Now that April 15th has passed, we’re left with the reminder of how aggravating and expensive paying the income tax can be. For many of us, it’s not a joyous memory.
Every year, the Tax Foundation calculates the number of days of work it takes for an average taxpayer to pay off their federal, state, and local tax burden. This year, “Tax Freedom Day” for Arizona was April 5.
But that tax burden calculation does not include the cost of your time spent gathering your receipts, W-2s, and bank statements. These “compliance costs” for all federal income taxes – personal and corporate – have been estimated by the Internal Revenue Service to equal $194 billion.
Nor does it take into account the amount of money you might have spent on paying a tax preparer. You can tell the tax preparation business is a boom industry when grown men are willing to stand on street corners wearing a Statue of Liberty costume and direct drivers to the nearest tax preparer’s location. The IRS estimates that Americans spend over $34 billion on tax preparation services and software each year.
In total, the compliance and filing cost for just the personal income tax in the U.S. is around $116 billion. That’s about $800 per personal income tax form filed. There goes some (or all) of your tax refund!
There is at least one way to make April 15 less of a burden on Arizona taxpayers: get rid of the state income tax.
An Arizona without an income tax could be a new powerhouse of job growth. It could be a beacon for capital and people fleeing states in which they’ve been taxed too heavily and in which job prospects are dimming. It would also be a great way to ring in the next 100 years of Arizona’s history.
We can’t completely dull the pain of tax day until fundamental tax reform is viable at the national level. But wouldn’t it be nice to have one less reason to dislike April 15th?
Goldwater Institute: A New Tax Plan for a New Economy
Tax Foundation: Tax Freedom Day 2013 report
National Taxpayers Union: A Taxing Trend