The concept of a “fair tax” and possible dissolution of the IRS as promoted by certain Presidential candidates has created great excitement. As stimulating, refreshing and sensible as both may be, I’m afraid there is at least one (ignored) reason why neither will happen in the foreseeable (like, forever) future. Consider:
- The IRS has 91,717 employees (source: IRS 2006 Data Book) with the force and weight of law relieving us of the fruits of our labor at a cost of $10.882 billion (source: IRS 2006 Budget).
- We are paying $4,128,662,000 to 19,242 tax preparation services with 205,122 employees to help us relieve ourselves of the fruits of our labor (source: 2002 Economic Census*).
- Ditto for a substantial portion of the $48,497,646,000 we pay to the 56,705 Certified Public Accounting firms with 426,208 employees (source: 2002 Economic Census*), granted, CPA’s do other things besides taxes.
- Never mind the multitudes involved in litigation, ancillary services, or contracted/outsourced services (primarily by the IRS), which are undocumented and therefore indeterminate.
* The Economic Census is conducted every 5 years. The 2007 data is not yet available.
Tallying the numbers above it takes 723,000 people (jobs) at a cost of $63 billion per year just to pay our taxes. One shame of these statistics is that (I surmise) those jobs and that money are, to a great extent, included in the rosy job and GDP numbers that we hear regularly. I’m sorry, but I don’t see how 723,000 people and $63 billion collecting taxes is adding value to the economy. Value is added to the economy when we spend of our own freewill, not under force of law, never mind the insult of the nature of the expenditure.
723,000 jobs
$63 billion
They won’t go quietly.
Chuck is self-employed in agri-business in Virginia. He can be contacted at chuckangier@gmail.com
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3 users commented in " Why a Fair Tax Won’t Work "
Follow-up comment rss or Leave a TrackbackThe figures you state is exactly the reason the Fair Tax should be implemented and will be a huge success when it is implemented. The costs you have outlined are (and must be) passed on to the consumer of products and services. All of these costs do nothing except drive the prices of goods and services upward.
When they are eliminated price will(through competitive pressures) fall.
As to jobs lost, who cared when the textile industry left the US, when the vast number of union manufacturing jobs left, when online and telephone service jobs left, when electronic jobs left? These were productive jobs that were lost. Jobs associated with complying with a 66,000 page tax code is wasted money and counter productive.
Try a basic economics course or read the book on the Fair Tax before spreading hogwash.
Mr. Fiordalisi,
Either I am a poor writer or you must not have read my entire post because you and I concur 100%.
The cost of tax compliance IS wasted and counter productive.
The point I tried to make with this post, (but obviously failed) is that 723,000 jobs and $63 billion in revenues can and will mount a huge lobby AGAINST a simpler tax that may and should eliminate the need for their services.
it could leave a higher tax burden on the middle and lower class….maybe you should read more about it instead of the book about it…i mean its fine to read the book but to base your information off that book alone is wrong and you mislead people…get other sources because theres plenty of reasons why it wont work like for instance, that it may not yield enough money for the government, resulting in cutbacks in spending, a larger deficit, or a higher sales tax rate. or
while progressive on consumption, the tax could be regressive on income, and would accordingly decrease the tax burden on high income earners and increase the tax burden on the middle class.
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