I'm genuinely baffled by this, why are the tax filing options in the US so fragmented? Here in the UK there are probably some situations in which you can't use the online, government provided, free service. But I'm going to stick my neck out and say they're fairly niche.
Having lived in the US I know things get complex when you start mixing in state taxes, but this is federal taxes right? Or wrong?
The answer is a bit complicated, but there are two major parts to it:
1) The tax filing prep companies spend ridiculous amounts lobbying to ensure both that the tax system remains complex, and that they are the only way to deal with that complexity. Fortunately, the effectiveness of this has been gradually waning, leading to things like the new service the article describes.
2) Taxes in the US are genuinely quite complicated, for some good reasons, many bad ones (including the aforementioned lobbying), and even more neutral-but-complicated ones. Both major political parties have a tendency to add extra complexity to the tax code for their own ideological (and often purely political) reasons.
(But despite what many people like to propose in response to this, a flat tax wouldn't actually make things better, because progressive taxation is very important for mitigating the staggering inequality in our current system, and is not even the primary cause of the complexity. The primary cause is the difficulty of agreeing on exactly what constitutes "income", combined with many often-conflicting attempts to incentivize or disincentivize various things through the tax code.)
Taxes are genuinely quite complicated in many countries (Germany's patchwork of feudal church obligations, diffuse taxing authority spread over multiple layers of government, and "temporary" taxes lasting over a century has some fun surprises, e.g.), and almost nobody ever voluntarily reduces the tax code's complexity.
What really sets the US apart is 1, very few other countries manage to witness so much criminal energy getting put into legislation without simply collapsing.
Federal taxes tend to be even harder than state taxes. There's usually more that goes into whether or not you qualify for exemptions and what sort of deductible you should take.
But the reason it's a mess is really really simple, lobbying. Tax prep companies have lobbied against a government solution for a long time now. Requiring everyone to spend $100, $200, or more per year is their subscription model and they like it that way.
Federal Taxes tend to be easier than state taxes. First of all, there is no nonsense of partial residencies to consider, which gets even more messy when you and your spouse have spent time in two different states.
Additionally some states (I am looking at you CA and NY) are absolutely rabid when it comes to coming after you for what they deem is their share. They will keep hounding you for years after you have moved away from the state. NY in particular enforces a withholding on additional income that's more than the maximum state tax rate, which effectively means that they get millions of dollars of interest-free loans from their taxpayers.
Plus community property laws make calculations even more messy.
I think it's a result of legacy stuff (i.e. "it's worked like this forever, why change?") and a historical and cultural distrust of the government which is far more pronounced and has had a much larger impact on how people interact with the government than in other countries. People in America tend to distrust the government by default in a way that can be baffling to people from other countries. They want to do a lot of stuff themselves.
Also, for-profit tax filers have aggressively lobbied to combat simplifying the process for decades.
Germany is a federation and US tax filing is still a mess in comparison.
As often with US oddities, the explanation boils down to "the US is big enough to make corruption really attractive and wealthy enough to be able to just ignore it".
You'll be pleased to learn that most (if not all) Cantons (= states) in Switzerland, a federalist state, have a free online tax filing solution, that computes both communal, cantonal, and federal taxes.
The US is very diffuse in taxing power. The federal government only has the power to implement procedures related to federal taxes.
But the state/county/city and even other amalgamations of governments such as “metropolitan”, “transit”, or other special case governments have the ability to tax and their own jurisdiction for implementing how to collect it.
In my opinion, the complexity is at a point that it is a drag on national productivity. And on top of that, it enables lots of corruption where anyone can simply claim plausible deniability and pay a small fine well worth the low probability of being punished.
There are slightly different issues here: fragmentation and cost. You could have a mix of non-free and unified, or free and fragmented etc.
It's fragmented because states here in US have their own laws, taxes, etc. So do local municipalities. Some cities collect some types of taxes, some others and so on. When it comes to stuff like taxes it may be easier to think of US as the EU.
Non-free is because of lobbying by various tax prep companies. It's a large business and here in US there is thing about not wanting the US government to compete with companies. So all these parasites popped up and now are saying "you can't compete with us, it will destroy us!". They always say something how anyone can get paper forms and mail stuff in, so all the electronic stuff is not needed and is just a convenience.
You can take a step back to explain this in the "bigger picture" sense.
The US is a for profit country. Virtually everything is done with the intent of making profit, rather than to benefit citizens. This is different than other developed countries, and the reason the US is so rich.
Prisons exist to make money, not to rehab (or punish) inmates.
Higher education exists to make money, not to educate.
"Healthcare" exists to make money, not to heal people.
(The list goes on and on).
Companies spend hundreds of millions of dollars lobbying the government (money is speech, after all) to keep it this way.
So when it comes to filing taxes, the goal is to make money, not to provide a service to citizens that is convenient, easy, free, etc.
Anytime you see something weirdly punitive or backwards US citizens are dealing with, its because the incentives are structured to favor this outcome. In this case we have a multi billion dollar tax filing industry that is fighting tooth and nail to keep its cash cow around through lobbying (read: legalized bribery).
Having lived in the US I know things get complex when you start mixing in state taxes, but this is federal taxes right? Or wrong?