The Crushing Weight of Our Tax Code
By Alan Stewart Carl | Related entries in Economy, General PoliticsTom Bevan of RealClearPolitics has some facts about our tax code.
Estimated amount of time Americans will spend preparing their taxes this year:
6.4 billion hours
Estimated amount of money Americans will spend on tax preparation
$265 billion
Percentage of Americans who will hire someone to prepare their taxes:
60%
Percentage increase in IRS rules and regulations over the last decade:
60.9%
Number of new pages added to the Form 1040 instruction booklet in the last decade:
58 (from 84 pages to 142)
This isn’t a tax system. This is a big, ole boulder strapped to the backs of every working American. Don’t worry about whether we should be paying more or less in taxes. Let’s at least agree that we should be spending less time and money preparing our returns. A lot less.
Anyone up for a flat tax?
This entry was posted on Wednesday, April 5th, 2006 and is filed under Economy, General Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
April 5th, 2006 at 2:58 pm
I’m all for simplifying the tax code. But…
…none of what you’re saying convinces me that this is an actual drain on our economy.
What it is is an industry. Don’t we want to have industries?
April 5th, 2006 at 3:43 pm
I don’t buy those numbers.
Americans spend more than a quarter-trillion dollars on tax preparation? In 2004, the last year the IRS had numbers available, there were 131.3 million individual returns filed. So, the average taxpayer paid slightly over $2000 to have their taxes done, and that includes everyone who did their own and didn’t itemize?
If you discount the 40% that did their own, then the cost to the average filer was more than $3300 dollars, whether or not they itemized.
I found a CNN article from 2002 that said that the nationwide average for preparation of itemized returns was $208. I don’t think that the cost of doing business has risen that much. (I have no personal experience with paid preparers, as I’m a single dependentless renter who can do basic math).
April 5th, 2006 at 3:44 pm
Well, it’s not a drain on our economy if you believe that all money spent is good money spent. But, to me, our time and money can be spent on a lot more productive and useful endeavors than paying our taxes.
Besides, it’s an artificial industry that doesn’t exist to serve a need created by the free market but instead a need created by government ineffeciancy and, frankly, rank stupidity. It’s a drain on our economy simply because it is unnecessary. If it’s not a bad thing, why not make the tax code even more complicated and try to boost the perctage of Americans hiring tax preparers from 60% to 80%?
April 5th, 2006 at 3:48 pm
Tim,
Interesting point about the numbers. If I have a chance, I’ll check Bevan’s source and see how they calculated it–my raw guess is that it includes money spent by businesses paying taxes. But that’s just a guess.
April 5th, 2006 at 5:45 pm
I agree with Alan’s guess. That number is so big because of business paying all those accountants. When we tighten the rules on accounting, someone has to do the work, and they will get paid a lot more than minimum wage to do it right.
That said, simplified tax system? Sure. Flat? No. We need a simplified progressive tax. Either way, you still have to do all the work to figure out what the income is. That’s where all the work goes. It’s not into looking up the dollar figure in the table at the end.
April 5th, 2006 at 8:02 pm
The numbers are a crock … not incorrect, mind you, but a crock nonetheless. They are posed in that way(to inlude biz accounting costs and maybe even corporate) in order to create controversy. It looks like something that would be published by a 527 Org. to generally get folks stirred up.
The numbers regarding the rich investors, though, are probably pretty accurate.
Alan has put it out there with clarity regarding the social program cuts at the expense of the working class. It doesn’t take a sighted person to understand that Bush has a particular hard on for the little guy when he enriches the rich and wants to take your measly $240 death benefit.
On the other hand, he was voted in a second time by somebody … and the super rich are not a majority.
I am sure that there are metrics available that accurately show the time/ cost factor for the average employee to complete the tax forms. That is where the centrist movement should be focused in terms of information publication. The 527 Orgs and the Party folks are going to make information as confusing as possible. We should be shooting for clarity in all things. Good job, ASC. You made people talk and think rather than debate a position. Maybe we are going somewhere after all.
April 5th, 2006 at 8:19 pm
Our Not Terribly Simple Tax Code
This will make you sick. I promise. (hat tip TMV)
April 5th, 2006 at 9:12 pm
I don’t know how lucky I am…
In NZ, tax from my earnings is deducted at source - salary, interest, dividends…
If I wish, if I believe that I am due a refund for some reason, I can file a formal return.
Similarly, if the IRD think I am not playing the game right (like if I owned investment properties and did not pay the tax on them) then they can work out what they think my tax is and charge me.
In my wife’s case, it pays for her to lodge a return because she works 8 months of 12, but the tax is deducted on the assumption of 12 months of 12 employment.
The tax return itself?
37 panels on 8 pages. My wife uses 12 of those 37 panels. The instruction booklet - 50 pages of examples and notes.
THAT is simple tax…
Now doing Company tax - that is for the professionals :-D
April 6th, 2006 at 1:23 am
Flat tax. Nice dream. Ain’t gonna happen, though, is it? How could paying the same proportion of one’s income, whether rich or poor, be fair? .
I look at the US tax system and think “there but for the grace of god go I…” Living as I do in Australia I feel I’m lucky - we pay one set of taxes, to the federal government (which seized state tax revenues to pay for WW2 and never gave them back, heh). Our income tax return form is large and complex, but not too complex for a high school grad to complete, and anyone without investments, tax write-offs etc. is wasting money if they use an accountant. (60% of American tax payers use an accountant to do their taxes? Wow, that really is an industry). Finally, we have an on-line tax facility now for the net-savvy - complete with online help, much more user-friendly than the paper form, provides immediate lodgement and rebate (if appropriate) paid in 14 days.
April 6th, 2006 at 3:49 am
I can vouch for what hiraethin says too. I work for a company that pays GST in Australia (we operate there as well as in NZ) and that return takes me about 5 minutes per month. Online, interactive, simple! Having the accounting records straight helps a great deal.
Hmm, hiraethin, when is a food ingredient not a food for GST purposes? That came across my desk this week in relation to one particular product that we sell in Aus. Oh, it is used in making beer, and is an additive to white bread. One is taxable, one is GST-free. All good fun really!!
April 6th, 2006 at 9:45 pm
Turbo Tax - $40
Electronic filing fee - $15
Time spent - 4 to 6 hours
Full blown 1040A
It ain’t rocket science to do your own taxes. A little complicated if you expect to do it without educating yourself first. But that’s true about almost anything. I like to pretend I’m on a treasure hunt when I do my taxes. Looking for all those gold nuggets. Makes it a little more fun.