As we all have been preparing our tax returns, the following facts about the complexity of the federal tax code prepared by the staff of the Joint Economic Committee of Congress might be of interest. This year, a comprehensive volume of federal tax rules and regulations spans over 46,000 pages, more than twice the length of tax rules and regulations in the 1970s. The tax code itself fills 2,840 pages, and contains about 2.8 million words. In comparison, the Bible has 1,340 pages, and about 0.8 million words. Over half of individual taxpayers now use a paid preparer for their income tax return, up from less than 20 percent in 1960.
Small businesses have particularly high tax compliance costs.
One study found that small businesses face compliance costs that are more than three times larger than taxes paid. These codes are so complex that many individuals are forced to call the IRS in order to successfully complete their taxes. In fact, the IRS receives over 110 million phone calls each year for help by taxpayers. In 1999, the IRS was able to answer only 73 percent of the inquiries correctly. Individuals and businesses had to deal with 481 separate IRS tax forms in 1999, a rise of 20 percent from 403 forms in 1990.