- 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.
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- 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.
- [Both] And that's our two cents.
- [Announcer] Thanks to our patrons
for keeping "Two Cents" financially healthy.
Click the link in the description
to become a "Two Cents" patron.
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- For more on administrative burden, check out our video
"Why do we hate paying taxes?"
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