Tax gap.

in #biden8 months ago

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Whenever I see posts like this I can't help but think of the tax gap. The current estimated tax gap (the difference between taxes owed under current law and taxes actually paid) is $688 billion per year. And this is likely a large underestimate. The majority of the gap is concentrated in higher income taxpayers. In a sane world we'd actually fund the IRS to increase compliance with the current tax law to begin with let alone new tax law. But we don't live in a sane world- everyone gets apoplectic when someone even considers increasing the IRS budget.

https://www.irs.gov/newsroom/irs-updates-tax-gap-projections-for-2020-2021-projected-annual-gap-rises-to-688-billion

This is just the IRS estimate using DCE, which is pretty conservative. Zucman estimates an even larger tax gap trying to compensate for the shortcomings of DCE modelling among wealthy taxpayers.

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These are Zucman's estimates using IRS audit data and off-shore tax amnesty data.

Audit enforcement of course wouldn't get all the tax gap, but there is a lot of low hanging fruit available here. The IRS audits of wealthy taxpayers are quite productive on a per dollar basis. They just don't get the resources they need to do these audits. And on the tech side of things they are in the stone age.

We've got a weird set of politics that constantly worries about the government debt, criticizes stuff like student loan forgiveness, but then doesn't actually consider basic revenue collection.

All while of course spending hundreds of billions on wars.

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