The Senators have begun to open the doors on a massive corporate welfare program known as "Free-File," which is only free for lower-income taxpayers (but exposes them to sleazy, expensive add-on product pitches) and forces others to ante up to comply with one of government's most forceful requests: paying taxes. In Mary Dalrymple's Associated Press story:

"All the forms and instructions are free, so why do we force taxpayers to pay a preparer or buy software to file electronically?" Baucus asked. "Taxpayers don't have to go to a bookstore and buy forms to file a paper return."

In the Washington Post story by Al Crenshaw Pitches, Fees Found in 'Free File' Tax Service:

Taxpayers who use the "Free File" online tax return preparation services offered by private vendors in partnership with the Internal Revenue Service often are confronted by surprise fees, expensive add-ons, loan solicitations and other marketing pitches, an analysis by the Senate Finance Committee has found.

And in a story Letting the IRS Do Your Taxes for You on the related issue of the goverment assisting consumers with simple returns, Steve Mathews of the Wall Street Journal (pd. subs. req.) finds that the IRS wants to help tax preparers, not taxpayers:

Mr. Everson's boss, Treasury Secretary John Snow, also strongly opposes IRS involvement in tax preparation, which he says would be a conflict of interest. "We aren't tax-preparation people," he told Congress earlier this month. "We're not software-development people. There is a private market out there that does that and does it well."

Does this well? Spare me. When they aren't making mistakes on our taxes, all they do well is fleece consumers by piling on numerous deceptive nickel and dime "electronic filing software charges" and other mysterious fees, plus pitch the big rip-offs, including Refund Anticipation Loans, one of the worst scams around (our blog on California Attorney General Bill Lockyer's lawsuit against H&R Block) and even under-performing IRAs. Last month, New York Attorney General Eliot Spitzer filed a lawsuit against H&R Block over that one.

"The conduct described in today's complaint is particularly appalling because many of those hardest hit were working families who struggle to save," Spitzer said. "Instead of providing these families with accurate information that would have allowed them to make informed choices, H&R Block steered them into retirement accounts that actually shrank over time."

It may sometimes make sense for the government to outsource some activities, but it should never agree to allow private companies to plunder taxpayers and profiteer from sweetheart deals, especially with the active assistance and encouragement of the government, as it appears to have under Jack Snow's watch. Last year, consumer groups even caught his IRS issuing gag orders preventing volunteer tax preparers from warning taxpayers about over-priced RALs.

Of course, there are numerous other examples of private companies feeding at the government trough. Look at the Bush Administration's new prescription drug benefit for our seniors-- the federal government is prohibited from negotiating with the prescription drug industry for better deals, while the new drug benefit health insurance sector established by the legislation virtually guarantees profits for the companies that are supposedly competing in the marketplace. And how about self-serving legislative efforts by the phone and cable companies to restrict municipal governments from competing for wifi? The list goes on. And this blog is getting long, but we'll have future posts about several proposed bills that appear to be written by and for the tax preparers.