The IRS estimates that in 2016 American taxpayers will spend 8.9 billion hours preparing and filing taxes. To put that in perspective, 8.9 billion hours is 1,015,286 years or the amount of time it takes to play about three games of Monopoly.
The report goes on to estimate the cost of compliance at $409 billion. That’s a ridiculous amount of money. If you had $409 billion in $100 bills and started stacking the $100 bills one on top of another, in about 2 minutes, you’d have stacked enough money to pay someone else to stack $409 billion of $100 bills.
That also puts the billing rate for tax prep at $46 per hour. I call bullshit. The only person working in tax prep who’s charging less than $50 per hour is wearing a Statue of Liberty costume.
The $409 billion estimate puts the per capita tax prep cost at $1,267, which sucks for infants.
So who the hell is making all of that money? Intuit's total revenue for 2015 was $4.2 billion (and most of their revenue wasn’t from tax products), H&R Block’s revenue was $3.1 billion, and Liberty Tax’s wasn’t even $200 million (although to be fair, most Liberty Tax offices are franchises). That still leaves well over $400 billion of unaccounted-for tax compliance fees.
In comparison to the $409 billion Americans spend on tax compliance, we spend $100 billion less than that on prescription medications. And a huge part of the $309 billion we spend on prescriptions is for antidepressants to help us cope with complying with the U.S. Tax Code.
As accountants, this is all good news because a shit ton of that money comes to us. Tax complexity is our welfare.