The local sports-talk radio station is running a bunch of commercials from a tax prep service in which a loud announcer declares that “People who did their own taxes left one billion dollars on the table last year. That’s billion with a ‘b.’” and urges people to “Get your billion back!” by paying for their tax-return service. Which, you know, sounds like quite a bit.
Only, there are upwards of 300 million people in the US. So, a billion dollars is about $3 per person. So, it’s maybe not as impressive as they want you to think.
Of course, a lot of those people are too young or too old to be filing tax returns anyway– that probably reduces the population for the per-capita figure by around a factor of two, so $6 per working adult. And, of course, half of those folks (47%, famously, but we’re going back-of-the-envelope here) don’t pay federal income tax, so we’re up to $12.
Then there’s the question of how many people did their own taxes, which is a little tricky to answer. Obviously, the extremely rich have people to do their taxes for them, but they’re only a few percent of the total. I’d be kind of surprised if the fraction of tax-paying adults who used a tax-prep service was even 50%, but let’s take that as the figure, bringing the average taxpayer’s share of those unclaimed tax benefits to a princely $24. $48 for a two-income family. That’s not nothing, granted, but I bet it’s also not a lot more than it costs to pay these folks to do your taxes for you…
Thus ends today’s lesson about how knowing a bit of math makes advertising claims much less impressive.
(Now, of course, that $1b isn’t going to be evenly distributed– lots of folks at the low end are already getting everything they can; it’s really the people at the upper end of the taxpaying-but-not-paying-a-tax-service block who are being targeted, and those people probably stand to make well above that average. Still, we’re not really talking vast sums of money for individual taxpayers, which makes the ad creepy and deceptive along with loud and annoying…)