One
of the first principles of free market economics is the idea of
competition. For those who have any trouble believing this axiom
here is a simple experiment. Go to a baseball game at Yankee Stadium
on a hot summer day. After getting to your seat and baking in the
sun for several hours, cool yourself off by purchasing a beer from
one of the roving vendors. Oh wait. I forgot to add that before
you leave your house, round up all your cash, credit cards, and
checks because you will need them to finance your purchase. After
buying your beer, enjoy its cooling effect while you steam at the
price you just willingly paid to the monopoly vendor who works at
the mercy of the indomitable George Steinbrenner and whose workplace,
"The House that Ruth Built," is underwritten by the taxpayers
of New York City, New York State and the Federal government (read:
you).

Next,
get on a plane and fly to Rio de Janeiro. Once you arrive in Rio
proceed directly to Maracana Stadium, bake in the sun for
several hours while watching a soccer game and then buy that same
beer. Don't even worry about exchanging your American pesos for
Brazilian reais, worthless paper is worthless paper and Brazilians
are not finicky about accepting your play money or their own. But
right before purchasing your beer from the carioca beer vendor,
call over another beer vendor and ask him if he can beat his competitor's
price. This will immediately start a price competition in which,
even after including your airfare and hotel costs, you will still
spend less than for that overpriced beer you grudgingly purchased
and angrily drank while Steinbrenner laughed at you from his taxpayer-funded
luxury box.

Needless
to say, competition works and only those who are ideologically opposed
("Competition oppresses the poor and working people and is
the tool of the capitalist overclass…"), illogical ("Competition
oppresses the poor and working people and is the tool of the capitalist
overclass…"…did I repeat myself?) or inane ("If we have
unregulated competition then they there will be more beer vendors
than spectators!") will find fault with this basic law. However,
even though I like to think I don't fall into either of the last
2 categories (you are free to disagree), Thursday night the US Senate
may have disproved the axiom when it voted 93-1 to ban the IRS from
developing software to "help" taxpayers file their returns.
It appears that the lobbyists for Intuit, the tax preparation software
producer, have saved us all from "competition" that ultimately
would have done each American taxpayer grave economic harm.

In
this case, competition under the guise of the IRS' software development
department would have made the DMV look like the benchmark of efficiency.
Imagine its first action — farming out a no-bid contract to Halliburton
for…for…well, I am not sure what purpose Halliburton would serve
in this case but let's just conservatively assume that Halliburton
does in fact get a no-bid contract, perhaps to provide the "necessary"
security for the IRS' new R&D facility.

And
how much might the IRS spend on R&D? Intuit has spent a little
more than $740 million dollars over the last three years. Luckily
for us taxpaying sheeple the cost was borne by the Intuit shareholders
so if their tax preparation software never sold, they were the ones
who would have suffered. Now imagine what the IRS' budget for R&D
might be. Intuit had the incentive and the know-how to produce its
software efficiently. By contrast, when I go running my father always
tells me, "You run slower than a tax refund." That statement
adequately sums up the IRS' efficiency. So we can probably assume
the IRS would spend a multiple of the approximately $250 million
per year Intuit invests in R&D.

Invests
in R&D? That's correct; Intuit invests in R&D because the
owners of Intuit are looking for a return on their investment. The
IRS has no owners so there is no investor monitoring how much it
blows on R&D let alone if the product might even sell. Imagine
the "IRS Software Development Agency." Just by the sound
of its name alone it could be one of the largest tentacles of the
Federal Leviathan employing thousands productively engaged in the
delicate task of "simplifying" the separation of Americans
from their hard-earned wealth. No budget would be too big and no
project to complex for this government agency to squander taxpayer
wealth in justifying its existence.

Having
my world turned upside down by shaking my belief in competition
I should probably not be surprised at comments made by two Senators
after the vote. Nevada Republican John Ensign said, "The IRS
should not be getting into a field where taxpayers are already well
served by the private sector." I only wish Senator Ensign had
spoken out during the pre-construction analysis of New York City's
multi-billion dollar elevated train recently installed between Jamaica,
Queens and JFK Airport. This former, multi-year work project is
presently bringing in a whopping $20,000 per month in fares. The
yellow cabs and private van services were adequately transporting
New Yorkers to JFK without forcing them to make an intermediary
stop in Jamaica, a situation I would consider "well served
by the private sector" as Senator Ensign said.

Senator
George Allen of Virginia opined that the vote was a "great
victory for the free market.” He added, "The IRS should not
be impeding competition from private sector innovators,” and that
"In order for private enterprises to flourish and provide jobs,
entrepreneurs need to know that the government won’t step in to
compete against a product that’s already in the marketplace.” Reading
those quotes might almost lead one to believe that these two Senators
think coherently. However my cynicism leads me to think it more
likely the case that they are both on a first name basis with the
Intuit lobbyists.

The
worst headache I ever had was in May 1988 as I was walking out of
the New York State Certified Public Accounting Exam after completing
the tax section. The tax preparation question was so convoluted
that rumor had it no two test-takers got the same answer, let alone
the correct one. Despite passing the exam I have had annual recurrences
of those headaches, strangely enough always around mid-April. I
have found the only relief is to visit my tax preparer and hand
him a box full of tax receipts. Although I pay him a multiple of
the retail price of Intuit's tax preparation software, it is a choice
I freely make. If Intuit starts selling its software at Maracana
any time soon, I may consider switching but I will give him the
opportunity to lower his price.

October
22, 2005

Mark
G. Brennan [send him email]
writes from New York City.