Research Report Reducing the Tax Gap: The Illusion of Pain-Free Deficit Reduction
Eric Toder
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IRS recently estimated a gross tax gap of $345 billion, or 16 percent of tax liability, for tax year 2001. The gross tax gap is the difference between estimated tax liability in any year and the amount of tax that is paid voluntarily and on time. The tax gap could be reduced by expanding the scope of information reporting, as the current Administration and some Members of Congress have proposed, or increasing resources for IRS enforcement. Potential budgetary gains from these measures are modest, however, and will not enable politicians to avoid hard choices about future tax and spending levels.
Research Areas Economic mobility and inequality Taxes and budgets
Tags Fiscal policy Federal budget and economy Campaigns, proposals, and reforms Federal tax issues and reform proposals
Policy Centers Income and Benefits Policy Center