Cost of Administering the US Income Tax

[KUJustin]

Without turning this into a debate on the merits of said income tax, can anyone here give me some direction on finding out the total cost of administering it? I'm coming up short on Google.

This would include the total IRS budget, but also all the money spent by private firms and individuals in terms of internal man-hours, accountants, forms, etc.

FWIW (nothing), my out-of-thin-air guess is $200B annually.

[mosdef]

[ QUOTE ]
Without turning this into a debate on the merits of said income tax, can anyone here give me some direction on finding out the total cost of administering it? I'm coming up short on Google.

This would include the total IRS budget, but also all the money spent by private firms and individuals in terms of internal man-hours, accountants, forms, etc.

FWIW (nothing), my out-of-thin-air guess is $200B annually.

[/ QUOTE ]

It's free because the government is more efficient than markets. How many examples of efficient tax administration can you think of that were administered by private companies? NONE. That's what we refer to as a "market failure".

Thanks for visiting Politics Forum.

[Inso0]

I'm going to sound like an asshat for not being 100% sure on my figures.

But I'm 90% sure that in a recent story, one of the big Wall Street firms was listed as spending like 5 BILLION, with a 'B' dollars on people to make sure they stay in compliance with the absurd tax code. I really want to find the story now, because I remember reading it and being absolutely astonished at how much money was wasted on their army of accountants or whatever the hell all goes in to tax compliance.

I shall look and provide linkage!

Perhaps it'll be a place to start.



EDIT: Ok I think I was off, and my figure might have been all the big Wall Street firms, not just one.

Take a look at this link: http://linder.house.gov/_pdfs/WSJFoxCNN.pdf

[KUJustin]

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[ QUOTE ]
Without turning this into a debate on the merits of said income tax, can anyone here give me some direction on finding out the total cost of administering it? I'm coming up short on Google.

This would include the total IRS budget, but also all the money spent by private firms and individuals in terms of internal man-hours, accountants, forms, etc.

FWIW (nothing), my out-of-thin-air guess is $200B annually.

[/ QUOTE ]

It's free because the government is more efficient than markets. How many examples of efficient tax administration can you think of that were administered by private companies? NONE. That's what we refer to as a "market failure".

Thanks for visiting Politics Forum.

[/ QUOTE ]

Juh... what? Did you read my post?

I'm not talking about cost relative to an alternative solution. There is an income tax. It does cost money for both the gov't and private firms to administer/adhere to. Those costs can be added up. That's what I'm asking for.

If your post was some sort of politics board sarcasm/inside joke then I apologize for not being a regular over here.

[mosdef]

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If your post was some sort of politics board sarcasm/inside joke then I apologize for not being a regular over here.

[/ QUOTE ]

I apologize for using inside jokes, I hope it was funny to at least the regulars.

For your question, do you mean the expense incurred by the government to collect and administer the tax system, or do you mean that plus all the expenses incurred by individuals and corporations to manage their taxes.

[laserboy]

[ QUOTE ]
Without turning this into a debate on the merits of said income tax, can anyone here give me some direction on finding out the total cost of administering it? I'm coming up short on Google.

This would include the total IRS budget, but also all the money spent by private firms and individuals in terms of internal man-hours, accountants, forms, etc.

FWIW (nothing), my out-of-thin-air guess is $200B annually.

[/ QUOTE ]

What the Federal Tax System is Costing You

According to the quoted study, the cost of compliance in 2005 was $265B. The IRS budget is comparatively small at $10B.

[Scary_Tiger]

[ QUOTE ]
[ QUOTE ]
If your post was some sort of politics board sarcasm/inside joke then I apologize for not being a regular over here.

[/ QUOTE ]

I apologize for using inside jokes, I hope it was funny to at least the regulars.

For your question, do you mean the expense incurred by the government to collect and administer the tax system, or do you mean that plus all the expenses incurred by individuals and corporations to manage their taxes.

[/ QUOTE ]

He means what he said, so both. I'd guess the IRS budget is a fraction of the compliance money.

[Inso0]

Oh yeah, real life story:

I hired a part time worker back in 2003 to do some office work and attempted to do everything "legit". I.E. we put him on a payroll, did withholdings, etc...

This was extremely part time, but over the $600 max "cash payout" allowed by the Wisconsin tax law. Anyway, long story short: I paid this kid about $2500 during the tax year, and wound up paying almost $2900 EXTRA dollars in taxes/fees/professional fees to do my books properly that year.

Needless to say, I learned my lesson after that.

1099's for the win.

Tax code = suck

[pvn]

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[ QUOTE ]
Without turning this into a debate on the merits of said income tax, can anyone here give me some direction on finding out the total cost of administering it? I'm coming up short on Google.

This would include the total IRS budget, but also all the money spent by private firms and individuals in terms of internal man-hours, accountants, forms, etc.

FWIW (nothing), my out-of-thin-air guess is $200B annually.

[/ QUOTE ]

What the Federal Tax System is Costing You

According to the quoted study, the cost of compliance in 2005 was $265B. The IRS budget is comparatively small at $10B.

[/ QUOTE ]

Phil153 posted a response to the OP that he deleted after he saw your post with actual numbers.

It went like this (I copied and pasted):

[ QUOTE ]
200 billion is way too high in my opinion, probably ban order of magnitude. Here's a rough estimate:

Most employees wouldn't spend more than a couple of hours a year on tax, which accounts for around $8 billion at $20/hr.

For a rough idea of the corporate market, PricewaterhouseCoopers is the largest accounting firm in the world, 146,000 people in 150 countries, and their annual revenue is 20 billion. A fraction of that would be tax. Most larger firms and businesses maintain good records anyway (income, receipts, salaries), so you can't count that as a cost of tax. So, I'd estimate something like:

24 million US businesses filing tax returns at 50 hours/year each and $20/hr =~ $20 billion.

So I'd estimate between 10 and 30 billion are spent on tax each year or ~0.2% of US GDP.

[/ QUOTE ]

This is a real dick thing for me to do, but someone had to take one for the team here.

[Borodog]

The more Phil gets exposed for spouting things out of his ass, the better this forum becomes.