Biden Tax Gap Proposal Deserves Bipartisan Consideration
For Immediate Release
The Biden administration will soon introduce a proposal to reduce the tax gap, the difference between taxes paid and taxes owed, according to news reports. The plan would provide the IRS with $80 billion to improve tax compliance and include other reforms such as increased information reporting. The administration estimates their proposal will raise roughly $700 billion on net. We are still awaiting details, but believe independent scorekeepers will likely score the plan as raising a more modest amount of revenue.
The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
Whether you support tax increases or tax cuts, everyone should agree that taxpayers ought to pay what they owe under the law. The federal government loses over $500 billion a year in unpaid taxes – perhaps way more - and it’s long past time to strengthen the integrity of our tax code.
Improving information reporting and better funding the IRS will most certainly help improve tax compliance. This is also one of the very few spending measures that truly will pay for itself. Tax cuts don’t pay for themselves; infrastructure spending doesn’t pay for itself, but measures to close the tax gap actually will.
While it’s still unclear exactly how much revenue can be raised by closing the tax gap, the cost of inaction is high. This is one of those rare public policy no-brainers. It shouldn’t become a victim of partisan politics. The federal government should enforce the law.
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