Many companies do not want limited government. A smart company dumps as many costs as it can into the public sector, thereby increasing its profits. WalMart is one such smart company, going so far as to provide their many low paid employees with literature on government social programs that will help the employee cope with the low wages WalMart pays. Smart companies crusade local governments to upgrade their fire departments and the delivery pressures of their water systems in order to save the company money on its business insurance. The cost is shifted and spread out to the public and the owners of companies in the upgraded area put the profits in their pocket. Smart established companies like regulations which establish a barrier to entry for their competition, particularly in businesses that have low capital requirements to start up. Smart companies lobby local and state governments for more licensing laws which present one more cost and regulatory hurdle for small businesses trying to gain a competitive foothold in an industry. Smart companies argue that licensing is needed for public safety. Would you want an unlicensed fishing guide? Of course not! Here is a partial list of occupations requiring a state license in my state.
The IRS is now requiring most tax preparers to be licensed as a Registered Tax Return Preparer, which includes “competency tests for all paid tax return preparers except attorneys, certified public accountants (CPAs) and enrolled agents who are active and in good standing with their respective licensing agencies.” (IRS Source) How many independent tax preparers who do tax returns for a few months a year will bother with the cost and time to establish and maintain their credentials? Many low income workers, especially those with marginal reading skills, feel more comfortable having a tax preparer fill out the amount of their W-2s and do the relatively simple calculations required to file the short form 1040A. The IRS could have exempted those preparing 1040As, but it didn’t. Did the IRS enact these regulations in response to a law passed by Congress? No. Surely the IRS must have studied this problem for several years before issuing these new regulations? The IRS spent all of six months before issuing these rules. One can only wonder who and what prompted such a swift review and enactment of these regulations. The logic is the oldest one in business: reduce the supply of preparers and those that remain can charge higher fees.
I am not a tax preparer so I don’t have a dog in this fight. I’m sure there are instances of tax preparers filing more complex tax returns which the preparer does not have the knowledge to prepare. But why use an axe when a paring knife will do? The only solution may be tax reform, the holy grail of simplicity and practicality that continually eludes our elected representatives.