The top 1 percent are evading $163 billion a year in taxes, the Treasury finds.
Source: New York Times
Daily Business Briefing
Sept. 8, 2021
Updated
Sept. 8, 2021, 1:58 p.m. ET
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WASHINGTON — The wealthiest 1 percent of Americans are the nation’s most egregious tax evaders, failing to pay as much as $163 billion in owed taxes per year, according to a new Treasury Department report released on Wednesday. (1)
The analysis comes as the Biden administration is pushing lawmakers to embrace its ambitious proposal to beef up the Internal Revenue Service to narrow the “tax gap,” which it estimates amounts to $7 trillion in unpaid taxes over a decade. The White House has proposed investing $80 billion in the agency over the next 10 years to hire more enforcement staff, overhaul its technology and usher in new information-reporting requirements that would give the government greater insight into tax evasion schemes.
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(1) https://home.treasury.gov/news/featured-stories/the-case-for-a-robust-attack-on-the-tax-gap
Read more: https://www.nytimes.com/live/2021/09/08/business/economy-stock-market-news#irs-tax-avoidance
https://home.treasury.gov/news/featured-stories/the-case-for-a-robust-attack-on-the-tax-gap
(1) The Case for a Robust Attack on the Tax Gap
September 7, 2021
By Natasha Sarin, Deputy Assistant Secretary for Economic Policy
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. 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.
The tax gap can be a major source of inequity. Today’s tax code contains two sets of rules: one for regular wage and salary workers who report virtually all the income they earn; and another for wealthy taxpayers, who are often able to avoid a large share of the taxes they owe. As Table 1 demonstrates, estimates from academic researchers suggest that more than $160 billion lost annually is from taxes that top 1 percent choose not to pay. (1)
Table 1: Distribution of the Tax Gap
(1) These estimates for the distribution of unpaid taxes are based on DeBacker, Jason et al., 2020. “Tax Noncompliance and Measures of Income Inequality,” Tax Notes Federal, 17 February. Estimated unpaid taxes are calculated by applying these percentages to TY 2019 tax gap estimates. The distribution of the tax gap across the income spectrum is difficult to estimate, especially at very top incomes. Ongoing work by IRS researchers and outside academics suggest the concentration of the tax gap is even more skewed toward the top of the income distribution. Guyton, John, et al., 2021. “Tax Evasion at the Top of the Income Distribution: Theory and Evidence,” NBER Working Paper No. 28542 These estimates are based on imputations of undetected evasion using multipliers developed from earlier audit data. The advisability of so-called “detection-controlled estimation” (DCE) adjustments are debated in the literature, especially with respect to understanding the distribution of noncompliance.
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= new reply since forum marked as read
is 700 billion per year. 
