Bad news for the IRS is good news for Americans. And recently, we learned that an IRS scheme to consolidate even more power over our taxes is no more.
It was called Direct File, a program that allowed taxpayers to file their taxes directly with the IRS rather than through a third party like an accountant or TurboTax. It was a pilot program available to 30 million taxpayers across 25 states, and yet only 140,000 ended up using it.
In addition to the complexity and usability concerns cited in an Inspector General report, taxpayers were likely sensitive to the fact that using Direct File would have placed full control over the taxation process in the hands of the agency whose mission is to collect as much revenue as possible, and by bureaucrats whose salaries are paid by taxes — a conflict of interest if ever there was one.
Now, under pressure from President Donald Trump, the IRS has announced Direct File is over. This is reason to celebrate, but instead, a certain “populist” interest group is seeing red.
Just days ago, the American Economic Liberties Project (AELP) fired off a press release mourning the demise of Direct File. It’s strange because the AELP claims to oppose monopolies in the name of economic populism. Its mission statement warns that “concentrated economic power in the United States has reached extreme proportions” and “contributes to a broad range of social problems and injustices.”
The AELP has tried to make common cause with the conservatives who have likewise grown skeptical of big corporate power, from tech companies that censor online speech to investment banks that leverage woke ESG rules.
So why are they now carrying the water of an especially dangerous monopoly — the IRS?
The fact is that the AELP is about as populist as Northrup Grumman. Based in Washington, D.C., it was founded and led for years by Sarah Miller, a former senior advisor to Lina Khan, the head of the Federal Trade Commission (FTC) under President Joe Biden. Khan’s FTC essentially became an anti-business strike force, targeting American companies with frivolous and costly lawsuits.
One of Trump’s very first acts as president was to push out Khan. But her legacy has lived on at AELP, which functions as a kind of retirement home for old Biden hands.
The ethos of Team Biden isn’t that monopolies need to be broken up, as some conservatives believe. It’s that the most powerful monopoly in the country, the federal government, should exercise untrammeled power over the private sector. Hence Khan’s lawsuits, which indiscriminately leveraged the government against businesses for no crime other than their being businesses.
The same ideology now animates the AELP. There’s nothing “populist” about simping for the administrative state. Conservatives shouldn’t be fooled: the AELP is a left-wing socialist front that supports big government at the expense of both businesses and consumers.
It’s why they opposed the merger of JetBlue and Spirit Airlines even though the resulting larger company could have competed with giants like Delta and Southwest, offering fliers more options. The AELP got what they wanted and today Spirit is bankrupt while JetBlue may not be far behind.
It’s why they opposed the Trump DOJ allowing telecom company Hewlett Packard Enterprise to acquire Juniper Networks even though U.S. intelligence services supported the merger because it would have created a needed global competitor to the Chinese tech giant Huawei. Not to mention the many legal analysts who pointed out that this is a clear cut case, with no antitrust concerns whatsoever.
And it’s why they oppose the IRS ending Direct File. In every case, the AELP has thrown its weight behind the government and sought to diminish the private sector.
Direct File would have cost taxpayers between $64 million and $249 million every year, according to the IRS’s own estimates. And while the AELP claims the program was “massively popular” (the IRS has a 38 percent approval rating), fewer than 1 percent of eligible taxpayers actually participated in the pilot while only about a third of participants who created a profile finished submitting a tax return.
Then there’s that conflict of interest. According to a report by an Inspector General, the Direct File software failed to list certain education tax credits filers could claim, costing each of those taxpayers an average of nearly $1,000. Why? Perhaps because it’s in the interest of the IRS, a government agency, to collect as much government money as possible.
Clearly we can’t trust the IRS with this kind of power. Donald Trump understands that the best economic policy is robust competition and wants to see American companies succeed. Good on him for squashing the IRS’s monopoly in the making.
