Monday, September 27

Taxes are expensive

Taxes are expensive. It’s not just the actual amount of tax payments that is costly, it’s also all the associated costs and the harm to economic growth. The Mercatus Center explains in a new publication:

The tax code, far beyond simply collecting revenue to fund the operations of the federal government, attempts to perform policy and political functions as well. This paper does not examine the normative value of these provisions, but instead examines the hidden costs of today’s tax code: time and money spent submitting tax forms, foregone economic growth, lobbying expenditures, and gaps in revenue collection. These problems grow larger as the Internal Revenue Code becomes more complicated and temporary. Based on the studies reviewed in this paper, we estimate that hidden costs range from $215 billion to $987 billion and that the tax code results in a $452 billion revenue gap in unreported taxes. The economic costs are substantial relative to the $2.45 trillion in revenues raised by the federal government in 2012.

The report may be read here: The Hidden Costs of Tax Compliance.