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$200 Billion

January 14th, 2009

The amount of economic waste caused by complying with the nation’s tax code. Mind you: this is just the explicit cost of compliance. This figure is not inclusive of all the negative effects of onerous taxation.

A friend of mine, notorious for playing the “Devil’s Advocate”, once quipped about a mutual friend studying for his CPA, “What about so-and-so? What would happen to all the people who work in that industry? Should they just lose their jobs?”

Well, d’uh!

Accountants can do more than just complete tax paperwork. Perhaps the most valuable functions they perform are third-party, independent audits. To the extent that their income depends on tax, one might expect their remuneration to decrease. Some of them might lose their jobs, in which case they’d have to find employment in another, productive sector of the economy, viz. a sector of the economy that is not $200 Billion of dead-weight loss.

If you found out that one of your employees had been drawing an annual salary to shovel $100 bills into the furnace, what would you do?



  • Zach S says on: January 14, 2009 at 10:56 pm


    I rarely look at tax paperwork. I actually hate it.

    Actually this post just made me think of something…the government forces companies to pay for us (CPAs/Public Accounting firms) to audit their taxes for the government. This is something I will have to think more about.

  • Brad says on: January 15, 2009 at 4:42 pm


    Was Head the one that said “about so and so?”

    W/O “The Man” Head would not have a job because there would be no need for Lawyers either.

    Zach – Remember this summer when we were talking about this and how my boy RP (Ron Paul) was going to eliminate the IRS and you were like “thanks for eliminating my job.” Now you know why.

  • Zach S says on: January 15, 2009 at 9:09 pm


    I never said you would eliminate my job…I just felt bad for other accountants who are with the IRS. Some people, its their dream (I mean it’d be cool to be an accountant who carries a gun and goes on sting operations)

    Hell you don’t even have to have a CPA license to work for the IRS so I really don’t feel for them. They can go be book keepers.

    I audit/consult/etc. I find that much more enjoyable and value added to society and very educational.

    One could make an arguement that without government laws (Specifically from the SEC) I wouldn’t have a job because there would be no accounting rules; however, I think this point is moot. The public sector would eventually find a way to self regulate (a la the AICPA) and soon to be the International Accounting Standards Board (IASB) to which the U.S. is now beginning to adapt.

    I’m not worried about my job

  • Brad says on: January 16, 2009 at 10:05 am


    I had a client when I worked at Quicken who was a IRS agent. This guy was making $105k after being there for only 2 years. I’ll never forget the story he told me where he had to shut down a car repair shop because the owner was behind on his business taxes. He said it was sad because it was one of those shops that the whole family worked at. Father and son were the mechanics, mom was the secretary, and extended family cleaned and detailed cars. By them not paying business taxes now ALL of them are out on the street.
    I think now how awesome it would be to put him (and his $105k(after only 2 years(F!)) salary with a pension and benes) out on the street.
    Don’t feel bad for anybody who works at the IRS.

  • Brad says on: January 16, 2009 at 10:18 am


    I forgot to add if they were to get fired to “Don’t feel bad for anybody who works at the IRS.”

no third solution

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