TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, March 28, 2013

WSJ: Another Perspective on TurboTax and Free, Simple Tax Filing

TurboTax (2013)Following up on Tuesday post on ProPublica's article, How Maker of TurboTax Fought Free, Simple Tax Filing: Wall Street Journal, This Space for Rent: An Economics Lesson for the Guys at ProPublica:

It's an interesting story, and ProPub deserves a laurel for its reporting. But several darts are due for the childlike Manichaeism of its narrative. Here it is, simplified only slightly: White-hatted government heroes try to help people. Black-hatted corporate villain hires evil lobbyists to thwart the effort. (The implicit conclusion: In steps mild-mannered reporter Liz Day--her very name connotes sunshine!--to Expose the Truth, and everyone lives happily ever after.)

Let's assume for the sake of argument that return-free filing is a good idea and that Norquist's concerns either are unwarranted or can be obviated. In that case it makes sense to fault Intuit for its self-interested opposition to legislation that would be in the public interest. It is still far too simplistic, however, to regard Intuit as the villain and members of Congress as heroes or victims.

Intuit is engaging in a perfectly normal activity that economists call rent-seeking. ... Rent-seeking behavior would be futile if government did not assert the power to grant the privileges sought. The TurboTax business wouldn't even exist if Congress had not seen fit to enact a tax code too complicated for most people to navigate. Of course many of those complications were established for high-minded reasons: to ensure that the rich pay their "fair share" and the poor are rewarded for taking low-wage jobs; to encourage homeownership, investment, contributions to charity and so forth. If Congress is a hero in this tale, it is a tragic one, for Intuit's influence was made possible by Congress's own actions. ...

There's another important element of this basic journalistic narrative: the means by which the bad guys have their way with the good guys and hurt the public. In ProPub's TurboTax story, it's "lobbying." In other stories it might be "campaign contributions." In the Constitution, these are known respectively as petitioning the government for redress of grievances and freedom of speech. Both are among the rights guaranteed in the First Amendment.

Well, this is curious, isn't it? A staple of journalism--a profession that lives and breathes by the First Amendment--is attacking corporations for exercising their First Amendment rights. There is an argument--or a reflexive claim, anyway--on the ideological left that corporations have no constitutional rights. But journalists can't make that claim with a straight face. Almost all of them do their work under the aegis of a corporation, whether a nonprofit like ProPublica or a business that at least aspires to make a profit like the New York Times Co.

As we've noted many times, many media corporations, including the New York Times Co., take the position that corporations should not have First Amendment rights--but they make an exception for media corporations. No wonder journalists don't inform the public--or, quite possibly, themselves--about rent seeking. Their employers depend on it.

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You've got to be kidding me. Is the WSJ truly this vapid?

Posted by: Anon | Mar 28, 2013 12:33:26 PM

Newspaper corporations are no different than any other corporation--neither type should have any rights under the Constitution. Journalists and reporters, however, do have First Amendment rights. This is really no different in concept than that pertaining in other circumstances. Law firms are not members of the bar and are not licensed to practice law. But the lawyers who own and work for the law firms are licensed to practice law. Same for accountants, physicians, etc.

As for Mr. Anon's question--the answer is "yes."

Posted by: Publius Novus | Mar 29, 2013 7:42:39 AM