10 Things I Hate About Taxes #1: Lost Productivity
ByToday we begin a series of short articles leading up to Tax Day, April 15. Most of these ideas have come from readers, so I’d like to thank everybody thus far who responded either through blog comments, Twitter, or Facebook with something they despised about taxes… I hope you enjoy this series.
Ever wondered how much time and money are lost through federal tax returns? It actually is rather astounding even by conservative estimates. Let’s run the numbers in back-of-the-envelope style calculation.
Consider that I, a moderate income citizen, have spent nearly eight hours thus far on my taxes. This includes going to the store to buy Turbotax, organizing all my papers, making calculations, typing, figuring out where things go – and I’m not even done yet. I anticipate I have at least four hours of work left, but for the sake of our conservative calculation we’ll assume that most people spend about eight hours on their taxes per year.
According to the latest census data on Wikipedia, roughly 300 million people live in the USA. I would estimate that about half of them work and do tax returns, which is roughly 150 million. (It appears that the number may be closer to 168 million according to Wikipedia.)
Consider, then, that around 150 million work or leisure days have been lost due to tax preparation. It’s hard to estimate how much lost productivity there is embedded in this number, but suppose we can put a value on that time… A little digging through Google seems to indicate that the average wage per hour in the USA can be very conservatively estimated at $15 per hour. This translates to $120 per day, that’s roughly $18 billion in lost productivity.
That’s a pretty large number, but in reality I’m just scratching the surface. I can’t even begin to imagine how the number increases when you add in purchases of tax software, purchases of tax services, and the expenditures of the IRS in processing and auditing. I think it’s probably safe to say that we are talking about a 10′s-of-billions-of-dollars industry of nothing but waste. Of course, that’s the function of the “state” in a nutshell – plus injustice, rights abuse, death, and destruction of private property.
Strangely enough, doing tax returns is, in another sense, a rescuing of productivity as well. The fact that this much effort is being put into getting as much of our hard-earned money back from the Federal Government is indicative that there is more to be gained in doing the tax return than not. How unfortunate that this must happen in the first place…
Thanks to Clear_Mark for inspiring this installment of 10 Things I Hate About Taxes.
Please support LCC by sharing this post on your favorite social network.
Related Content:
Norman is the creator and primary writer for LCC. Learn a little bit about him in the
And things are relatively simple if you are a regular employee. They give you an employment record, you enter it in to a computer program, and it spits out your tax record.
Once you are self employed, it gets far more time consuming. You have to account for every expense, every receipt, every invoice, every tax you charge and have been charged, for every day of business. When I became self employed, my time doing taxes quadrupled.
Then, a few years back, I incorporated a company. Now I have to not only process my own taxes, but the company taxes, which takes even longer to do than my personal ones!
I estimate I’ll spend around 20 to 25 hours just on processing my taxes this year. And I don’t even do my own taxes! I have an accountant to whom I submit all my information. At the end of it all, I’ll get a $1500 accounting bill.
And none of that includes the almost daily filing time it takes to organize receipts and invoices. Its really ridiculous.
I second Rod, absolutely. While I’m pretty lucky and don’t have do much of the tax stuff myself, I am in a small business with my dad (LLC), and he talks frequently about what a drain of time and effort it is. The funny thing, as Norm pointedout, is that all this time, effort, skill, and imagination is going towards minimizing how much the government gets the suck out of us.
Good post, Norm.
[...] 10 Things I Hate About Taxes #1: Lost Productivity [...]
[...] #1: Lost Productivity [...]
[...] you’re wondering what’s quite so bad about taxes, read this series of articles. Possibly related posts: (automatically generated)Wisconsin Tax Day Tea Party UpdateTea [...]
[...] is so bad about taxes, you ask? Read this series of [...]
[...] the first installment of this series, I talked about how much effort is wasted just doing taxes. Compliance with the law [...]
[...] Lost Productivity [...]
[...] Lost Productivity – “Ever wondered how much time and money are lost through federal tax returns? It actually is rather astounding even by conservative estimates.” [...]
The 168 million number is a bit too high, since most returns are filed for households rather than individuals. There were about 154 million individual returns files in 2007, plus another 2.5 million corporate returns and close to 31 million returns filed by businesses for employment taxes. Both businesses and individuals also have to spend time and money throughout the year keeping records that the government demands even if you don’t try to minimize your tax burden. I saw a rough estimate done 30 years ago, saying that the dead weight loss from record keeping and filing was the equivalent of taking every car and truck that the big three produced and dumping them in the deepest part of the ocean. Of course, there were a lot fewer people and businesses filing much simpler returns back then, and the big three produced a lot more cars and trucks than what’s left of them do today.
Well, even as a rough estimate that’s a pretty good guess, though, don’t you think?
But really, thanks for that information. Good to know!