New Study Finds Cost of Complying with Federal Income Tax is $265 Billion, or 22 Cents Per Dollar Collected
A new Tax Foundation study by economists Scott Hodge, J. Scott Moody and Wendy P. Warcholik estimates that complying with the federal income tax code during 2005 cost U.S. taxpayers at least $265.1 billion, and cautions that that estimate is conservative. That burden represented over 6 billion hours spent by individuals, businesses and nonprofits complying with the federal income tax code. Projections show that by 2015 the compliance cost will grow to $482.7 billion. The study notably excluded the productive value that people may have added to the economy if they had been working instead of filling out forms, but the size and economic importance of a $265.1 billion economic cost represents a work force of nearly 3 million people. In an earlier report the Tax Foundation has stated that the FairTax would eliminate more than 95 percent of those costs. See, http://www.taxfoundation.org/ , report No. 138.
posted by Tim Carlson at 5:37 PM
1 Comments:
Yes our present tax code is wacko. Its horrible. But Fairtax isnt the right answer.
Fairtax is on at least two fundamental fallacies. There are other things wrong, but these two by themselves would make the rate over 50%. Other problems would make the rate over 70%.
Fallacy 1) Fairtax assumes it can tax the federal government to pay for the federal government (Boortz, page 148 "The federal government itself will be a major taxpayer") It can not work that way.
Thats like me paying myself 10,000 a day to cut my grass every day. I can write the check, I can even deposit the check, but at the end of the month, I dont have 300,000 dollars.
Tne Pentagon can write checks for sales tax of 300 billion dollars. It can even deposit the checks, but it doesnt gain 300 billion dollars.
That fallacy ALONE means the fairtax rate has to be 35-40% to make up for it.
The second fallacy: that Fair tax can get 460 billion dollars from taxing health care. Fairtax assumes they can tax health care (and government and renters, and new homes etc).
But political reality matters. YOu wont be able to tax nursing home patients 25,000 a year. You can't tax the parents of a cancer patients 70,000 sales tax to keep their 8 year old alive. YOu cant tax kidney transplant patients 40,000 sales tax on their care.
By FAR the biggest shift it taxes, would be the shift TO health care paying the sales tax of 35-40%. (The rate would have to be that high, because of government not being able to pay a sales tax, as outlined above)
These patients will scream bloody murder -- 50 million health care patients, many are older, many are middle and lower income. Congress will give them an exemption.
Try to visualize what would REALLY happen if you passed the Fairtax.
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