Why does it cost so much to comply with tax laws? For starters, the tax code is long. It contains 3.8 million words as of 2010. And the task of figuring it out is all the more impossible because the law is constantly changing. In 2001, the tax code contained “only” 1.4 million words, but since then there have been approximately 4,428 changes to the tax laws. There were 579 changes in 2010 alone. The National Taxpayer Advocate routinely identifies tax law complexity as the number one problem facing taxpayers.
One tax system that’s easier to comply with would be a flat tax system that features one low rate and many fewer deductions and credits. Why doesn’t Congress adopt such a system? Probably because that would mean abandoning the idea of using the tax code to advance social agendas, and politicians like the idea of trying to change people’s behaviors.
The Laffer paper is “The Economic Burden Caused by Tax Code Complexity,” published by the