Treasury says tax gap swells to $ 7 trillion and demands a stronger IRS

Washington’s Internal Revenue Service building.

SAULLOEB / AFP via Getty Images

The Treasury estimates that the difference between what Americans are obliged to pay taxes and what they actually pay will grow to $ 7 trillion over the next decade.

In a prepared statement, Deputy Assistant Secretary Mark Mazur told Congress Thursday that the so-called tax gap would worsen in the coming years without additional funding from lawmakers.

He added that the total tax gap estimate is about $ 580 billion in 2019 alone.

“Over the next decade, the total tax gap is projected to total about $ 7 trillion, which is about 15 percent of all accrued taxes,” Mazur told Congressman.

“A larger tax gap produces the following results: higher tax rates elsewhere in the system, lower income to fund a country’s fiscal priority, or higher budget deficits and more federal debt.” He added. “A widespread and persistent non-compliance also undermines confidence in the fairness of our tax system.”

Mazur has blamed the persistent and widening tax gap due to lack of funding for the Internal Revenue Service. The IRS budget has been cut by 20% over the last decade, resulting in more layoffs and significantly lower audit rates.

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Earlier this year, the tax office said budget cuts forced it to reduce 33,378 full-time jobs, including a significant number of taxpayer services and executives, between fiscal 2010 and fiscal 2020.

The IRS has repeatedly warned that layoffs undermine the ability to initiate and perform audits that help close tax gaps. The number of millionaires has almost doubled since 2012, but tax audits have fallen 72% from 40,965 in 2012 to 11,331 in 2020.

Mazur recommended that lawmakers support provisions within the Biden administration’s fiscal 2022 budget to help expand its services.

The White House is currently proposing a sustainable multi-year funding stream for nearly $ 80 billion in resources over the next decade, which the Treasury says will allow staff to be hired. President Joe Biden also proposed funding to upgrade IRS technology and improve information reporting through third-party reports.

The Treasury Department’s Tax Analysis Department estimates that these compliance initiatives will generate approximately $ 700 billion in additional tax revenues over the next decade.

Mazur’s remarks were made the day after five former Treasury Secretaries, Lawrence Summers, Robert Rubin, Henry Paulson, Jacob Blue, and Timothy Geithner, urged lawmakers. In the New York Times editorial Approve much of the Biden administration’s budget for tax collectors.

“We are confident that we can design better information reporting requirements that will allow for significant increases in revenue without imposing any burden on taxpayers and significantly increasing the regulatory burden of the economy as a whole,” said the former secretary. Is writing.

“Reasonable people can disagree on the magnitude of certain tax increases,” Quintet added. “But everyone, including lawmakers from both parties, needs to agree on this issue. Providing the IRS with the tools needed to improve compliance can generate significant income and be more equitable. An efficient tax management system will be created. “

Treasury says tax gap swells to $ 7 trillion and demands a stronger IRS

Source link Treasury says tax gap swells to $ 7 trillion and demands a stronger IRS

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