About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 Arthur P. Hall, Growth of Federal Government Tax Industry Parallels Growth of Federal Tax Code 1 (1994)

handle is hein.taxfoundation/srdjxz0001 and id is 1 raw text is: TAX(%r FOUNDATION September 1994 Number 39 Growth of Federal Government Tax Industry Parallels Growth of Federal Tax Code For roughly the past half century Ameri- cans have witnessed frequent and dramatic changes in the federal government's tax system. Most of this change has taken place in the federal income tax. A permanent federal income tax was introduced after ratification of the 16th Amendment to the U.S. Constitution on February 3, 1913, and the tax played an important role in financing America's involvement in two world wars. Yet the substantial role the income tax plays today in the overall federal tax system can be traced to legislative efforts 40 years ago, when Congress undertook to make the income tax a cohesive and logical scheme through the Income Revenue Code of 1954. Figure 1 Budgetary Cost of Federal Government Tax Industry, 1955-1995 Source: Tax Foundation compilation based on data from Office of Management and Budget; Clerk of the House; Secretary of the Senate; and agency annual reports. Ever since the 1954 legislation, the federal income tax code has steadily grown in size and complexity. This growth has increased the cost of the federal tax system in two fundamental ways. First, taxpayers have had to earmark an ever-larger amount of tax dollars to the financing of the federal government tax industry (legisla- tive, administrative, and judicial) that amends, administers, and adjudicates the federal tax system. Second, the growth of the federal tax system, particularly the growth in the income tax code, has forced the private economy to dedicate a substantial (and increasing) amount of resources to tax planning and the economi- cally sterile exercise of tax compliance and litigation. Based on previously published Tax Founda- tion calculations, the total cost of complying with federal taxes for U.S. business will amount to an estimated $127 billion in 1994. The cost of this activity for individuals may be as high as $65 billion, bringing the total 1994 private sector cost of federal tax compliance to $192 billion. Personnel and Cost of the Federal Government Tax Industry Figure 1 and Table 1 portray the growing cost of the federal tax industry. The inflation- adjusted budgetary costs of this industry will have grown by 650 percent between 1955 and 1995 (using the projections contained in the president's fiscal 1995 budget). Table 1 also reports the number of people employed within the federal tax industry (exclud- ing elected officials). The estimated 136,155 people that will be employed in 1995 represents a 114 percent increase over the estimated 63,712 By Arthur P. Hall, Ph.D. Senior Economist lax Foundation

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most