Thursday, January 6, 2011

Complexity of Tax Code Major Headache In Time and Money

With the passage of Obama's recent tax legislation, once again the call is going out for a major overhaul, if not outright elimination, of current federal tax code. Two recent articles here and here both have references to a recent report by Nina Olsen, the National Taxpayer Advocate at the Internal Revenue Service. Some aspects of the report the articles highlight are numbers that are sure to surprise most people:

-Businesses and individuals spent an estimated 6.1 billion hours preparing their returns, equal to the same amount of time on the job of 3 million full time workers in a year.
-89 percent of taxpayers either employed someone or bought software to prepare their taxes at an average of $258 per taxpayer, which equals a combined $163 billion.
-The tax code itself is currently roughly 3.8 million words and growing, with over 4000 changes in the last 10 years and 579 last year.

All these numbers add up to a tax code that has been growing out of control, costing taxpayers billions of dollars and millions of productive hours. With no one seemingly brave enough in Washington to confront the issue head on, it doesn't appear there is any relief in site but hopefully the highlighting of the IRS taxpayer advocate report will start to build up some political momentum on this issue.

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