Tax-preparation: Utterly recession-proof
byJan 10th 2009 8:00AM
Nina Olson, the IRS' national taxpayer advocate, estimates that the preparation of IRS Form 1040 takes up 3.6 billion hours per year -- 26 hours and 40 minutes per person. In all, tax preparation takes up about 7.6 billion work hours per years.
This is time that doesn't create anything or enrich lives. Companies like H&R Block have amassed multi-billion dollar market caps by taking advantage of the complexity of the tax code and the fact that many people need help navigating the byzantine world created by the IRS. Troublingly, H&R Block's business has proven to be recession-proof, meaning that as incomes decline, tax preparation fees take up an ever-larger percentage of our time and income.
Maybe tax cuts will help stimulate the economy and maybe they won't: But President-elect Obama must do something to simplify the mess that is the IRS. Otherwise, look for the tax-preparation business to continue to be a growth industry.