Tuesday, November 13, 2012

The myth that taxes are too complicated for the typical American

I was listening to David Walker on the radio this morning, and he was going on about how tax preparation is too complicated for the vast majority of Americans.  This didn't seem right to me, so I went to the IRS SOI data Table 1.2 to see how many American's qualified for the 1040A return (a two-page form) or the 1040EZ return (a one page form).

The answer: of the 140 million tax returns filed in 2009, 90 million were filed by taxpayers that had adjusted gross income of less than $100,000 and that used the standard deduction.  These taxpayers qualify for using the 1040A or1040EZ.  So for more than 3/5 of US taxpayers, filing is not complicated at all.

Is the tax code too complicated for the other 50 million and for corporations?  Almost certainly.  But it is not a problem that afflicts the "vast majority" of Americans.

[update: according to this source, 32 percent of filers use 1040A or 1040EZ]



29 comments:

Ross said...

As a grad student I take the standard deduction, but sometimes I have meager amounts of self-employment income that forces me to use the 1040. I think you are missing some reasons that people are forced off the short forms.

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Mila Ray said...

I do not think that taxes are too complicated for typical American and totally agree that it can be a myth. There’s nothing what can be too complicated, it just needs some time and attention. Most of taxpayers want everything was too easy and do not want to spend their time trying to figure out in something. Americans use lots of financial services, take out loans and advance loans, it all need some particular attention and careful attitude, but nothing is extremely complicated about that.

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