1. I am thrilled to see bipartisan support for tax compliance efforts. Investing in IRS will raise substantial revenue and create a more efficient and equitable tax system.
2. The @WSJEditorial board disagrees, and shockingly argues that *increasing deficits* is preferable to cracking down on tax cheats.
Here is why they are wrong....
wsj.com/articles/a-bip… via @WSJOpinion
Here is why they are wrong....
wsj.com/articles/a-bip… via @WSJOpinion
3. @WSJEditorial suggests that it is mere conjecture that evasion results in sig losses.
This is untrue. The IRS estimates tax gap w/ audit studies. Btwn 2011-2013, owed b/ uncollected taxes totaled $440B+
Extrapolating for growth, tax gap $600B this year, $7T in next decade.
This is untrue. The IRS estimates tax gap w/ audit studies. Btwn 2011-2013, owed b/ uncollected taxes totaled $440B+
Extrapolating for growth, tax gap $600B this year, $7T in next decade.
4. @WSJEditorial also claims that to raise $ IRS will audit “nearly every high-income taxpayer in the country.”
This too is a fallacy
My research w/ @NatashaRSarin shows returning IRS to 2011 audit levels alone would raise ~$180B in a decade.
(High-end focus raises even more)
This too is a fallacy
My research w/ @NatashaRSarin shows returning IRS to 2011 audit levels alone would raise ~$180B in a decade.
(High-end focus raises even more)
5. @WSJEditorial states w/o evidence that high-end noncompliance uncommon bc “costs are too high” for potential tax cheats.
B/ long line of research shows unpaid taxes concentrated at top of distribution.
This is b/c no costs to evasion w/ IRS that lacks resources to police it
B/ long line of research shows unpaid taxes concentrated at top of distribution.
This is b/c no costs to evasion w/ IRS that lacks resources to police it
6. In fact, a few hundred high-income indvls committed the most egregious form of tax evasion: failing to file returns all together, and cost the IRS $10 billion over three years.
For years, the IRS was not even able to pursue these cases.
For years, the IRS was not even able to pursue these cases.
7. Another example: billionaires filed false returns that cost IRS an est. $2 billion.
They hid from tax authorities using program called “Evidence Eliminator.”
Took years to come to light; even then w/ minor consequences for at least some implicated:
nytimes.com/2021/03/12/bus…
They hid from tax authorities using program called “Evidence Eliminator.”
Took years to come to light; even then w/ minor consequences for at least some implicated:
nytimes.com/2021/03/12/bus…
8. Part of issue is today IRS runs on tech from the 1960s & has failed to keep pace with changes in the economy.
Complex partnerships rose from 5% of income to 35% of income since the 1990s.
4.2M partnership returns filed last year; the IRS had ability to examine just 7,500
Complex partnerships rose from 5% of income to 35% of income since the 1990s.
4.2M partnership returns filed last year; the IRS had ability to examine just 7,500
9. IRS Commissioner Rettig has made clear: to appropriately concentrate audits across the income distribution, the IRS needs the resources to go after the top.
Details of bipartisan package are promising on this dimension.
Details of bipartisan package are promising on this dimension.
10. @JoeBiden Admin’s compliance proposal is explicit: Audit rates will not rise relative to recent yrs for anyone making under $400K in true income.
Ordinary taxpayers will benefit from *lower* audit rates when IRS has ability to better target enforcement on those skirting law
Ordinary taxpayers will benefit from *lower* audit rates when IRS has ability to better target enforcement on those skirting law
11. Career economists at Treasury estimate more resources for IRS + better information generate $700B in a decade.
12. Former Commissioner Rossotti and IRS exec Fred Forman estimate more than 2x as much, $1.6T.
taxnotes.com/tax-notes-fede…
If anything, infrastructure package appears to understate revenue potential here very significantly.
taxnotes.com/tax-notes-fede…
If anything, infrastructure package appears to understate revenue potential here very significantly.
13. It is no surprise that a bipartisan group of IRS commissioners and former Treasury Secretaries support efforts to tackle the tax gap.
washingtonpost.com/opinions/five-…
nytimes.com/2021/06/09/opi…
washingtonpost.com/opinions/five-…
nytimes.com/2021/06/09/opi…
14. No reason to maintain a tax system where ordinary taxpayers are fully compliant, but those (disproportionately $$) who happen to earn income in opaque ways do not.
The @WSJEditorial board may side with tax evaders; but Congress and American people, should not.
The @WSJEditorial board may side with tax evaders; but Congress and American people, should not.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
