Although our ultimate goal must be to abolish the income tax and other forms of taxation, there would be significant benefit in just simplifying the tax code. Consider a few stats from a recent WSJ editorial:
- According to my office's analysis of IRS data, U.S. taxpayers and businesses spend about 7.6 billion hours a year complying with the filing requirements of the Internal Revenue Code.Imagine if we had an extra 3.8 million workers doing productive activities like searching for cures for cancer, or advocating for a better philosophy, instead of complying with byzantine tax rules?
- If tax compliance were an industry, it would be one of the largest in the United States. To consume 7.6 billion hours, such a "tax compliance industry" would require the equivalent of 3.8 million full-time workers.
- Compliance costs are huge both in absolute terms and relative to the amount of tax revenue collected. Based on Bureau of Labor Statistics data on the hourly cost of an employee, my office estimates that the costs of complying with individual and corporate income tax requirements in 2006 amounted to $193 billion -- or a staggering 14% of aggregate income tax receipts.
- More than 80% of individual taxpayers find the process of filing tax returns so overwhelming that they pay for help. About 60% of taxpayers pay preparers to do the job, and another 22% purchase tax software to help them perform the calculations themselves.