Compliance With Complex Tax Code Costs Taxpayers $431.1 Billion

“U.S. taxpayers pay an estimated $431.1 billion annually, or 30% of total income taxes collected, just to comply with and administer the U.S. income tax system,” said Dr. Laffer, who rose to prominence as an economic expert during the Reagan Administration and whose name is forever linked to the ‘Laffer Curve’ tax revenue model. “Individuals and businesses spent an estimated 6.1 billion hours complying with the filing requirements of the income tax code.”

The study estimates that those 6.1 billion hours equate to $377.9 billion, compounded by direct outlays (paying professional tax preparers or purchasing tax software) estimated at $31.5 billion and IRS administrative costs running $12.4 billion. Comprehensive audits impose an additional taxpayer burden of at least $9.3 billion, bringing the total to $431.1 billion in order to comply with the complexity of the federal income tax system. These costs don’t account for the lost economic opportunities caused by the uncertainty and confusion of the tax code, nor the pain and suffering for people dealing with the IRS.