Why did House Dems just kill the public option — for taxes?

Remember the public-option debate from ObamaCare? Democrats wanted the government to offer a low-cost alternative to private health insurance, arguing that health care was a right and the private sector was unduly profiting off of access to it. The idea died at the time, but some Democrats running last year proposed bringing it back as an incremental approach to Medicare for All.

Oddly, though, House Democrats just passed a bill that forbids the IRS from providing a public option when it comes to filing taxes:

Liberals abandoned a last-minute rebellion Tuesday over a bill to change the Internal Revenue Service, with Democratic leaders easily pushing legislation through the House that would bar the IRS from creating free tax preparation software.

The House approved the bipartisan legislation on a voice vote as liberals, who feared the measure would enrich private tax preparers at the expense of millions of taxpayers, gave up their fight, in part because of the value of other elements of the legislation. …

The IRS already offers a program that allows low-income taxpayers to file free, but it is done through industry software and industry systems and is not well-publicized. Only 2 percent of eligible low-income filers use the free system, while some experts have long argued the IRS could help more Americans by offering its own free online software system.

Actually, it’s not all that secret. Both H&R Block and Intuit (Turbo Tax), the two main partners with the IRS on the free filing system, are running television ads non-stop on some cable channels heralding their options for it. The IRS website has a prominent graphic and a banner link to its “free file” system, which includes further links to free state-tax filing systems as well. In fact, the website has options for “free file” for those above the $66,000 cut-off too, although the software for those filers only does the math on the forms rather than walk people through all of the potential options.

One can argue that this public-private partnership should be sufficient for the needs of taxpayers. One could also argue the same thing about Medicare Advantage, although Democrats targeted that partnership to pay for ObamaCare and claimed that it exploited the government system for profits. That was an argument that a few Democrats made about this program as well, with Republicans arguing to keep the IRS from competing against its own partners.

In the end, though, the ban on the public option for taxes is a model of bipartisanship … and engagement with the players in the program:

In 2018, H&R Block gave campaign donations to the provision’s leading sponsors in Kelly and Lewis. H&R Block also contributed to the campaigns for 11 of the 25 Democrats on the Ways & Means Committee, including its Chairman, Rep. Richard Neal. H&R Block gave to nine of the 17 Republicans on the committee, including ranking Republican Rep. Kevin Brady.

Neal also received a sizable chunk from Intuit, which in 2018 gave his campaign $6,500, along with donations to dozens of other lawmakers.

The bill also has a companion in the Senate, which also has a bipartisan component banning the IRS from developing its own electronic tax-filing system. The Senate version is sponsored by Democratic Sen. Ron Wyden of Oregon and Republican Sen. Chuck Grassley of Iowa.

Republicans have at least been consistent on this issue. They want to keep government from competing with private industry in both contexts to keep from undercutting private suppliers and competition. Democrats, on the other hand, wanted the federal government not just to regulate health care but to compete in the markets that it regulates. The income-tax market is a creation of the federal government — and yet they suddenly have an issue with a public option to deal with it. It’s a curious hypocrisy, but one that should be recalled if and when we hear about a “public option” for the ObamaCare exchanges again.

As for the tax preparation industry as a whole, it’s also worth recalling that conservative reforms such as the flat tax and the “fair tax” would have made it obsolete in the first place. Too bad Republicans moved away from actual reform in 2017 when they had an opportunity to moot this entire debate.