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March 28, 2006

Compliance costs

It’s tax time again, and when most people think about taxes they consider how much they will either have to pay or get back. But, as N.C. State University economist Mike Walden explains, there are other significant costs associated with filing tax returns.

“There’s the time that we have to spend in gathering tax information. This is a particularly costly thing for businesses. And, of course, there’s the dollar cost that many people and businesses expend when they have someone prepare their taxes,” says Walden, a specialist with North Carolina Cooperative Extension.

“These are broadly called compliance costs, and they are not an insignificant amount,” he adds. “In fact, it is currently estimated that those compliance costs amount to $265 billion a year and within 10 years that could rise to $500 billion.

“And this is one reason why some say we need to simplify the tax code,” Walden concludes, “because if we did so that would probably bring those compliance costs down.”

Posted by deeshore at March 28, 2006 08:00 AM