The Broken Window Fallacy teaches us the important economic lesson that it is necessary to “take account of that which is not seen,” that when we see tax dollars being spent on a government project, we mustn’t forget all of the other ways that money could have been used if it wasn’t appropriated from it’s rightful owners. On John Stossel’s program this week, there was an astonishing example of this.
“Those of us who pay others to do our taxes spend more on that than the Fortune 500′s five biggest employers pay all their workers. In other words, what we spend on tax paperwork is greater than the pay of every worker at Wal-Mart, United Parcel Service, and McDonald’s, and IBM, and Citigroup – all those places combined!”
This means that there is an enormous void in our economy. Imagine all of the productive work that these companies do, all of the products they sell and create, and all of the families who rely on the jobs they provide. That is what is missing from our economy because it is wasted on tax preparation.
And the above example only takes into account the money spent, not the time spent. I shudder to think of what the true waste is if the IRS is right and “the average time required to complete and file the commonly used Form 1040 this year [2009] should be 26.4 hours.”
Tax Preparation and the Broken Window Fallacy
The Broken Window Fallacy teaches us the important economic lesson that it is necessary to “take account of that which is not seen,” that when we see tax dollars being spent on a government project, we mustn’t forget all of the other ways that money could have been used if it wasn’t appropriated from it’s rightful owners. On John Stossel’s program this week, there was an astonishing example of this.
This means that there is an enormous void in our economy. Imagine all of the productive work that these companies do, all of the products they sell and create, and all of the families who rely on the jobs they provide. That is what is missing from our economy because it is wasted on tax preparation.
And the above example only takes into account the money spent, not the time spent. I shudder to think of what the true waste is if the IRS is right and “the average time required to complete and file the commonly used Form 1040 this year [2009] should be 26.4 hours.”