By Kevin Theissen
The size of the US Tax Code has increased quite a bit over the last 100+ years.
Two of our most important historical documents, the Gettysburg Address and the Declaration of Independence, have 272 and 1,337 words, respectively. Our federal tax code was formally established in 1913 and had 9,337 words. It has grown to over 10 million words currently – or a 100,000% increase. As a reference, that would be close to 13 Bibles.
The IRS receives over 63 million calls per year from taxpayers who are confused about their taxes.
Complying with the tax code takes a lot of time, money, and effort. Collectively, we spend over 8 billion hours calculating our taxes every year.
If tax compliance were a company, almost 4 million people would be employed there full-time. Walmart, the largest employer in the world, employs just over 2 million people.
Fifty percent of Americans hired a professional tax preparer and the IRS has over 80,000 employees.
All totaled, our combined efforts to comply with the tax code costs almost $2 billion per year or almost $600 for every family in the country.
The bulk of the tax burden falls on a small percentage of the population. There are over 150 million individual tax returns and almost $2 trillion are collected each year. The top 20% of earners pay almost 90% of the $2 trillion collected.
Most of the tax dollars collected fund defense, Social Security, Medicare, health programs and social safety net programs such as food stamps and disability payments, along with paying off interest on the national debt.
The numerous past arguments for simplifying our tax system have not achieved much yet as the complicated system continues to grow. And whether you believe we all should pay more or fewer taxes, it is the law and the right thing to do so be prepared to pay all the taxes you owe … but not a penny more.
Tax time is nearing so start gathering your documents!
Kevin Theissen is the owner of HWC Financial in Ludlow.