Two Cents

- Just one more signature, and whew!

Our taxes are finally done.

(sighs heavily) - Great, what's the damage?

Huh, not bad.

- Yeah, well, there's one more tax that isn't listed on these forms.

- Really?

- Yeah, and it's one that every American has to pay, even though you rarely think about it.

And it's not only the government doing the taking, our health insurers, our phone companies, even our employers all get their cut.

- They're cut of what?

- Your time.

(upbeat music) - The American tax system is one of the most complicated in the developed world, and it places a unique burden on its citizens.

The average American spends 11 hours completing all the necessary paperwork, and we collectively spend around $12 billion a year on tax preparation services and softwares, not to mention the repercussions if you get something wrong.

- Journalist Annie Lowrey calls this the time tax, a "levy of paperwork, aggravation and mental effort imposed on citizens..." It's the shifting of the burden of bureaucracy from organizations to ordinary people.

And it doesn't just refer to the IRS.

Time taxes are everywhere when you start looking for them, filling out forms at the DMV, time tax.

Making multiple phone calls to get a building permit, time tax.

Waiting for hours in line to vote, time tax.

- Now, of course, it's expected that living in the modern world will involve some drudgery, but if time is money, it's fair to quantify the hours we spend on bureaucracy and ask whether it's necessary or fair, especially since the time tax, unlike our formal tax system is regressive, meaning the poorer you are, the more you pay.

- If you've never applied for any safety net programs like food stamps, housing assistance or unemployment benefits, you might be shocked by the number of hoops you're asked to jump through.

Dozens of forms and documents, in-person interviews, time sheet logs, fingerprinting, drug tests and intrusive personal questions about your career and medical history.

And many of these programs require re-certification, meaning you have to do it all over again on a regular basis.

- Adding to the burden is the fact that poor people are less likely to have internet access and desktop computers and more likely to have frequent changes of address and disabilities that may prevent them from getting around easily.

If you're already working two jobs to barely make ends meet, it's a big deal to get time off work so you can ride a bus downtown and wait in line for hours to be interrogated by a government employee.

It's not surprising that a lot of people instead choose to just throw their hands up and say, "Nevermind."

- Authors Pamela Herd and Donald Moynihan call this phenomenon administrative burden.

And there's more to it than just the time and effort you put into paperwork, which they refer to as compliance costs.

- There's also the learning costs which are the benefits you miss out on because you don't know about them or can't understand the complicated application process.

- And there's the psychological costs which refers to the humiliation, shame or degradation that applicants must put up with to access the benefits they're legally entitled to.

- Now, you might think that these costs are fair.

Hey, if you want free money, you're gonna have to put up with some hassles, okay?

- But remember that Americans of all socioeconomic levels get financial assistance from the government.

It's just the programs aimed at the poor that seem to treat you like a convict on parole.

You don't have to pee in a cup to get a mortgage, and you don't have to be fingerprinted to start an IRA.

- Government programs that tend to have more white, middle and upper class beneficiaries are typically much easier to apply for and maintain, so much so that the people who access them are more likely to believe that they're not on any kind of government assistance at all.

- There's a long history of using bureaucracy to discourage certain undesirable people from participating in government.

In response to the 15th amendment which gave non-white men the right to vote, many southern states built bureaucratic roadblocks like poll taxes and literacy tests.

- But there are other less pernicious factors that underlie the administrative burdens.

For one, it saves money.

The more people you can frustrate out of the system, the less you have to pay in claims.

As Florida Governor Ron DeSantis said about his state's unemployment system, "I think the goal was for whoever designed it was "let's put as many kind of pointless roadblocks "along the way so people just say, oh, the hell with it.

"I'm not gonna do that."

- This motivation extends outside the halls of government.

Private insurance companies deliberately make filing a claim such a hassle that some percentage of valid claimants will just give up.

Automated call centers save money on labor by forcing you to spend more of your time on the phone.

And employers who used to automatically pay into pensions now require their employees to enroll themselves in 401Ks, and many of them never get around to it.

- But some politicians may actually see a value in administrative burden itself.

If your aim is to shrink the size of the government, it can be helpful to cultivate an impression of it as bloated and inefficient.

The last thing you want is for citizens' interactions with the government to be smooth and pleasant.

- Of course, the ostensible reason for administrative burden is to prevent fraud, and it is true there is a not insignificant amount of fraud and abuse associated with government benefits.

Hard numbers are very difficult to come by, but estimates vary between 5 and 15% of overall payouts go to people who are technically ineligible or are spent on things they're not intended for.

However, a significant amount of that fraud is perpetrated by companies and identity thieves, not the individuals and families who genuinely need the help and are forced to bear the brunt of administrative burden.

- The ultimate question is whether preventing a small amount of fraud is worth discouraging millions of eligible Americans from accessing their benefits.

Unfortunately, we just don't have the data to weigh that question accurately.

The amount of time and money Americans lose to bureaucracy has never been comprehensively calculated.

We don't know how many qualified Americans skip benefits because of red tape, or whether these massive complex systems are actually more wasteful than the fraud itself.

- Without this information, there's little chance that anything will be done about administrative burden in the short term.

Fortunately, there are nonprofit organizations dedicated to helping low income people navigate it.

- And if you happen to be one of the few who is naturally good at researching application processes and filling out forums, consider yourself lucky.

It's a surprisingly useful skill in our modern ocean of bureaucracy.