The Treasury Department revealed the top 1 percent is responsible for the more than $160 billion lost each year in the United States.
Natasha Sarin, deputy assistant Treasury secretary for economic policy, penned a blog post Tuesday titled, “The Case for a Robust Attack on the Tax Gap.”
She wrote, “A well-functioning tax system requires that everyone pays the taxes they owe. Today, the ‘tax gap’—the difference between taxes that are owed and collected—totals around $600 billion annually and will mean approximately $7 trillion of lost tax revenue over the next decade.”
Sarin continued, “The sheer magnitude of lost revenue is striking: it is equal to 3 percent of GDP, or all the income taxes paid by the lowest earning 90 percent of taxpayers.”
She pointed to a table included in the report citing data from 2019 showing $163 billion “lost annually is from taxes that top 1 percent choose not to pay.”
Sarin suggested the unpaid taxes “mean policymakers must choose between rising deficits, lower spending on important priorities, or further tax increase to compensate for lost revenue—which will only be borne by compliant taxpayers.”
According to the report, the IRS is unable to collect 15% of taxes that are owed because of outdated technology.
“For the IRS to appropriately enforce the tax laws against high earners and large corporations, it needs funding to hire and train revenue agents who can decipher their thousands of pages of sophisticated tax filings. It also needs access to information about opaque income streams—like proprietorship and partnership income—that accrue disproportionately to high-earners,” Sarin said.
Mentioning the Biden administration’s tax plan, Sarin noted it calls “for significantly increasing the IRS budget, specifically $80 billion of investment over the coming ten years in enforcement, IT, and taxpayer services generating an estimated $320 billion in additional tax collections over the next ten years.”
Concluding the post, Sarin explained the Biden administration’s “compliance initiatives are guided by a singular objective—bringing about an end to a two-tiered tax system, where ordinary Americans comply with their tax obligations, but many high-end taxpayers do not.”
She added, “Giving the IRS the information and resources that it needs will generate substantial revenue. But even more importantly, these reforms will create a more equitable, efficient tax system.”
The president argued on Twitter on Wednesday, “When corporations and the wealthiest start to pay their fair share, it will put millions of people to work in jobs that will help them punch their ticket to the middle class — and to stay in the middle class.”
When corporations and the wealthiest start to pay their fair share, it will put millions of people to work in jobs that will help them punch their ticket to the middle class — and to stay in the middle class.
— President Biden Archived (@POTUS46Archive) September 8, 2021
Everyone will do better.
He added, “Everyone will do better.”
