Taxpayers in the United States spent more than six billion hours and $234 billion every year on tax compliance, says a new study from the Tax Foundation.
Will this change under the Trump administration?
Pete Sepp, president of the National Taxpayers Union, told an event on Monday that tax compliance costs Americans $234 billion annually on lost productivity and direct costs. In addition, they lose 6.1 billion hours per year in time because they have to comply with the tax code.
“The problem is the status quo—thinking that, well, if we don’t do tax reform this year it will just be that bad. No, the status quo is not the static quo—it’s going to get worse,” Sepp told an audience.
“The paperwork burden inventory at the Office of Management and Budget related to Treasury is expected to rise by another 2 billion hours in the next few years. One-third added to that, we’re looking at tax compliance costs of north of $400 billion a year.”
Although President Donald Trump and Treasury Secretary Steven Mnuchin have pledged to introduce a plan to reform the tax code sometime this summer, it may be best to just leave the system the way it is, as legendary free market economist Murray Rothbard suggested a long time ago.
“Everyone will agree that the American tax system is a mess. Taxes are far too high, and the patchwork system is so complicated that even IRS officials don’t understand it. Hence the evident need for some sort of dramatic, even drastic, reform. As often happens, a group of dedicated and determined reformers has arisen to satisfy that need. But before we embrace this new gospel, we should heed the old maxim about jumping from the frying pan into the fire, and also remember the warning of the great H.L. Mencken, who defined “reform” as “Mainly a conspiracy of prehensile charlatans to mulct the American taxpayer.” And we should also bear in mind that all acts of government, however worthy they may seem, have a way of winding up solving no problems and only making matters worse.”
Perhaps tax compliance will grow to $250 billion and seven billion hours if the tax code is meddled with.
–AM
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