When people hear about other people with tax problems, they may often think that it was intentional, but those with tax problems can frequently report that it was not. A common cause of tax problems is not intent but complexity!
There are thousands of pages of IRS tax documentation and the IRS themselves require an army of experts who spend every waking hour navigating this documentation. They package it up into forms and guides and ask millions of Americans to be completely accurate… or else. Minor errors and tiny oversights can trigger invasive and disruptive tax audits.
How bad is it? Here’s an info-graphic about the tax system that we love. For those of you who prefer text instead of images, I’ve interpreted it below.
There are about 138 million taxpayers in the United States and these taxpayers pay a whopping $2.3 trillion (yes, with a “t”) in taxes each year. (Who can afford college tuition at that rate?). Even though that 2.3 trillion is such an unbelievably gigantic number, it’s worse knowing that 92 million taxpayers (more than half of all taxpayers!) make less than $50,000 per year and pay between 10% and 15% of their income in taxes. Meanwhile, 5 million taxpayers make more than $200,000 and pay 20% to 25% in taxes each year.
Ready for some more shocking numbers? Some say that over 16% of Americans evade taxes each year while 78% of those who file taxes get $2,700 back in their returns. That results in over $345 billion dollars of lost revenue (worth 2.6% of our national GDP).
Worse yet: The tax code in 1913 was 400 pages but now it’s over 70,000 pages long, so it’s not surprising that the IRS themselves estimate that it will take you more than 24 hours of straight calculations to do your own tax returns! It’s no wonder that more than 60% of Americans pay someone else to do their taxes.
(source: QuickSprout)