Wednesday, March 25, 2015

Filing Taxes Is a Productivity Drain: But I Didn't Know it was this bad

Wow, what a waste of time and money for Americans.
The real problem with the tax code isn't "fairness." It's the monstrous complexity that costs the country a staggering amount of time and money.
The IRS estimates that Americans spend more than 6 billion hours filing returns. And some put the compliance costs at $300 billion.
More than half of Americans must pay someone to figure out their income taxes — even those earning less than $20,000 a year, according to the Government Accountability Office. More than four in 10 pay someone to file the laughably named 1040EZ.
So you take that 6 billion hours and multiply it by the $16 an hour and you have nearly $100 billion that Americans waste doing this process. You add this to those compliance costs of $300 billion and you have $400 billion it takes to file these returns. This doesn't add all the money people waste paying tax preparers and preparing for audits and other nonsense. All of this work for the government to rake in $3 trillion. 
 
This part is especially annoying:
At the other end of the spectrum, those making less than $30,000 accounted for almost half of the tax returns filed, but paid a mere 1.7% of total federal income taxes.
Why should these people have to even file a tax return if they bring in such a tiny percentage of tax revenue? If it is for Child Tax Credits or something then offer them a different mechanism for collecting this money other than a tax return. Maybe just a check in the mail or a direct deposit. Or even a document that people can send in called a Tax Credit Form. You then use all that enforcement money to prevent fraud when it comes to sending in these Tax Credit Forms.
 

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