Paul L. Caron

Tuesday, November 19, 2019

Sarin & Summers: Shrinking the Tax Gap — Approaches And Revenue Potential

Natasha Sarin (Penn) & Lawrence H. Summers (Harvard), Shrinking the Tax Gap: Approaches and Revenue Potential:

Between 2020 and 2029, the IRS will fail to collect nearly $7.5 trillion of taxes it is due. It is not possible to calculate with precision how much of this “tax gap” could be collected. This paper offers a naïve approach. The analysis suggests that with feasible changes in policy, the IRS could aspire to shrink the tax gap by around 15 percent in the next decade—generating over $1 trillion in additional revenue by performing more audits (especially of high-income earners), increasing information reporting requirements, and investing in information technology. These investments will increase efficiency and are likely to be very progressive.

Tax Gap 1

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Congress has not only cut funding for IRS compliance efforts (audits and enforced collection), it has handcuffed the agents doing those functions. No one fears an audit or seizure any more, and it shows. And not just the top 1%; watch whether your favorite restaurant, nail salon, beauty shop, or other business rings the sale on the register.

Posted by: Smitty | Nov 19, 2019 1:34:40 PM