Friday, January 13, 2006

The High Cost of Income Tax

The New Editor
The Tax Foundation estimates that it cost US taxpayers more than $265 billion to comply with the US tax code last year: (via Tax Prof Blog)

In 2005 individuals, businesses and nonprofits will spend an estimated 6 billion hours complying with the federal income tax code, with an estimated compliance cost of over $265.1 billion.

To put this amount into perspective, only 29 countries in the world have GDPs greater than than $265 billion. There are only 12 states in this country whose gross output is greater than $265 billion. This amount is greater than the 2004 revenues of Wal-Mart, the world's largest corporation.

And, as the Tax Foundation points out in a separate press release:

... 6 billion hours per year [in compliance time] represents a work force of over 2,884,000 people. That’s larger than the combined populations of Dallas (1,210,393), Detroit (900,198) and Washington, D.C. (553,523), and it’s more people than work in the auto industry, the computer manufacturing industry, the airline manufacturing industry, and the steel industry combined. (emphasis added)

This is all a part of what our current tax code cost us. Do you know who pays for this? The wealthy, no! The middle class, no! The poor, no! Everyone that buys a consumer product pays for it. The tax and the cost of compliance is passed down the line to the end user, who has to pay a little extra. This is one reason we need the FairTax. Another tidbit to think about, our tax system is one reason why compainies are basing their headquarters overseas.

posted by David at 1:48 AM :: Permalink ::

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