What is the Tax Gap?

Research Report

What is the Tax Gap?

October 22, 2007


In this paper Toder addresses issues related to measurement of the tax gapthe difference between tax liability under the current Federal tax law and taxes paid. He discusses how the tax gap is defined, reviews the main components of the tax gap, and describes how the IRS estimates it, as well as some of the major methodological issues in and weaknesses of current estimates. Toder concludes with some brief observations on the use and potential misuse of tax gap estimates and how compliance data might lead to better tax law administration.

Research Area: 
To reuse content from Urban Institute, visit copyright.com, search for the publications, choose from a list of licenses, and complete the transaction.