One can only imagine what the full burden of government on the well-being of society might be. In our analysis we estimate that U.S. taxpayers pay $431.1 billion annually, or 30 percent of total income taxes collected, just to comply with and administer the U.S. income tax system.*
This cost estimate includes:
Approximately $31.5 billion in direct outlays (e.g. paying a professional tax preparer such as H&R Block or purchasing tax soft ware) (2010 data).
Total IRS administrative costs of $12.4 billion (2010 data).
The Taxpayer Advocacy Service of the IRS estimates that individuals and businesses also spent 6.1 billion hours complying with the filing requirements of the U.S. income tax code. We estimate the dollar value or cost of these hours to be $377.9 billion as of 2008. The 6.1 billion hours number was estimated by multiplying the number of copies of each form filed in tax year 2008 by the average amount of time the IRS estimated it took to complete the form.
Individuals spent 3.16 billion hours complying with the income tax code, which weighted by time spent by income group, costs the U.S. economy $216.2 billion annually.
Businesses spent 2.94 billion complying with the business income tax code, which costs the U.S. econo-my $161.7 billion.
Comprehensive audits also impose an additional taxpayer burden of at least $9.3 billion annually.