Top 1 Percent Avoid Paying $163 Billion in Taxes Each Year: Treasury Department
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The Department of Treasury has found that the wealthiest one percent of Americans have avoided paying $163 billion in taxes per year.
The Treasury’s analysis, titled “The Case for a Robust Attack on the Tax Gap” and written by Deputy Assistant Secretary for Economic Policy Natasha Sarin, opens by explaining, “A well-functioning tax system requires that everyone pays the taxes they owe.”
The report argues that narrowing the tax gap, which accounts for the difference between owed and collected taxes, will lead to a more equitable economy, as it currently “totals around $600 billion annually,” which would lead to “approximately $7 trillion of lost tax revenue over the next decade.”
Sarin’s report includes a table detailing tax data from 2019, which ultimately found that more than $160 billion lost annually is “from taxes that top 1 percent choose not to pay.”
The report goes on to argue that in order to collect owed taxes and enforce laws against high earners and corporations, the IRS needs funding to update their technology and to hire agents able to decipher “thousands of pages of sophisticated tax filings.”
“It also needs access to information about opaque income streams — like proprietorship and partnership income — that accrue disproportionately to high-earners,” she wrote.
The reports comes as President Joe Biden’s administration is pushing for a significant increase to the IRS budget. The White House has specifically called for $80 billion of investment over the next ten years, claiming it would help the government catch tax evasion schemes.
“Giving the IRS the information and resources that it needs will generate substantial revenue,” Sarin concluded. “But even more importantly, these reforms will create a more equitable, efficient tax system.”
