The Internal Revenue Service recently updated its tax-gap estimate using 2006 tax year liabilities, and the numbers show that underreported income—largely from the one percent—remains a big obstruction to collecting taxes. Even though 83 percent of the country voluntarily pays its taxes, there are still $450 billion worth left unpaid. The IRS believes tougher enforcement could help it collect an additional $65 billion, but that still leaves $385 billion that will never be paid. That's a lot of money—enough to pay for more than 11 payroll-tax-cut bills like the one passed by Congress at the end of last year.
After largely ignoring Mitt Romney during Saturday's debate in New Hampshire, the Republican candidates have started attacking the front-runner where it hurts most: his economic résumé. A new 28-minute television advertisement focusing on Romney's time at Bain Capital has the most potential to hurt the candidate given that the former governor touts his experience there as indicative of his ability to fix the U.S. economy. Newt Gingrich-supporting Super PAC "Winning Our Future" produced the film. The advertisement strikes back at Romney's $3.7 million-worth of negative, anti-Gingrich advertising in Iowa, which effectively ruined the former speaker's end-of-the-year momentum.
Despite conservatives' denials about income inequality and the validity of the Occupy movement's mission, recent surveys show that the protest's rallying cry—"We are the 99 percent"—strikes a chord with many Americans. The economic mobility that once seemed a basic feature of American life has faded away; the U.S. now stands behind Denmark, Canada, and Britain, among others, when it comes to social mobility—62 percent of Americans born into the top two-fifths of the income distribution stay in that bracket, a far larger sum than in Britain (30 percent).
Fed Chair Ben Bernanke has decided to release senior officials' short-term interest-rate forecasts, opening a window into the collective mind of the Federal Reserve. The forecasts will be released after the next meeting of the Federal Open Market Committee on January 25. It will include forecasts for the "likely timing" of the first hike of the federal funds target rate and "qualitative information" on the Reserve's war chest of bonds and securities. The Fed likely hopes that by releasing this data, it can encourage much-needed economic growth by guiding investors' expectations and staving off worries about interest-rate changes.