NCPA - National Center for Policy Analysis

Joint Committee On Taxation Study On Tax Simplification

May 2, 2001

Congress's Joint Committee on Taxation has just released a massive new study of tax simplification. The study identifies the magnitude of the complexity problem with some interesting statistics.

Following are a few:

  • The Internal Revenue Code (the tax title of federal law) has 1,395,000 words.
  • As of June 2000, the Treasury Department had issued 20,000 pages of tax regulations containing over 8 million words.
  • There are 649 different IRS forms, schedules and instructions totaling more than 16,000 lines; 159 worksheets contained in the IRS instructions; and 340 different IRS publications totaling more than 13,000 pages.
  • The 1040 form alone has 79 lines, 144 pages of instructions, 11 schedules totaling 443 lines, and 19 separate worksheets.

No wonder, then, that taxpayers contacted the IRS 117 million times in 1999 for advice and clarification -- getting a wrong answer 47 percent of the time to boot, according to the General Accounting Office.

Some 55 percent of tax returns now indicate a professional tax preparation service was employed, up from 48 percent in 1990.

Complexity makes it harder for taxpayers to claim deductions. According to a new GAO report, in 1998 more than 500,000 taxpayers overpaid their taxes by taking the standard deduction, even though they paid enough mortgage interest alone to come out ahead by itemizing their deductions. Collectively, they paid $311 million more than they had to. Amazingly, 6,000 of these taxpayers overpaid by more than $5,000 each.

The JCT report makes specific recommendations for simplifying the tax code and reducing complexity. Unfortunately, it is a virtual certainty that taxpayers will find their taxes more complicated after Congress finishes work on a tax bill this year.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, May 2, 2001; "Study Of The Overall State Of The Federal Tax System And Recommendations For Simplification, Pursuant To Section 8022(3)(B) Of The Internal Revenue Code Of 1986" (JCS-3-01), April 2001, Joint Committee on Taxation.

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