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Cato Daily Dispatch for April 15, 2004

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Taxing 28 Hours Needed to Complete Returns
Income Tax Refunds Not as Large as Expected
Poll: Balancing Budget Beats Tax Cuts

Taxing 28 Hours Needed to Complete Returns

"If it seems like it's taking you longer and longer to fill out your tax return each year, you're not imagining things. The government estimates it takes taxpayers 28 hours and 30 minutes to complete an average tax return with itemized deductions and income reported from interest, dividends and capital gains. That's 42 minutes longer than last year," the Associated Press reports.

"The preparation-time estimate takes into consideration the time spent gathering records, learning and preparing the forms, and sending them to the IRS."

Chris Edwards, director of fiscal policy, has come up with a list of 10 surprising facts about the income tax. Edwards notes that the costs of complying with the complex tax code cost Americans $100 to $200 billion a year and income taxes are so complex that there are up to 1.2 million paid tax preparers in the country.

Income Tax Refunds Not as Large as Expected

"Through April 9, the average refund was up $102 to $2,090, an increase of about 5 percent from refunds during the same period last year, the IRS says. Economists and tax analysts had earlier predicted the Bush administration's $350 billion tax-cut package would boost refunds by more than 25 percent. The administration estimated the average refund would increase $300," USA TODAY reports.

In "Emancipating America From the Income Tax: How a National Sales Tax Would Work," David R. Burton and Dan R. Mastromarco, both of the Argus Group, recommend replacing individual and corporate income taxes, the capital gains tax, the estate and gift taxes, and non-trust fund excise taxes with a national sales tax (NST), as well as abolishing the Internal Revenue Service.

"A 15 percent sales tax on the final purchase of goods and services at the retail level. The NST would be similar to state sales taxes. The rate should decline in future years to 10 to 12 percent as economic growth allows more revenue to be raised at a lower rate and government downsizing continues."

Poll: Balancing Budget Beats Tax Cuts

"By almost a 2-1 margin, Americans prefer balancing the nation's budget to cutting taxes, according to an Associated Press poll, even though many believe their overall tax burden has risen despite tax cuts over the past three years."

"About six in 10, 61 percent, chose balancing the budget while 36 percent chose tax cuts when they were asked which was more important, according to a poll conducted for the AP by Ipsos Public Affairs."

In "The Balanced Budget Veto: A New Mechanism to Limit Federal Spending," attorney Anthony W. Hawks writes that with the veto "the president would be empowered with an item reduction veto only during sessions of Congress following fiscal years with budget deficits. The item reduction veto would provide the president with a tool to cut spending when Congress has failed to do so.

"Such a veto power, however, would not enshrine balanced budgets as constitutional doctrine. Instead, it would provide Congress an incentive to curb deficits and regain budgetary power that has been temporarily bestowed on the president."

Jonathan Block, editor, jblock@cato.org