Maryland Legislature: All Tax Preparers Must Be Licensed

April 9, 2008

The Maryland legislature has passed a provision that would require all tax preparers to become licensed, thereby paying a registration fee and passing an examination. Economists have a term for this. It’s called occupational licensing, and while it can have the benefit of greater knowledge for the consumer, it typically has one major long-term side effect: higher prices.

And I know this is going to shock you: the Maryland Association of CPAs has endorsed the bill. Who would have guessed that those who have CPAs would support restricting entry into one of their products? That’s like asking McDonalds, Wendy’s, and Dairy Queen if they would like to see legislation that would outlaw Burger King from making the Whopper.

Of course those in the Maryland legislature want to make you think that they are only looking out for you, the innocent taxpayer who needs somebody else to fill out a tax form. My suggestion is that these legislators should have to pass an exam regarding what is current state tax law because after all, they are the ones making the laws. I somehow doubt such a provision would ever get through, and even it did, I’d put my money on about a 5 percent pass rate. And that’s likely being generous.

Bonus Question: Could the Maryland legislators be any more ignorant of tax policy than the members of the United States Senate?

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