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The Cost of Complying with the Federal Tax Code

At the Washington Free Beacon yesterday, Ali Meyer reports on a Tax Foundation event on Monday. Her opening paragraphs provide two major takeaways:

"Taxpayers spend 6.1 billion hours a year just to comply with the federal tax code, according to experts at a Tax Foundation event on Monday.

"Pete Sepp, president of the National Taxpayers Union, said that tax compliance costs taxpayers $234 billion per year in direct costs and lost productivity.

"The problem is the status quo—thinking that, well, if we don't do tax reform this year it will just be that bad," Sepp said. "No, the status quo is not the static quo—it's going to get worse."

"The paperwork burden inventory at the Office of Management and Budget related to Treasury is expected to rise by another 2 billion hours in the next few years," he said. "One-third added to that, we're looking at tax compliance costs of north of $400 billion a year."
I couldn't find anything at the Tax Foundation website about Monday's event. However, there are a number of research papers about individual tax compliance and complexity. Most of those hours, by the way, are devoted to complying with business returns although they say that 1.6 billion hours are devoted to 1040 returns. With approximately 130 or so million individual tax returns, the average tax filer spends about 12 hours in preparing and filing a 1040. The Tax Foundation was founded in 1937; for more information. click here.

The National Taxpayers Union (NTU) was founded in 1969; for more information, click here.

Sounds like time for a flat tax or the FairTax.


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