How much is your time worth? Five bucks an hour? Twenty bucks? More?
Well, take that figure and multiply it by 27. At the low end, that’s $135. At the next level, it comes to $540. And if you’re a trial lawyer and bill $500 an hour, you’re looking at $13,500. All to do your federal taxes. That’s right. The White House estimates that it takes a total of 3 billion hours to comply with the tax code, or about 27 hours per taxpayer. Estimates of the cost of complying with the U.S. tax code top the $200 billion mark.
The White House Council of Economic Advisers says, “Reduction or removal of many of these distortions, through broadening the tax base and lowering tax rates, would, by one estimate, increase accumulated capital by 10 to 15 percent and real GDP by 2 to 6 percent. The economic gains from fundamental reform of the tax system could lead to substantial increases in economic well-being for all Americans.”
But don’t look for lawmakers to do much about it, because it’s the Republican-controlled Congress that is responsible for much of that tax code complexity. According to CCH Inc., which monitors changes in the tax code, the number of pages of federal tax rules has gone from 45,662 in 2001 to 54,846 last year. And that’s with a tax cut package. Indeed, since 1995, when the Republicans first took control of the Congress, the number of pages of federal tax rules has jumped by 35 percent.
The problem? Lawmakers of both parties want to use the tax code for political, and not simply economic, ends. So they target and tweak rather than just cut taxes.
Just consider this excerpt from the 401khelpcenter.com Web site on the Bush tax cut: “Elective deferral limits (401k, 403(b), and 457) to $11,000 in 2002, then increased $1,000 each year till $15,000 in 2006, and then indexed in $500 increments.”
Say what?
It’s time to simplify the tax code.