Nothing Certain But Death and Tax Evasion

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. 

A study into the collection gap found that over 50 percent of tax evasion was undertaken by individuals with business income, and that misreporting is highest among those who have an adjusted gross income between $500,000 and $1,000,000. Even as tax evasion has increased, the number of IRS workers has decreased—falling from 116,673 in 1992 to 84,711 in 2010—leaving the institution unequipped to stop the problem. 

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