Regulatory Costs of Small Business
September 29, 2005
Excess regulatory costs are like sand in the gears of commerce, diverting companies’ attention toward legal and administrative tangles and away from productive work.
The Small Business Administration’s Office of Advocacy has released a new study (PDF) on the costs of federal regulations on small businesses, including the costs of complying with the federal income tax. In fact, the paper’s section on tax compliance relies on the Tax Foundation’s own 2002 study of compliance costs by economist J. Scott Moody:
The estimate of the cost of federal tax compliance relies on a 2002 report by the Tax Foundation that provides extensive details about the time required to file federal income tax returns…
The basic approach to the computation of tax compliance costs is straightforward and easy to describe. The first step uses data from the Internal Revenue Service on the amount of time required to complete each type of tax form, and the number of filings for each type of form…
The number of compliance hours is broken down in Table 6 for businesses, nonprofits, and individual filers. The total number of hours required for compliance is nearly 5.8 billion per year, and American businesses account for roughly half of the total hours.
Was this page helpful to you?
The Tax Foundation works hard to provide insightful tax policy analysis. Our work depends on support from members of the public like you. Would you consider contributing to our work?Contribute to the Tax Foundation
Let us know how we can better serve you!
We work hard to make our analysis as useful as possible. Would you consider telling us more about how we can do better?Give Us Feedback