Complex Tax Code is Costly

December 4, 2002

The U.S. tax code is so inexcusably complex that it encourages cheating and costs the government dearly in revenues, analysts report.

  • Running close to six million words, the tax code is seven times longer than the Bible.
  • The Internal Revenue Service estimates that such complexity is forcing Americans to spend $80 billion per year simply to comply with tax laws.
  • A University of Michigan study puts the cost of enforcing and complying with federal personal and corporate income taxes at around $115 billion per year.
  • The federal government has accumulated such a huge backlog of uncollected tax debts that the IRS is considering hiring private bill collectors to help track down the missing funds -- a move which would only add to enforcement costs.

Experts pronounce the present tax system "beyond repair." They would like to see it scrapped and replaced with a flat tax -- the simpler, the better.

The suggestion is far from outlandish. Russia already has a flat tax in place -- at a rate of 13 percent. Since it adopted the flat tax two years ago, inflation-adjusted tax revenues have jumped by nearly 30 percent.

Source: Edwin Feulner (Heritage Foundation), "Shelter from the Storm," Washington Times, December 4, 2002.

 

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