A new study out of the Tax Foundation estimates that complying with the federal income tax code during 2005 cost U.S. taxpayers about $265 billion.
Scott Hodge, president of the Tax Foundation and co-author of the study, said that figure amounts to about 22 cents in overhead costs for every dollar of income tax collected. For 2005, the $265 billion compliance 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, or an inflation-adjusted $405.8 billion.
The authors of the study said that the burden estimate is cautious and excludes many costs, such as the productive value people may have added to the economy if they had been working instead of filling out forms, or the time that taxpayers disputing their bills spend in litigation.
For comparison, the compliance cost is greater than the revenue of Wal-Mart ($259 billion), the nation's largest company. Similarly, 6 billion hours per year represents a work force of over 2.8 million people -- more people than work in the auto industry, the computer manufacturing industry, the airline manufacturing industry and the steel industry combined.
The nonprofit Tax Foundation has monitored tax policy at the federal, state and local levels since 1937. The report is available at
