This could be the end for Turbo Tax and H&R Block
Ric Edelman: It's Monday, September 25th. You know, we keep hearing about technology innovation. You want a tangible example of where this is going? Look no further than the IRS. The IRS is testing a free electronic tax filing system. It's going to be ready for a small group of taxpayers in January. This software could prove to be a direct competitor to the tax preparation industry. That spells lots of implications about our capitalist society.
Anyway, 70% of taxpayers could eventually use this IRS system, probably including you. It's being designed for people with basic tax returns. So if you get k-1s, forget about it, you're not going to be able to use this new IRS system. But if your income is under $73,000 a year, it might be right for you. So far, very few taxpayers have ever even heard of this. When they find out it could ruin the day for TurboTax and H&R Block because the IRS will make their products obsolete.
That's a big deal because the commercial tax preparation market is worth $15 billion. Our entire economy is based on capitalism, private enterprises providing needed and valuable products and services to the marketplace. Are we a country where the government does what private enterprise used to do? I mean, it's bad enough that in some states the state sells alcohol rather than private liquor stores. Now it seems the IRS is going to be providing free tax return systems.
But is anybody going to be terribly upset? I mean, we all hate doing taxes. We certainly hate having to pay for tax preparation services. And people hate working for accounting firms. That's why there's such a huge shortage of accountants in our country. And the last two years, 300,000 accountants have either quit or retired. A 17% decline in the number of CPAs in the country. If you need a CPA, you don't already have one. Good luck finding one.
The reason there aren't enough accountants is because college graduates would rather go into investment banking. It's sexier. Pays a lot better, too. I mean, like 2 or 3 times better for sure. The number of people studying for their CPA exam is at the lowest level in 17 years. 67,000 people are sitting for the exam this year worldwide, not the 74,000 that the AICPA expected. This new automated tax preparation form that the IRS is building solves it all at the expense of those tax prep firms and their employees.
So it's no surprise that Intuit, which owns TurboTax, spent $1 million this year trying to persuade Congress not to let the IRS do this. Just like, you know, elevator operators pleaded not to let people press their own buttons in an elevator. Intuit lost. You will win unless you plan on being an accountant or unless you plan on needing one. This is just another example, the slippery slope of how you need to think far into the future.
And by far, I mean like ten years to decide what degree you're going to obtain, what career you're going to pursue or what you're going to encourage your children to pursue. Any job that can be done by machine will be done by machine. The market will demand it and adding up a bunch of rows of numbers, machines can do that. We don't need humans walking around with slide rules anymore. Don't be one of them. Don't let your kid be one of them and consider the implications on our capitalist society.
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