Thread by @LHSummers

@USTreasury concludes $80B of funding to IRS will result in $400B in additional revenue for IRS over the decade. This is most significant offset in BBB package & one I am thrilled to see included. I have long believed robust attack on tax gap first order for tax reform efforts

If anything, @USTreasury estimates are conservative. @NatashaRSarin and I estimated that a $100B investment in the IRS focused on high-end enforcement (like Admin proposal is) would generate $800B+ over the course of the decade, outside of info reporting, which raises even more.

Our estimates are lower than those of former Commissioners Charles Rossotti and Fred Goldberg ($1.6T), who have also written in this space.
shrinkthetaxgap.com/reform-proposa…

Some, like CBO, have historically had less optimistic estimates of the revenue potential here. As we have written, they are significantly underestimating bc incomplete methods, e.g. ignoring deterrence.

nber.org/system/files/w…

Unlike CBO, our estimates (as well as Rossotti/Goldberg) are more thorough and granular.

We account for fact that high-end enforcement focus generates significant revenue, as extra audit hour spent auditing someone making $5M+ generates ~$5K.

There is a lot of money to be raised here. That’s because the magnitude of the problem is enormous.

The tax gap, left unaddressed, is $7T+ over the course of the decade.

That’s 3% of GDP.

Admin estimates less than 6% decrease in tax gap from its efforts.

They can—and will—do much better when depleted IRS finally has resources it needs.

That is why a bipartisan group of former Treasury Secretaries:

nytimes.com/2021/06/09/opi…

And IRS Commissioners:

washingtonpost.com/opinions/five-…

Are enthusiastic supporters.