Eakinomics: Death,
Taxes, and …
Benjamin Franklin famously opined “in this world, nothing is
certain except death and taxes,” to which one can now append “and the
burden of filing your taxes.” With Tax Day now arriving tomorrow, AAF’s Dan
Bosch and Gordon Gray did their
annual review of the compliance burden of the income tax. The
good news is that “After consecutive years of double-digit percentage
increases in the total number of forms issued by the IRS, forms have
decreased by 9 percent since last Tax Day.” The bad news is that “The total
projected cost of Internal Revenue Service (IRS) paperwork is $196.7
billion annually – a small decrease from last year’s projection.” Very
small, actually, at 0.3 percent.
So, there you have it, forms down but cost per form up. Oh well.
To be specific, the summary figures are:
- Forms: 1,217,
- Hours: 7.98 billion,
- Total Projected Cost:
$196.7 billion, and
- Average Hours per Paperwork
Submission: 7.8.
As noted above, the number of forms are down from 1,337 last
year. Notably, however, between 2015 and 2019 the number of forms increased
by 55 percent. In terms of cost of compliance, the Business Income Tax
Return ($62 billion) and Individual Income Tax Return ($33 billion) lead
the league, accounting for 84 percent of the Internal Revenue Service
paperwork compliance costs.
This is, of course, not the only way to measure the compliance burden. The
authors note that “The Taxpayer Advocate Service (TAS) has also reviewed
recent attempts at capturing the cost of the U.S. tax code, noting that
experts have embraced a range of methodologies for these
calculations. TAS, for example, estimated the 2015 cost of income-tax
compliance at $195 billion. The Tax Foundation estimated that compliance costs
amounted to $406 billion in 2016.” In general, such studies are remarkably
similar in magnitude and changes in the compliance burden.
Enjoy Tax Day!
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