The total amount spent on federal tax compliance is about 13 percent of the total HP Corporate Tax Department budget. It is interesting to note that HP’s total costs of local (U.S.) sales and use tax compliance exceed its federal income tax compliance costs.
In addition to noticing the sales tax figures, did you overlook this quote? :
"For a company of its size and complexity,
HP’s outlay on federal tax compliance
is quite modest."
......
A conservative estimate by Professor Joel Slemrod puts compliance costs at around 125 billion dollars a yar and another 10 billion for theIRS. this does not include tax planning to minimize tax costs.
....A recent comprehensive study done by IBM Business Consulting Services under contract to the IRS concluded that, in tax year 2000, the 125.9 million individual taxpayers had a total compliance burden of 3.21 billion hours and $18.8 billion in monetary expenditures. This translates into an average burden of 25.5 hours and $149 per taxpayer. Although self-employed taxpayers represent only about 25% of all individual taxpayers, they experienced approximately 60% of the time and money burden. As a result, the average time and money burden of self-employed taxpayers (59.5 hours, $363) was substantially greater than that of those taxpayers with only wage and investment income (13.8 hours, $75). Not surprisingly, the average compliance burden was also consistently higher among taxpayers who have more complex tax returns; for example, non-self-employed taxpayers who itemize their returns spend an average of 21.3 hours and $114 on tax compliance, compared with 11.4 hours and $63 for non-itemizers. The current system is not, however, complicated for everyone, and is generally not that complicated or costly for the tens of millions of taxpayers who file Form 1040EZ or 1040A; survey evidence suggests that 30% of taxpayers spend fewer than five hours on all tax matters over an entire year. By applying a range of dollar values to each hour of time burden, IBM estimated that the annual resource cost of compliance for individual taxpayers is between $67 billion and $99 billion.
A series of analyses by the Office of Tax Policy Research at the Ross School of Business at the University of Michigan , under contract to the IRS, have examined the compliance cost of large and medium-sized businesses. In 1996 the total compliance cost for the 1,500 largest companies exceeded $2 billion, or over a million dollars per company; for Fortune 500 companies, the average cost was nearly $4 million. For businesses smaller than the biggest 1,500, but with assets in excess of $5 million, in 2002 the total compliance cost came to about $22 billion. There is clear evidence that business compliance costs are regressive --costs as a percentage of company size are higher for smaller companies than they are for larger companies. For instance, companies with between $100 million to $250 million of assets have only about seven times higher compliance costs than companies with between $5 million to $10 million of assets, even though they are between 10 and 50 times bigger.
In written testimony I submitted to this committee on June 15, 2004, I drew on these and other studies to estimate the total annual cost of collecting the federal income tax in 2004. My best estimate came to $135 billion per year. Of this total, $85 billion consists of the total compliance cost borne directly by individuals (including sole proprietorships), and another $40 billion relates to business. Adding an IRS budget of about $10 billion produces the overall collection cost estimate of $135 billion. This is 14.5% of individual and corporation income tax receipts in fiscal year 2004, and about 1.2% of 2004 GDP.
The $135 billion annual cost of complexity is the value of the resources used up in the process of collecting taxes, and the amount of resources that could --if taxes could be collected costlessly --be freed up for whatever else Americans would prefer to use their time and money for. This is an economic cost of collecting taxes that should be added to the cost incurred when the tax system discourages people from working as much as otherwise, businesses from investing as much as otherwise, and so on.
The negative consequences of tax complexity, though, go beyond what can be estimated in dollars. Complexity causes a capricious and inequitable distribution of tax burdens because it rewards those who have the means and inclination to find all the tax angles, and leaves the dutiful among us holding the bag. Moreover, the unfairness complexity causes --and the complexity itself --undermine trust in the fairness of the tax system, which may in turn undermine voluntary compliance. Complexity reduces the transparency --who bears how much burden and why --of the tax system, which I believe is inimical to a properly functioning democracy......
Here is Prof Slemrods statement, which you can again try and cherry pick to your advantage..it does give some good discussion of the tax situation.(6/9/05)
http://www.irstaxattorney.com/tax-reform-legislation/Statement_of_Joel_Slemrod.html