Earlier quoted context omitted.
And yet the cost of implementing a government algorithm has not yet fallen to near-zero. Furthermore, the government has surely implemented the algorithm itself in order to verify submitted tax returns, so the implementation cost of pre-computing everyone's tax should be comparatively small.
Maybe I’m overly cynical, but creating tax returns for everyone for free would prevent the IRS from allowing you to incriminate yourself by mis-filing (intentionally or not) and then levying huge penalties and interest on you 10 years later. Everyone is hating on TurboTax for making money, but they’re pretending the government tax machine has no such motivation, which simply is not true.
Yeah, that's overly cynical. :) If they switched to a pre-filled system, the revenue from penalties would go down, but it's quite likely the amount they would bring in would actually go up, assuming this reduced tax fraud. In 2016, they charged $24.1 billion in penalties -- but they estimate tax fraud cost them around $458 billion. If they lost 90% of the revenue for the penalties but cut the tax fraud even by 25%, they would be way, way ahead.