The fiscal cliff deal is likely, according to Washington bean counters, to raise roughly $620 billion in new upper-income taxes over the next decade. In 2013, that works out to be about $50 billion. For comparison, the sheer complexity of the US tax code will cost taxpayers more than three times that amount. The WSJ:
The federal Taxpayer Advocate ranks complexity as the No. 1 problem facing the tax system and offers an eye-opening estimate of Americans’ cost of complying – $168 billion in 2010, or about 15% of total income-tax receipts.
In her 2012 annual report to Congress, Taxpayer Advocate Nina Olson says it takes U.S. taxpayers more than 6.1 billion hours to complete all the filings required by the tax system, making tax compliance “one of the largest industries in the United States.” That is the equivalent of more than 3 million full-time employees.
So not only does our complex tax code hurt economic growth by distorting decision making, its complexity is a tax in and of itself. Time for a tax cut via simplification?