Sunday, March 21, 2021

"Unreported income is the single largest reason that unpaid federal income taxes may amount to more than $600 billion this year..."

"... and more than $7.5 trillion over the next decade.... The government has a basic obligation to enforce the law and to crack down on this epidemic of tax fraud. The failure to do so means that the burden of paying for public services falls more heavily on wage earners than on business owners, exacerbating economic inequality. The reality of widespread cheating also undermines the legitimacy of a tax system that still relies to a considerable extent on Americans’ good-faith participation.... ...Charles Rossotti, who led the I.R.S. from 1997 to 2002... that Congress needs to... [create] a third-party verification system for business income.... Under his plan, the government would require banks to produce an annual account statement totaling inflows and outflows, like the 1099 tax forms that investment firms must provide to their clients.... The money is undoubtedly in chasing wealthy tax cheats, but equity argues that business income, like wage income, should be subject to a uniform reporting standard.... Consider what happened after Congress passed legislation in 1986 to require taxpayers to list a Social Security number for each person claimed as a dependent.... The next year, seven million children abruptly disappeared from tax returns.... The government can crack down on crime, improve the equity of taxation — and raise some needed money in the bargain. There are many proposals to raise taxes on the rich. Let’s start by collecting what they already owe."

Says the Editorial Board of the NYT.

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