[“The sheer magnitude of lost revenue is striking. It is equal
to 3% of GDP, or all the income taxes paid by the lowest earning 90%
of taxpayers."] [[link removed]]

TREASURY REPORT: THE 1% FAIL TO PAY $160B A YEAR IN TAXES  
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Martin Pengelly
September 8, 2021
Guardian
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_ “The sheer magnitude of lost revenue is striking. It is equal to
3% of GDP, or all the income taxes paid by the lowest earning 90% of
taxpayers." _

Taxes! , by soukup is licensed under CC BY 2.0

 

The wealthiest 1% of Americans are responsible for more than $160bn of
lost tax revenue each year, according to a new report
[[link removed]] from
the US treasury.

Natasha Sarin, deputy assistant secretary for economic policy, said:
“A well-functioning tax system requires that everyone pays the taxes
they owe.”

According to the treasury report, the wealthiest 1% of US taxpayers
are responsible for an estimated $163bn in unpaid tax each year,
amounting to 28% of the “tax gap”.

Sarin said that tax gap – “the difference between taxes that are
owed and collected” – amounted to “around $600bn annually and
will mean approximately $7tn of lost tax revenue over the next
decade.”

The Biden administration
[[link removed]] proposes
closing the tax gap by empowering the Internal Revenue Service (IRS)
to more aggressively pursue unpaid taxes, at a cost of $80bn and in
the process helping fund the president’s ambitious domestic economic
agenda.

Republicans in Congress and lobbyists for business are united in
opposition to the proposal to shore up tax enforcement.

“The sheer magnitude of lost revenue is striking,” Sarin wrote
[[link removed]].
“It is equal to 3% of GDP, or all the income taxes paid by the
lowest earning 90% 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.”

The treasury report may also focus attention on Americans outside the
top 1% but still well off. According to the report, the wealthiest 5%
of US taxpayers account for more than 50% of lost tax revenue
annually. For the top 20%, the figure is 77.1%.

Sarin said that “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”.

Former treasury secretary Robert Reich, now a Guardian contributor,
called the report a “bombshell” and said
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must have the funds to beef up enforcement. Every additional $1 of IRS
funding yields $3 of tax revenue, mostly from the very rich who
illegally avoid paying taxes owed.”

The treasury says closing the tax gap would raise $700bn in public
revenue over 10 years.

The Congressional Budget Office has said
[[link removed]] reinforcing the IRS would not
raise that much, putting the figure at approximately $200bn.

But the CBO also said that if Biden’s proposals were enacted, “tax
compliance would be improved, and more households would meet their
obligation under the law”.

_Martin Pengelly is breaking news and weekend editor for Guardian US.
Twitter @MartinPengelly. Click here
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Martin's public key_
 

_Get a global perspective, free to your inbox. Subscribe to a Guardian
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