While GOP lawmakers in Congress routinely denounce the lack of a balanced budget, there is one thing many Republicans are reluctant to confront — and that’s the growing number of Americans who are cheating on their federal taxes.
A report issued this week by the Internal Revenue Service estimates the ‘tax gap’ — that’s the money legitimately owed to Uncle Sam, but not paid by taxpayers each year — increased to almost $500 billion in a review of the 2014-2016 tax years.
Think about that: $500 billion a year. Half a trillion dollars going unpaid.
And like most things in Washington, the IRS believes the tax gap will keep growing, reaching $540 billion per year in 2017-2019 — though the IRS Commissioner has said the true cost might be closer to $1 trillion per year.
Why are more Americans cheating on their taxes? Because lax financial reporting rules allow many people to make money and hide it from the IRS.
“For the individual income tax, reporting compliance is far higher when income items are subject to information reporting and even higher when also subject to withholding,” the IRS report stated.
Over the past decade, Republicans succeeded in cutting the size of the IRS enforcement division, making it more difficult to collect unpaid taxes.
At the same time, various plans proposed in Congress to trigger more income reporting have run into routine opposition from the GOP and business groups, as critics often characterize it as an ‘invasion of privacy.’
Just this past week, U.S. Rep. Drew Ferguson, R-West Point, warned the Biden Administration against making any plans to monitor bank transactions as a way to detect possible tax evasion.
“We remain strongly opposed to any effort to impose a bank surveillance scheme,” Ferguson wrote in a letter to the Treasury Secretary.
House Republicans say if they win control of Congress, one of their first moves will be to repeal funding approved earlier this year that would allow the IRS to hire 87,000 new employees over the next decade.
The goal of that new IRS funding is not only to increase the amount of money collected in overdue taxes but also to improve customer service, by making it easier for Americans to call in for tax return answers.
But for Republicans, that’s clearly not one of their priorities, as they darkly warn of IRS agents auditing millions of workers.
“What’s more important — funding the IRS or funding border patrol?” asked U.S. Rep. Buddy Carter, R-Pooler.
That line certainly sounds good to a lot of voters.
On the other hand, just think of how many new border patrol agents could be hired each year — if Americans just didn’t cheat on their taxes.
Jamie Dupree has covered national politics and Congress from Washington, D.C. since the Reagan administration. His column appears weekly in The Atlanta Journal-Constitution. For more, check out his Capitol Hill newsletter at http://jamiedupree.substack.com
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