THE INCOME-TAX COMPLIANCE COST OF BIG BUSINESS

A survey of 1,329 of the largest corporations in the United States rev eals that the average annual cost of compliance with federal and subfe deral corporation income tares is approximately $1.565 million, implyi ng an aggregate annual compliance cost of over $2 billion. As a fracti on of revenue raised, these compliance costs are lower than estimates that have been made for the individual income tar. The cost-to-revenue ratio is higher for state corporate tar systems than it is for the fe deral tar system, presumably reflecting the nonuniformity of state tar systems. There is near unanimity among senior corporate tar officers that the Tar Reform Act of 1986 added complexity to the tar system res ulting in a combination of higher compliance costs and less accurate i nformation transmission. They point to. in particular the alternative minimum tar, inventory capitalization rules, and the taxation of forei gn-source income as growing sources of complexity.