Silent Killer Claims Nearly 9,000 American Lives Annually


Earlier this year that Nina E. Olson, the ombudsman for the Internal Revenue Service, reported that Americans are spending 6.1 billion hours preparing their tax returns each year – the equivalent of 2,932,692 Americans working full time. 6.1 billion hours per year equates to the equivalent of 695,884.7 years (accounting for leap years of course). The World Bank reports that the average lifespan (averaging both genders) is 78.4 years (as of 2008 – the economy may have shortened this due to stress alone). That means that the number of years spent on taxes per year claims 8,876 human lifespans per year

Though my post title is alarmist (and meant to be tongue-in-cheek), the matter is serious. A huge amount of society’s resources are spent on writing, interpreting, complying (or avoiding) and arguing over increasingly complex tax laws. How much is the complexity increasing? In 2001, the tax code had 1.4 million words. By 2010, this had tripled to 3.8 million! I’ll admit, the number of words alone is only a proxy for complexity and may not be the best metric (for example, they could have had me write it, which would have tripled the word usage without changing anything).

Another way we can view the numbers as the cost to society in terms of productive resources spent on taxes. With a working age population of approximately 200,329,211 (Current population from the US Census Bureau multiplied by Labour Force Participation Rate from the Bureau of Labor Statistics), this equates to 1.46% of the population working on taxes. Not curing cancer or building houses, but working on taxes.

Olson suggests that “the time for tax reform and tax simplification is now” and is urging Congress to scrap the existing code with a complete overhaul. The benefits of a complete overhaul would be increased revenue of $1.1 billion by closing the various loopholes and deductions that have been built into the system after years of tinkering by special interests.

The report cites some of the most controversial loopholes for wealthy individuals and specific industries – including tax subsidies for electric cars and golf carts, movie production and a byproduct of the papermaking process known as “black liquor.”

Perhaps Olson’s 6.1 billion hour figure is an exaggeration. The real debate shouldn’t be over that figure, it should be over how the system can be improved to direct the nation’s resources to the highest and best use, rather than on compliance with overly burdensome regulations.

On a side note, do a rough back-of-the-napkin calculation adding up the time society in the aggregate spends on any trivial task (preparing food, commuting, etc). Use conservative inputs, and prepare to be astounded by the waste of human life.

Read the full article here.

Talk to Frank about Taxes.