over bill, if they bill too much the government has an incentive to switch contractors.
Neither system is perfect.
> Neither system is perfect.
Yes, thats why people arguing that private companies are always better are so annoying.
You get that you're actually agreeing with this post right?
> They have an incentive to pad everything and to never lower costs because their budget will be lowered otherwise.
Sure, but in the absence of widespread corruption (which until now, the US has been relatively clear of) they don't just get to go home with that budget in their pocket. They're still paid on standardized pay scales. Any extra budget still gets spent on the actual org or project, with the exception of random things like travel or office supplies.
The contractor takes home every extra dollar as profit.
I don't disagree at all that neither system is perfect, of course, but just saying.
You are absolutely correct, billable hours are perverse incentives and wrap rates border on predatory, but this status quo is Congressionally mandated and buy commercial as a policy is generally bipartisan.
Do you think the government should allow electronic filing of taxes?
Because if the government is going to accept returns electronically instead of through the physical mail, then it should accept them without requiring an intermediary.
Interestingly, it does this for corporations, but not for individuals.
Gee, I wonder why.
Personally, I think that (a) the government needs to have my PII to process my taxes, and that (b) having the government require me to also hand my PII to a third party in order to pay taxes is a big fucking security nightmare.
The electronic filing sites are available to "the public" both as a webform and as an api. They're just buried and never mentioned.
No. They are fucking not.
The site that was killed was the IRS direct file site.
The webform is through the free file alliance, aka Turbotax and friends.
The API requires you to jump through a million hoops. Heaven help you if the reason you want to use the API is because you are behind on your taxes, because that will signal that you are not of good character.
Speaking of being behind on your taxes, you have to use paper for any but the last three years of returns anyway.
I was talking about free fillable forms, but when I did some research I learned its not actually owned by the irs. Now I'm confused.
At exorbitant costs or lackluster execution, with plenty of campaign donations along the way
Was direct file exorbitant expensive? Or lackluster? What about all the 18F work?
On the flip side, plenty of private companies are expensive and corrupt.
I think it's possible both can be good and both can be bad.
> As much of it as possible should be contracted out to 3rd parties.
This is the case pretty much.
Comments that start with “Eh” are a real turnoff.
Direct File was a service not infrastructure
We have such a long history of really famous examples of big, successful government mega projects: hoover dam, interstate highways, manhattan project, apollo program... even the freaking panama canal was a government project.
What happened to us?
Crazy environmental and labor regulations is what happened.
I wouldn’t class this IRS project as anywhere near the the magnitude of complexity or impact of the projects you mentioned though.
> Crazy environmental and labor regulations is what happened.
Mainland Europe has “crazy environmental and labour regulations” and manages to build cheaper and faster. So no, your pet hate is not the reason.
When was the last time Europe built anything approaching the Hoover Dam, Manhattan Project, or the Panama Canal? You’re not serious, are you?
Contracted out like the healthcare.gov original launch fiasco for the AHCA?