The cost of compliance with the ever-growing Tax Code costs U.S. taxpayers a total of 8.9 billion hours and $409 billion, according to new research.
The IRS recently estimated that Americans will spend 8.9 billion hours complying with IRS tax-filing requirements in 2016, and according to a new analysis from the Tax Foundation, this translates to an annual tax compliance cost of $409 billion, or the equivalent of 4.3 million full-time jobs.
The calculations have increased substantially since 2012, when the IRS estimated the total paperwork burden at 6.1 billion hours.
“Time is the most valuable thing we have, and we should not be forced to waste it complying with IRS forms,” said Tax Foundation president Scott Hodge in a statement. “Congress needs to keep this in mind as they move forward with tax reform over the next year. In addition to fostering economic growth, we need reforms that ease the burden of time on taxpayers. I think that’s something we can all get behind.”
The Tax Foundation’s analysis provides a breakdown of the most costly IRS forms and provisions for businesses and individuals. For example, the time spent complying with business income taxes costs $147 billion annually, while preparing individual income taxes costs another $99 billion.
There are also cases where the cost of compliance for a specific tax is nearly equal to the amount of revenue that tax brings in. The estate and gift tax, for example, will collect approximately $20 billion in federal revenues this year, but has a compliance cost of $19.6 billion.
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