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.

Paul at Wizbang has a good headline roundup, including something I didn’t know, and that is that gift card spending doesn’t count until the card is actually used. This surprised me, because the money has been given to the store, but I guess it is offset by a liability until it is used.

And in addition, it seems to me that often someone will spend more than what is on their gift card. If you’re given a $20 gift card, you might buy a $25 gift and pay the extra $5.

Friday was Walmart’s biggest day ever. Amazon.com took 108 million orders. Holiday spending up 9%. etc.

When life hands you lemonade, make lemons. Apparently that’s the approach the New York Times is taking when it comes to reporting on the economy:

Gasoline is cheaper than it was before Hurricane Katrina slammed into New Orleans. Consumer confidence jumped last month and new home sales hit a record. The stock market has been rising. Even the nation’s beleaguered factories appear to be headed for a happy holiday season.

By most measures, the economy appears to be doing just fine. No, scratch that, it appears to be booming.

But as always with the United States economy, it is not quite that simple.

Consumer confidence is bouncing back from what was arguably some of its worst readings in years. Gasoline prices-the national average is now $2.15, according to the Energy Information Administration- have fallen because higher prices tamped down demand and supplies in the Gulf Coast have been slowly restored. The latest read on home sales, released today, contradicts virtually every other recent measure of housing activity that generally indicate a slowdown. And yes, manufacturers’ fortunes are on the mend, but few besides airplane makers are celebrating.

It all means that the economy is likely to end the year with a splash, but that does not mean the broad economic picture next year will be even better.

“The economy is doing great, but there must be bad news in here somewhere. There has to be, and we’ll find it.”