Research by Nation's Largest Taxpayer Group Uncovers 'Taxing Trend': Tax Complexity Rises for 4th Straight Year

4/15/2002

From: Pete Sepp, 703-683-5700 or David Keating, 202-223-2555, both of the National Taxpayers Union (NTU)

ALEXANDRIA, Va., April 15 -- Americans still struggling to file their federal income taxes before this evening's deadline will be forced to work even harder than last year, and much harder than 5 years ago, according to new statistics compiled by the 335,000-member National Taxpayers Union (NTU).

"Ben Franklin once said that nothing is certain but death and taxes, but if he were alive today, he might add that taxes have become more complicated," said NTU Senior Counselor David Keating. Among Keating's findings about the 2002 tax filing season:

-- NTU projects that, for the first time ever, 6 in 10 taxpayers will use a tax pro this year, a jump of over 58 percent since 1980 and 20 percent since 1995. Keating estimates that the average fee for tax preparation at H&R Block will top $120 this year, up by about $10 over last year and an increase of 40 percent compared to 4 years ago.

-- The IRS now reports that the average taxpayer spends 28 hours and 6 minutes on the 1040 form and necessary recordkeeping, including the common schedules for interest, dividends, capital gains, and deductions. This is an increase of 1 hour and 4 minutes compared to last year, the 4th straight increase. This time burden for these common forms has risen by 40 percent since 1997.

-- Today taxpayers must wade through 122 pages of instructions for the standard 1040 form, up 5 pages from last year. This new level is also more than triple the number in 1975 and over double the number in 1985, the year before taxes were "simplified." Sixty-five years ago its instructions were just 2 pages long. Even when the income tax became a mass tax during World War II, the instructions took just 4 pages.

-- The "simple" forms are becoming more time-consuming too. Form 1040A and Schedule 1 now exceed 11 hours of paperwork burdens for the first time, and even the 1040 "EZ" form now tops 4 hours.

-- Americans toil for about 6.1 billion hours on tax forms and recordkeeping, accounting for 80 percent of the federal government's entire paperwork burden. These estimates are probably too low since they ignore the countless hours spent on tax minimization strategies.

"These trends toward greater tax complexity seem to offer little comfort for taxpayers in the coming years," Keating concluded. "Only fundamental tax reform might be a strong enough lifeline to save us from drowning in a murky sea of tax law."

NTU is a non-profit, non-partisan citizen organization founded in 1969 to work for lower taxes, less wasteful spending, and accountable government at all levels. Note: Further research on tax complexity and tax reform is available upon request or online at http://www.ntu.org/.