Today’s taxpayer faces two huge (and growing) problems. First, they face an increasingly complex income tax system. Second, they face an economy that is making it more and more difficult to make ends meet.
Nina E. Olson is the National Taxpayer Advocate, which is a kind of independent watch dog group within the IRS. Each year she is required by Congress to produce and annual report about the problems with the IRS. Each year she produces am annual report, and each year the IRS acknowledges it and then promptly ignores it.
In her recent report, Olson outlines several problems with the tax code right now, specifically around the tax code’s complexity that requires experts to translate and explain and the economic difficulty that Americans are facing. Here are a few highlights (and my take on them):
- “Taxpayers and businesses spend 7.6 billion hours a year complying with tax filing requirements”. That is huge. To put that in perspective, every man, woman, and child in the world is given a total of 8760 hours in a year. With an average lifespan of 75 years, every person will enjoy just over 650,000 hours of life. So, if 12,000 people spent every hour of their entire lives doing income tax, they would be able to do the work required of one year’s worth of taxes!
- “Taxpayers spend $193 billion a year complying with income tax requirements, an amount that equals 14 percent of the total amount of income taxes collected”.
- 80% of individual tax payers have to pay to get help with their taxes (either for someone to complete them or for software).
- There are changes to the tax code every single day. In 2008, Olson points out, there were over 500 changes.
These are just a few of the many problems Olson has highlighted in her report. You can read the IRS report here.
Olson’s report is very informative. It tells us that the tax code system is so unwieldy and complex that no one can efficiently navigate it and this creates more problems than it solves.
Just imagine if Americans were suddenly given 7.6 billion hours of their lives back. I’m sure that stress and crumbling family life would be positively impacted. Just imagine if Americans were suddenly given $193 billion back. We wouldn’t feel the need for a BandAid stimulus package. Just imagine if taxpayers could sit down in an evening with clearly written papers and could quickly fill out their income tax forms. I believe we would minimize late filings and tax mistakes.
For further reading, visit the National Taxpayer Advocate site, here: taspresskit.irs.gov.