Tax Compliance Burden
About Tax Compliance Burden
Tax compliance burden refers to the time and money spent by taxpayers to comply with tax laws. In the US, taxpayers spend approximately 6.5 billion hours annually on tax compliance, equivalent to 3 million full time workers. The cost of compliance is estimated at over 100 billion annually. The complexity of the tax code is the primary driver. The US tax code is over 70,000 pages long. Countries with simpler tax systems, like Estonia and Denmark, have much lower compliance costs. Return free filing, where the tax authority prepares returns for taxpayers, is used in 36 countries but not the US. The tax preparation industry has lobbied against return free filing in the US. Tax complexity also enables avoidance, as sophisticated taxpayers can exploit loopholes that ordinary taxpayers cannot.
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