The choice is between letting the government do your taxes for "free", versus having a company whose reputation rides on getting your taxes done as efficiently as possible with the least tax burden to you. Anybody who would choose to have the government complete them, hasn't been paying attention to the lengths revenue-strapped states will go to maximize their tax collections.
It's a bit like letting the user car salesman set the price you pay for the auto versus haggling for yourself. It's also simpler, "free", quicker, and less intensive to let the professional do it for you.
But free can sometimes be the most expensive way of all.
No need for the hyperbole. OP's question is logical. On one hand you have a company who is taking your money and has a reasonable expectation that, as a result of using their software, you will save more money because they will help you find deductions and tax credits that you would've been hard pressed to find yourself. These companies compete in a free market for your money, both with other software companies and with CPAs/CPA firms. The "winner" (for a particular user/client) is the one who (a) has the best reputation of not getting you audited, and (b) who gets you the best price:deduction ratio.
On the other hand, you have a government entity whose sole charge is to collect revenue. Is their system going to be designed to help you get as many deductions as possible? Are they going to prompt you to deduct moving expenses (just to pick one example)? Maybe, maybe not. The question is legit though and thus causes us all to say, "Wait a minute... maybe, since there is a financial incentive for them not to show me deductions, that they will hide some of that (or make finding it as complex as the tax code)."
If Intuit/et al help you save $5000 in taxes this year by helping you deduct all that you can, Intuit/et al do not make one penny more - that money simply stays in your pocket. If the IRS helps you save $5000 that you would have otherwise paid (b/c you did not fully deduct all that you could have), then the IRS loses $5000. That in and of itself highlights the problem.
"nd has a reasonable expectation that, as a result of using their software, you will save more money because they will help you find deductions that you would've been hard pressed to find yourself."
That has a lot less to do with software and more with you knowing the allowed deductions.
Funny how I have no problem finding these deductions using the free sw provided by the government (in more than one country)
I understand this is strange, but it works because deductions are often balanced. For example, you filing a deduction for medical expenses signal a correspondent owing of taxes by the doctor/hospital, so you're helping with enforcing collections.
" Is their system going to be designed to help you get as many deductions as possible? Are they going to prompt you to deduct moving expenses"
More or less yes. There may be the case where the software is going to be completely useless (like Argentina), but then you just skip the sw and go for a tax consultant.
"If Intuit/et al help you save $5000 in taxes this year by helping you deduct"
If you really can save 5k you 1 - probably know it 2 - may get the help of a tax consultant
But most people don't have deductions and should just file the 'default' for free.
I disagree. We are talking about instances where both you and the government have all the information necessary to compute your tax exactly. It doesn't matter who does the calculation, the rate is fixed in advance. Even if you let them calculate the number for you there is no reason you can't double check it.
For more complicated tax situations where you are trying to minimize your tax based on information not available to the government this type of a system wouldn't be applicable.
Your (and others) comment is about income and taxes paid only. However, the US tax system is not just about income and taxes paid; it is also about deductions and tax credits. Yes, the IRS can calculate accurately (based on company reporting/history) what you've earned (income) and paid into the system for the tax year (taxes paid). Is that all you want them to do though? Of course not. Anyone who says, "Yes!" to that simply hasn't either thought this through or doesn't understand the concept of tax deductions and credits. See my comment above for more detail.
I think that, while the "5 minutes and you're done" thing can be understood as marketing spin, it would not be tremendously hard for any IRS service to provide the same kind of itemized listing that most tax softwares do to handle credits and deductions.
My tax experience is light–it takes me maybe an hour of data entry after all my stuff is gathered–so this wouldn't actually help me at all. But for others? If you could shave off as little as 20% from time spent on taxes, that sounds worthwhile to me.
Having tried both the systems of Spanin and Denmark - your post doen't seem very informed.
In both Spain and Denmark the system works excellently and all the information is available for you to verify. You just dont have to do any typing.
So if you are paranoid you can spend as long as you want verifying pre-completed information. If you have better things to spend your time on (family? friends?) you can just do a quick check to see that the numbers look right.
It's a bit like letting the user car salesman set the price you pay for the auto versus haggling for yourself. It's also simpler, "free", quicker, and less intensive to let the professional do it for you.
But free can sometimes be the most expensive way of all.