It’s begun — the 3-month countdown to income tax filing day. People are getting their W-2 forms and are beginning to twitch and grimace at the thought of doing their taxes. Call it the tax code boogie.
Judging from data developed annually by the Tax Foundation, the tax code boogie is a long and winding song, that takes days to complete. In all, the foundation says that taxpayers will spend more than 6 billion hours in filling out their income taxes. With about 150 million workers, that comes out to an average of 40 hours per worker to comply with the tax code. Looked at another way, a worker has to spend, on average, of a full workweek just to comply with tax law.
This does not come cheap. The Tax Foundation estimates that, in 2005, the cost of complying with the tax code came to $265.1 billion, or more than $17,000 per worker.
A single tax rate, whether on income or consumption, would clearly cut way, way back on the time and money spent on complying with the tax code.
Some estimates put the compliance costs of a single tax rate at less than 10 percent of current costs. That averages out to just $1,700 per worker, which means the worker could use that extra time and money to work, save, invest, even spend more than he or she can now.
Unfortunately, there are a host of opponents to the idea of flat rate tax, and they all have a vested interest in maintaining the status quo.
Favored interest groups, such as mortgage lenders, ethanol producers and most corporations want to keep everything just as it is. Otherwise they “lose” the tangible benefits they are receiving. And let’s not forget the accountants and tax attorneys whose income depends on a complex tax code.
The annual scramble to pay less is the flipside of the billions of dollars in direct government handouts. If you’re Peter rather than Paul, you do your best not to be robbed.
Isn’t it time to end this silly game?
As for those whose incomes or profits might be hurt because the tax system is fair, simple and flat, they will have more than enough to do in the subsequent economic boom.