The TaxProf reports on the new study by the Tax Foundation on The Rising Cost of Complying with the Federal Income Tax.

The study estimates that complying with the federal income tax code during 2005 cost U.S. taxpayers $265.1 billion (up from $134.2 billion in 1995 (in inflation-adjusted dollars)), or 22 cents per dollar of tax revenues collected (up from 15 cents per dollar of tax revenues collected in 1995). By 2015, compliance costs are projected to grow to $482.7 billion.

Why does this matter? According to the study:

It is important for taxpayers to have an estimate of their compliance cost because the performance of the economy is dramatically
affected by the level of complexity in tax law. If lawmakers create an Internal Revenue Code that is unnecessarily complex or that changes rapidly, taxpayers will face uncertainty about how taxes will affect a business plan or investment. When the tax consequences of economic activities are unpredictable, tax policy handicaps the growth and dynamism of the U.S. economy.

Studies of the federal income tax code consistently find that the current system is excessively complex. This study concurs, quantifying the code’s complexity in a way that makes clear how unnecessary much of it is. If the high cost of complying with the federal income tax were a necessary price to pay for a fair and effective tax system, there would be little room for complaint.

And this gem, along with the accompanying chart on page 5 of the report:

The Tax Foundation has determined that during the past 45 years the number of words detailing income tax law has grown from 172,000 in 1955 to 1,286,000 in 2005, a staggering 648 percent increase.