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“I Love Doing my Taxes!” & Other Phrases You’ll Never Hear
Most people hate doing their taxes. I certainly do. Last year I moved states and sold my old home, worked as a self-employed contractor for a few months, and then got a new job. Because of that, I have to fill out dozens of pages of paperwork and file three separate returns. I can’t figure most of it out on my own, so I bought a computer program to help me file. Even with the program I’ve spent many hours working on my taxes.
Odds are, you can probably relate to my frustration. Individuals and small businesses are forced to spend their time and money every year to make sure they’ve paid their taxes properly and filled out the forms accurately. But isn’t that just the cost of having a government? Aren’t taxes necessary? Perhaps, but just because taxation is necessary doesn’t meant that filing taxes should be a huge undertaking. The current tax structure is needlessly burdensome.
“Doing my taxes is a piece of cake!”
A 2011 study by the Laffer Center estimates that in 2008 individuals and businesses spent 6.1 billion hours complying with the tax code. That amount of time is hard to fathom, so let’s try to put it in perspective. Suppose you worked at a massive company with one million employees. If each person works 40 hours a week, how long would this million-person workforce take to reach 6.1 billion hours? Nearly three years. Just imagine how much work could be done, or how much rest and relaxation could have been enjoyed with all that time.
It isn’t just lost time either. According to the same study, in 2010 about $31.5 billion was spent on either professional tax preparers or purchasing tax software. That’s $100 for every man, woman, and child in America, or about $275 for every household.
Between lost time, money spent on tax preparers and software, and the cost of the government programs to collect and run the tax agencies, the Laffer Center study estimates the burden on taxpayers in 2011 was $431 billon. That’s around $3,145 per taxpayer.
“Our tax code is so easy to understand!”
Why is there so much time spent to comply with the tax code? Because it is hopelessly complex. The U.S. tax code contains more than 71,000 pages and more than 3.8 million words. Finding out which parts of the tax code apply to you in that enormous stack of paper is practically impossible, which is why so many people choose to pay tax preparers or purchase software. Not only is the tax code itself unwieldy, but it changes so frequently that keeping up to date is difficult.
When Charles Rossotti, Commissioner of the IRS from 1997 to 2002 testified before the U.S. Senate Finance Committee in 2006 he noted:
Since the adoption of 1986 tax reform, Congress has passed 14,400 amendments to the tax code. That’s an average of 2.9 changes for every single working day in the year for 19 years.
Keeping up with this rate of change is so difficult that even the IRS doesn’t understand the tax code. In 2002, Treasury Department auditors conducted a test of the IRS help centers. They found that 29 percent of the tax questions they asked were answered incorrectly by the IRS itself.
Some amount of taxation is necessary for the government to fulfill its proper role, but the tax code in America is bloated and incomprehensible. The tax code is constantly changing, and it is taking more and more of our time and money to comply with it. In order to give Americans more control over their own resources and stop limiting our economic freedom, we must simplify the tax code.