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Tax Complexity Spikes Upward

On Tax Day, yesterday, our friends at the National Taxpayers Union (NTU) released their "15th annual study of tax complexity 'A Taxing Trend.'" You can find it here.

At their blog, Government Bytes, today, Doug Kellogg writes that they took "a look at the past few studies," and " put together the graph below, which reveals a disconnect between the two major complexity indicators over the past few years, and that’s not a good thing!" Before posting the graph, let me add Kellogg's other comments:

"Since 2006, NTU has calculated a total cost for our tax complexity burden, based off of the hours demanded by paperwork and out of pocket costs like assistance from people who are actually capable of doing your taxes.

"Check out our graphs below and you can see that the hour burden is shifting relatively gradually, though it remains high. On the other hand, the bottom line cost of dealing with the tax code is shooting straight up. When you stop and realize the majority of “Obamacare” tax provisions are coming over the next year…Well, signs point to this costly complexity trend taxing our health and sanity even more in the years to come."

Here's the first graph cited by Kellogg:

The second graph cited by Kellogg is available at the above link to Government Bytes.

Staying on the topic of unnecessary tax complexity, Sita Slavov wrote last Friday at the American Enterprise Institute's magazine, The American, that America's "tax system’s unnecessary complexity creates unfairness and uncertainty. With a few reforms, it could be more growth-friendly, simple, and fair."

In a similar vein, in Accounting Today article on Friday, Michael Cohn writes:

"Complexity and inconsistency within the tax code continue to be a major problem for small businesses, with one out of four small businesses reporting that they need to spend 120 hours or more per year on the administration of federal taxes, or three full work weeks, according to a new survey."

And at International Liberty, Dan Mitchell presents "a very depressing picture of tax complexity and political corruption" in a single info graphic, i.e., showing how the tax code grew from 400 pages in 1913 to more than 72,000 pages in 2011. At the same post, Mitchell explains the flat tax in a video that is less than seven minutes.

Finally, Gallup reported yesterday that "fewer Americans now view their income taxes as fair" with 55% saying "their taxes are fair," which "is the lowest since 2001." According to Gallup:

"Perceptions of income tax fairness, perhaps surprisingly, vary little by household income level. Fifty-seven percent of those whose annual household income level is below $75,000 say their taxes are fair, as do 54% of those whose income is $75,000 or above.

"In fact, there are no notable differences by most major demographic groups. The biggest differences are based on political affiliation, with Democrats and political liberals much more likely than Republicans and conservatives to believe their taxes are fair."

We hope you made it through Tax Day 2013.

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