Paul L. Caron
Dean




Thursday, June 10, 2021

We Ran The Treasury Department. This Is How To Fix Tax Evasion.

New York Times op-ed:  We Ran the Treasury Department. This Is How to Fix Tax Evasion., by Timothy Geithner, Jacob Lew, Henry Paulson, Robert Rubin & Lawrence Summers:

The five of us served as Treasury secretary under three presidents, both Republican and Democrat, representing 17 years of experience at the helm of the department. While we are not in agreement on many areas of tax policy, we believe in the importance of strengthening the tax system to do more to collect legally owed but uncollected taxes — which, left unaddressed, could total $7 trillion over the next decade. We are convinced by the strength of our experiences that more can be done to pursue evasion in the ways outlined by President Biden’s recent proposal to increase the resources and information available to the I.R.S.

Over the past 25 years, I.R.S. resources have been steadily cut, with the ratio of enforcement funding to returns filed falling by around 50 percent. Today, the I.R.S. has fewer auditors than at any time since World War II. Faced with resource constraints, it is no surprise that the agency is not able to appropriately focus scrutiny on complex returns, where noncompliance is greatest. Of about four million partnership returns filed in 2018, the I.R.S. audited only 140 of them. It did not pursue 300 high-income taxpayers who together cost the agency $10 billion in unpaid taxes over a three-year period when they failed to even file returns. And audit rates of those in the top 1 percent have fallen most staggeringly over the course of the past decade, such that rural counties in the Deep South have some of the highest rates of examination in the country.

The president’s proposal calls for significant investment in the I.R.S., with $80 billion over a decade in primarily mandatory funding to provide multiyear resources to support necessary work force, service and information technology advancements. In particular, the agency’s siloed and antiquated I.T. is a major source of risk, causing server crashes and leaving the I.R.S. susceptible to cyberattacks. It is imperative that the information technology undergirding our tax system keep pace with the information technology driving our economy. ...

We know firsthand the challenge dedicated I.R.S. employees face each day as they work to administer tax laws while hamstrung by inadequate funding and support. Reasonable people can disagree on the magnitude of particular tax rate increases. But on this issue, all should agree, including members of Congress of both parties: Giving the I.R.S. the tools it needs to improve compliance will raise significant revenue and create a fairer, more efficient system of tax administration.

https://taxprof.typepad.com/taxprof_blog/2021/06/we-ran-the-treasury-department-this-is-how-to-fix-tax-evasion.html

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