Americans Pay $140 Billion, Spend 7.6 Billion Hours A Year Just To File Their Taxes, Report Finds
Any attempts to simplify the complicated U.S. tax code will produce lower taxes for some people and higher payments for others, including some of the middle-class families President Barack Obama has promised to shield from tax increases, a new report says.
The Washington Post flags these eye-popping figures from the report that illustrate what a painful ordeal filing taxes has become under America's labyrinthine tax code:
American taxpayers spend 7.6 billion hours and roughly $140 billion a year to comply with the bewildering thicket of requirements in the federal tax code.
Obama asked his Economic Recovery Advisory Board, led by former Federal Reserve chairman Paul Volcker, to review the pros and cons of three tax issues: simplifying the tax code, getting people to pay up and overhauling the corporate tax structure.
He specifically asked the board not to consider policies that would increase taxes on families earning less than $250,000 a year, or for individuals making less than $200,000 .
But the report by the board's tax subcommittee said the panel took Obama's request to mean that "not every option we considered must avoid a tax increase on such families" but rather that the options together should be "revenue neutral" for this particular income category.
So while taxes would not increase on the group as a whole, the report says some families would end up paying more and others less if the tax code is simplified.
But higher taxes on any family earning less than $250,000 a year and on any person making less than $200,000 annually could prove dicey for Obama, given his promise not to raise taxes on them at all.
The report does not recommend any options over others, but rather lays out the pros and cons of all the ideas it considered.
The board voted Friday to send the report to Obama.
Volcker said the goal was to set out as clearly as possible all the competing considerations and hope that the administration and Congress will draft legislation or put in place practices that can help make navigating the tax system easier.
"That's all we can hope for," Volcker said.
Meanwhile, the White House and Congress will have to grapple with a more immediate tax issue in the run-up to the Nov. 2 midterm elections.
A series of tax cuts enacted under President George W. Bush are scheduled to expire in January. Obama wants to renew only those tax cuts that apply to middle-class and lower income taxpayers, those whom Obama says have suffered the most during the recession and could use the break. Republicans want the tax cuts extended for all, including the highest wage-earners.
Some of the options in the report for simplifying the tax code include consolidating multiple benefits for children, education and for savings and retirement. The panel also looked at options for overhauling the corporate tax code and for getting more taxpayers to pay what they owe.