Taxing is a system that was intended, long, long ago, to be a fair means to collect funding for common goods. What the system has become in the world today is a means of amassing power and implementing social policy.
The tax system has become a huge industry. In the state of Tennessee there will be 943,679 tax returns prepared by professionals in 2004. Assuming each return costs the tax payer $100 (a figure that is very conservative), and that Tennessee is an average sized state (which is about the case), that results in a $5 billion industry just for the preparation of individual returns. Add to that the billions of dollars spent on corporate tax work and compliance, to say nothing about tax audits, and you have one very large, very powerful industry.
This is not a static market for these tax entrepreneurs. It is a growth industry, if there ever was one. Here are a few facts from the National Taxpayers Union:
1. "It now takes the average American 28 hours and 30 minutes to prepare the 1040 "long" form?an increase of 34% since 1995. The 1040A, or "short" form?takes nearly as long to prepare (11 hours, 32 minutes) as the long form did just nine years ago."
2. "Today's short form, at 48 lines, has double the number of lines on the 1945 version of the standard 1040 tax return."
3. "The increase in the tax law's complexity alone has added roughly 1 billion hours in annual paperwork burdens over the last 10 years -- part of the overall IRS-induced paperwork burden that is currently estimated at a staggering 6.7 billion hours per year."
4. "Today, taxpayers must wade through 131 pages of instructions for the standard 1040 form, which is more than triple the number in 1975 and over double the number in 1985, the year before taxes were ?simplified?."
5. "The growth rate of returns prepared by tax professionals reached a record 62.1%... Counting computer-prepared returns, that figure would rise to 88.4%."
The tax industry is quite duplicitous with the source of all of their business: the government. Whenever "tax reform" or "tax simplification" legislation is proposed, hold on to your wallets. Most of this legislation is written by the very professions, accountants and lawyers, who run the tax industry. Tax law is purposely vague. Audits, and the tax law they create through IRS court cases, creates billions of dollars more for this industry. We pay this industry to create new tax law by defending us when faced with audits that are the result of ambiguous tax code they helped to draft.
We scream bloody murder when the defense industry charges us $250 for a toilet seat. But, we rejoice when we pay at least that much to a tax preparer who gets us a few hundred dollars of our own money back from the government.
This is an industry that produces no goods that we consume, and no services that we can enjoy. I teach entrepreneurs that one of the best sources of opportunity is an inefficient market. If ever there was an inefficient market it is the flow of cash from citizens to government. And the tax industry entrepreneurs, which actually helped to create most of these inefficiencies in the first place, have taken full advantage of this market. And of the taxpayers.
