That's not what your source said:
Tax disincentive costs: the loss of production because of the discouraging effect of taxes on investment and labor. In recent years, a number of economists have made calculations of this "excess burden" for a wide variety of taxes. In a 1985 article in the American Economic Review, Michigan State economist Charles Ballard and his colleagues estimate that for each additional dollar in taxes collected the economy loses 33.2 cents of production.Costs of tax enforcement: resources expended in responding to the tax authority. Each act of tax enforcement--each audit, each notice, each levy--entails a burden for the citizen subject to it. Since these actions run into many millions every year, the time and expense for citizens is significant. Tax avoidance-- setting up shelters, using loopholes, litigation--entails further costs. My calculation of the enforcement and avoidance costs comes to 8 percent of tax revenue.
And, secondly, someting doesn't add up: If everybody (individual, businesses and non-profits) spend $194 Billion on compliance surcharges, as your post directly says, to collect $2,000 Billion tax dollars, then it looks to me like we only spend 9.7 cents for every dollar of tax collected (not 20.4 cents)
And out of that, the $86.1 Billion of that borne by individuals is not available to businesses to reduce prices. That leaves somewhere between $102 Billion and $108 Billion (depending on what percentage of the non-profits are commercial) available for cost reduction.
Again, that's a far cry from even the $250 Billion that most don't quibble about; it's light-years away from $662 Billion!
Again, that's a far cry from even the $250 Billion that most don't quibble about; it's light-years away from $662 Billion!
What is missing in the analysis, is that $250 billion is the costs attributed to everyone's filing returns. It is the basic number that is claimed by Flat Tax proponents that will be saved in going post card sized tax returns for individuals. Unfortunately it misses on several scores not to mention that business costs tied up in do not change substantially with the change to the Flat Tax.
The reason that most don't quibble with it is that most are advocates of one or the other type of tax reform and that number is used by all sides of the debate without any understanding as to what it really means. They agree as it makes good sound bytes for tax reform generally and avoids public debates just like we are having here.
The total unique tax related overhead incurred by all businesses due to the current tax system in comparison to the total unique tax related overhead incurrent by retail businesses only under an NRST is the base issue. I agree costs on business is poorly related to "compliance cost".. They are minimal in a business setting in relation to sales volume, it is the other hits that are significant overall.
The major opponents to NRST hit compliance costs for that very reason, that such can't be justified for much more than 1-3% of sales prices even though in comparison to the taxes paid by small businesses overall, $7 in such costs are put out for every dollar of taxes actually paid by them.
A business that can claim zilch taxable income still pays the accounting costs associated with that tax compliance number and there are many, many claiming zilch taxable income for a variety of reasons including tax avoidence schemes and out right evasion where the real costs get imposed in regard to how business must be done to achive low tax liabilities or hide evasion as the case may be.