Thursday, August 03, 2006

How much will we pay to avoid paying?

Hat tip to Joe over at the Tax Update Blog for alerting me to this post from The Tax Foundation blog. The intended point of the post, as I read it, is simple: People cheat on their taxes because they don't understand them.

A quote from the post sums it up nicely:

The costs of tax compliance are high: in 2005 complying with the federal income tax code cost the nation an estimated $265.1 billion, which amounts to a 22-cent tax compliance surcharge for every dollar the tax system collected.


While I agree that complexities in the tax system facilitate cheating, I would argue the premise of this post. My mom's an accountant and so is Joe. My guess would be that both of them would agree that we as a nation don't spend $265.1 billion just to comply with tax laws, we spend $265.1 billion to comply with the tax laws at the lowest possible price.

Certainly some of the blame falls on the tax code and the people who wrote it: the fact that the tax code is over 65,000 pages long allows for the inclusion of thousands, if not millions of little loopholes to slide your money through.

But if we're spending $265.1 billion annually to pay people to find those loopholes, doesn't some of the blame fall back on us? Your tax dollars and mine pay for our education system, health care for millions of Americans who would otherwise go without, national defense, national infrastructure we all use everyday, environmental protection...the list goes on and on. Some of your tax dollars may be wasted or spent in a way you wouldn't approve of personally, but certainly the majority are being used on things that make our nation great and your life significantly better.

At what point did it become socially acceptable to hire professionals to make sure you're making the minimum-possible contribution to that fund?

I'm not saying I'm going to send the IRS a bigger check than I owe them. But, food for thought.

KL

1 comment:

The Real Sporer said...

I'm on a role tonight.

The tax code is insane, it drags growth, productivity and innovation at a time we need all 3 really bad.

And it's not fair because those at the very top (including virtually all limosine liberals like Babs, the Sheen crew, Michael Moore etc...) don't pay anything, or very very little.

People at the bottom pay virtually nothing (by that I mean under $40K per year which sure isn't poverty level)so people in the $50-$500 pay it all-and that is inherently unfair.