Today, total federal tax rules span 45,662pages, having more than doubled in lengthsince the 1970s (Figure 1). This page countincludes the full tax code, tax regulations, andsummaries of various Internal Revenue Servicepronouncements such as letter rulings andtechnical advice memoranda.
The tax codeitself runs at least 1.4 million words and hasincreased in length 51 percent since 1985.
The growth in tax complexity can also bediscerned from other statistics, as summa-rized in Table 1. For example, the number ofdifferent tax forms produced by the IRSincreased 23 percent in the past decade from402 to 496.
Taxpayer phone calls to the IRSdoubled during the 1990s from 56 million to111 million, even though the number of tax-payers grew only 12 percent.
Apparently,the growth in usage of home computer taxsoftware, and the 1.5 billion annual hits tothe IRS Web page, have not reduced taxpayerconfusion.
The Tax Industry
The complexity of the tax system hasspawned a huge “tax industry” engaged intax filing, administrative, planning, avoid-ance, enforcement, and other activities. Themost visible part of the tax industry is theIRS with a budget of $9 billion in fiscal 2001.The IRS employs 97,000 people and usesabout 74,000 volunteers each year duringtax-filing season.
In addition, there areabout 24,000 tax workers in other federalagencies.
The complexity of the income tax hasoverwhelmed federal tax workers. Year afteryear the IRS answers a large proportion oftaxpayer phone queries incorrectly. The mostrecent government investigation found thatIRS workers provided incorrect answers totaxpayer questions 47 percent of the time.
Alongside the federal tax bureaucracy, ahuge private tax industry of accountants,lawyers, and other workers has developed. Ofthe 1.6 million accountants in the country,perhaps 30 percent, or 480,000, are in taxpractice.
Of the 1,048,000 attorneys in thecountry, perhaps 10 percent, or 105,000, arein tax practice.
Enrolled agents are anothergroup of tax specialists and number at least35,000.
There are also uncounted thou-sands of computer specialists, administrativepersonnel, and others in the tax industry, aswell as tens of thousands of tax workers instate and local governments.
Today, total fed-eral tax rulesspan 45,662pages, havingmore than dou-bled in lengthsince the 1970s.
Figure 1Total Pages of Federal Tax Rules (tax code, tax regulations, various IRS rulings)
Source: CCH, Inc.,
Standard Federal Tax Reporter,