Received a subsidy? Visit a tax preparation service

Latest Tax Season Headache? Obamacare – Bloomberg View.

There’s been a lot of talk about the “hidden taxes” in the Affordable Care Act, but here’s one I hadn’t thought of before or seen mentioned anywhere: the sudden need for folks with simple tax returns to avail themselves of the services of a paid professional. If you have no income outside a modest salary, and not much in the way of potential deductions such as huge mortgage interest or state tax bills, then there was really no reason to use a tax preparer. Even the mathematically challenged should, with the aid of a calculator, be able to fill out their 1040EZ forms just fine. But Obamacare has introduced a significant level of complexity into the taxes of lower-middle-class wage earners. More of them are going to need an accountant to negotiate the process — or risk owing the government hundreds of dollars because they didn’t fill out the forms correctly.

The money doesn’t go to the government, of course, but in many ways this looks like a tax: Suddenly, people with simple incomes are going to need to pay a significant sum to keep themselves out of trouble with the IRS. This tax will be extremely regressive, because the people most likely to be hit by it are people whose incomes are (or have been) low enough to qualify for subsidies.

That’s not to say that these people are worse off because of Obamacare. For one thing, lower-middle-class workers have always historically used tax preparation services more than they really should, because they really need their refunds and they’re worried about getting it wrong. But it is one more symptom of the law’s Byzantine complexity that new costs keep popping up just where voters least expect them. (all emphasis added)

Goodbye 1040EZ, hello tax complications for those who can least afford it. Rube Goldberg I say.

Oh, the publically traded tax firms are H&R Block and Liberty Tax Services.

 

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