NCPA - National Center for Policy Analysis

27 HOURS PER 1040

May 2, 2005

A new study by the National Taxpayers Union makes the case for fundamental tax reform by looking at the deadweight loss of tax paperwork. Just how burdensome is our current tax system?

According to NTU:

  • Form 1040 now takes 26 hours and 48 minutes to prepare, and the ?short? form requires 11 hours and 21 minutes of preparation.
  • Form 1040 is now 128 pages, compared to 2 pages in 1935.
  • Because of the rising complexity of tax forms, 60 percent of taxpayers hire a professional preparer, compared to only 38 percent in 1980.
  • Also due to increased complexity, average tax preparation costs have risen from $62.72 in 1980 to $135.96 in 2004.
  • Tax form paperwork burdens account for 80 percent of the total federal paperwork load.

Today's tax system hits us hard in two ways, says NTU.

  • First, all of this time and money that?s spent on preparation could be better spent doing something productive.
  • Second, there's the loss that nobody sees: how much time and money do people waste on unproductive behavior just to gain a small tax advantage?

If the first category is huge, the second is enormous, says NTU.

Source: Weblog, "27 Hours Per 1040," Heritage Foundation, April 26, 2005; based upon: David Keating, "A Taxing Trend: The Rise in Complexity, Forms, and Paperwork Burdens," National Taxpayers Union Policy Paper 116, April 14, 2005.

 

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