Government taking consumer protection too far

By Freedom Newspapers

All Americans are morons and dupes: How can they possibly survive without the beneficent people in government, and the many “protections” afforded them by the regulatory superstate, helping them through this dangerous labyrinth called life?
Hyperbole? Perhaps. But this seems to be the mindset behind the relentless push to draw the government deeper into consumer protection activities, most of which are well beyond what the founders envisioned when they got it all started.

We’ll concede that government has some legitimate, albeit limited role to play in protecting people from threats, such as violent criminals and foreign invaders. But is it really the government’s job to license and regulate income tax preparers? Assuming they even supported the concept of an income tax, that’s something the founders likely would have dismissed with the flourish of Latin: caveat emptor.

The Taxpayer Advocacy Panel, a federal advisory group that serves as a sort of buffer between the tax collectors (the IRS) and the taxpayers, recently suggested that the IRS begin licensing (which also means regulating) professional tax preparers, those poor souls who make a living helping normal people make sense of the tax code (and also, perhaps, reduce their tax burden and wiggle through loopholes — through legal means, of course).

In an Aug. 18 letter to the IRS, the panel reported “the current system, in which no qualifications or licenses are required to offer paid tax preparation services, leaves customers open to inept and unethical service and identity theft.”

According to, a Web site that caters to federal employees and policy wonks, “Panel members recommended that the IRS develop a licensing system, possibly based on existing training and testing used in the Volunteer Income Tax Assistance program, to license individual preparers annually and indicate the preparers’ level of expertise.”

An argument might be made for building in some additional safeguards against identity theft. But even that should be the job of tax filing companies, since they’ll be out of business if seen as vulnerable to breaches of privacy or identity theft.

We see no evidence of a crisis of competence or wave of criminality sweeping the ranks of the nation’s tax preparers. Some are better and more competent than others. A few may be incompetent, and a tiny minority, crooks. But the same can be said about auto mechanics, plumbers, general contractors and any number of professions. That doesn’t mean federal policing is required to get the bad actors off the stage.

As usual, the greatest safeguard against abuses or incompetence is the wary consumer, industry self-policing and a market that maximizes consumer choice. Nine times out of 10, these things will be much more effective in punishing incompetence or corruption than a government licensing scheme will.

When we accept the premise that it’s the government’s job to be more aggressive about looking out for the people than people are about looking out for themselves, we’re one step further down the “road to serfdom.”

The world would be a better place to live if all tax preparers were good at their jobs. But the companies and individuals that specialize in this work already have plenty of incentive for making that happen, because a failure to maintain standards will cost them customers.

Allowing Washington to write and enforce the tax code is bad enough. But putting the efficiency experts in the federal government in charge of regulating the people who help us fill out our paperwork is an idea that taxes our patience.