Heavy Lifting - thoughts and web finds by an economist
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Saturday, March 13, 2010
From the 2009 IRS Data Book:
During fiscal year 2009, the IRS collected more than $1.9 trillion in taxes, net of refunds, and processed more than 236 million returns. Nearly 110 million returns, including 66 percent of individual income tax returns, were filed electronically. Nearly 124 million individual income tax return filers received a tax refund and/or economic stimulus payment during the fiscal year. Individual income tax refunds totaled $321.3 billion, and economic stimulus payments totaled over $11.5 billion. In fiscal year 2009, IRS spent an average of 50 cents to collect each $100 of tax revenue.
So, 124m/236m = 51.5% of all tax returns filed received a refund, that is, they gave an interest free loan to the government, or received stimulus money? I would have thought it was a bit higher than that.
I am not sure what to make of the $0.50 to collect $100 statistic. I suppose with all the withholdings and electronic filing it is likely that the IRS doesn't spend a lot on collecting taxes. On the other hand, I spent $50 for a tax software and spend 5-7 hours of my life for a total opportunity and explicit costs of around $1500. So, it is easy for the IRS to claim they are not spending a lot collecting taxes when businesses and individuals are spending all the money sending the IRS taxes. We have other studies that show that millions of man-hours are spent in compliance with the tax code, so the IRS's boast of how cheap it is for it to "collect" $100 is laughable.
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