Americans will spend nearly 9 billion hours this year filling out paperwork for the IRS, according to a Tax Foundation report released last week. That’s more than 1 million years, or enough time to watch The Godfather trilogy more than 900 million times.
“For decades, the tax code has become more and more detailed, with thousands of additional pages of statutes, regulations, and case law. This added complexity imposes a real cost on the U.S. economy,” the report said.
“For example, a business owner who needs to file a complex tax return each year may hire an accountant or tax lawyer to do it. This tax professional may cost $70,000 a year or more. This is $70,000 that this business owner cannot devote to purchasing equipment or hiring workers.”
The compliance costs, the report says, add up to a $409 billion drain on the U.S. economy.
The report from the conservative-leaning non-profit highlights how the tax code, which is currently 2.4 million words, has grown by almost six times since 1955. This on top of 7.7 million words of tax regulations to clarify that code, and 60,000 pages of tax-related case law to help accountants and tax lawyers determine how much individual and business taxpayers owe.
Clearly, many of us need a little help in understanding how to file our taxes. A Nerdwallet survey of tax-filing American adults found that most Americans got an F (51 percent) on a basic quiz about tax fundamentals.
The Tax Foundation report argues that simplifying the tax code should be a high priority for lawmakers. And while tax reform proposals are generally gauged by whether they raise more revenue for the federal government or not, the new report offers another metric to keep in mind. It says the “most important benefit of tax simplification may be the gift of time.”