Economic Perspective: Costs of Filing Taxes
“Today’s program looks at costs of filing taxes. Mike it’s tax time again so many households as well as tax accountants will be spending hours compiling tax information, and filing the necessary forms. Since time is money, as the old saying goes, do we have any estimates of the cost to individuals of calculating taxes and meeting the federal deadlines?
“We’ve had this question many, many times over the years, and we do have estimates so I’m going to give you the latest estimate in a moment, but these estimates are based not just on what people might pay tax folks, like accountants, to do their taxes for them, but the time people that spent even if people did taxes themselves.”
“The time element comes in here in the sense that the tax system is complicated, particularly in terms of what people can deduct, and you have to look at your own situation, you have to track your spending, and then you have to see among those spending items are things that you can deduct. All that takes time.”
“So we do have a recent estimate of the cost to the households of complying with the tax code. This has been published in the National Bureau of Economic Research, a very prestigious organization, and, let the drumroll we can have here in the background, the current cost seems to be around $200 billion annually in terms of what people spend either in terms of time or money in complying with the current tax code.”
“Now we do have a new tax act that went into effect this year. We don’t have an estimate yet on what it will do. I think most experts say although there are some measures in that new tax act that perhaps will reduce the amount of time that some people spend filing taxes there’s still enough complication there that we’re still going to have a continuing cost of doing taxes.”