Tax Complexity Working Out Alright for CPAs

Posted on by Greg Kyte

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.

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George Steinbrenner’s Final Win: The Estate Tax?

By now most of you have heard that George Steinbrenner passed away this morning at age 80. We’d ask that you to wait at least a few hours before you start dispensing with the Costanza or GS quotes in Larry David’s voice (“Big Stein wants an eggplant calzone!”) but we realize not every one was a fan of the Boss.

The silver lining in Big Stein’s death is that since the estate tax still remains in limbo among the hallowed walls of Congress, his $1.1 billion fortune (Forbes’ latest ranking) could possibly pass to his heirs tax free.

It’s an especially well-timed passing if you read yesterday’s morbid Wall St. Journal article. If you didn’t happen to read it, the article more or less made the case for every wealthy person to give serious consideration to paging Jack Kevorkian, taking a nice warm bath with a toaster or whatever their preferred method of self-imposed death would be.


Steinbrenner is the third billionaire to pass on to the big baseball diamond in the sky (btw, can someone up there keep him away from Billy Martin?) this year – Walter Shorenstein and Dan Duncan are the others – and if the family is as shrewd about their money as they are about their baseball team, they will likely fight any retroactive provisions in the new estate tax (assuming it ever passes).

As with mentioned in the Duncan post, we hope that the Steinbrenners are able to keep their fortune; not because we’re opposed to taxing the rich (just ask AG), it’s because we’re opposed to an incompetent and impotent Congress who allowed the estate tax to expire in the first place. Besides, GS went out with the Yankees as reigning champs, so it seems fitting that he gets a final win against the tax man as well.

RIP Big Stein.

George Steinbrenner, Yankees’ Owner, Dies at 80 [NYT]