Wow- imagine putting all that on our deficit?


We have an undertaxed rich. Under current U.S. tax law, the wealthy in the United States don’t have to pay much in taxes. Even worse, they don’t even pay what they owe.
Another reminder of this systematic shortchanging of Uncle Sam emerged last week — from the independent panel that Congress created in 1998 to monitor the IRS. According to the latest available figures, this IRS Oversight Board notes in its new annual report, $290 billion a year in taxes due is going uncollected.
Not all of that, to be sure, reflects tax evasion by the rich. But tax evasion by the wealthy represents an oversized share of that gap. In 2008, one study broke the IRS “tax gap” data down by income level and found that Americans making between $500,000 and $1 million a year were underreporting their incomes at triple the “misreport” rate of taxpayers making between $30,000 and $50,000.
What’s the IRS doing about all this? The Oversight Board sees some promise in recent IRS action. The agency, notes the Board, “initiated a major effort in 2009 to identify taxpayers who were hiding money in offshore tax jurisdictions.”
As part of that effort, the UBS Swiss banking giant has agreed to turn over the names of 4,450 U.S. taxpayers who had been stashing dollars in secret Alpine accounts. And 14,700 U.S. taxpayers have agreed to reveal details on their own offshore accounts after the IRS set up a voluntary disclosure program.
Data from these 14,700 affluent taxpayers, says the Oversight Board, will hand the IRS “a wealth of information to mine for future enforcement efforts.”
Unfortunately, on the audit front, the IRS doesn't seem to be moving with the same sense of urgency. Close examinations of high-income returns remain relatively rare. The exam rate for taxpayers making over $200,000 a year has essentially remained flat for the past three years, hovering around 2.9 percent.
And the IRS still lacks an up-to-date sense of how much in taxes America’s rich are evading. The $290 billion “tax gap” estimate the IRS Oversight Board cited last week comes from data collected way back in 2001.
This failure to update the tax evasion stats, notes the Oversight Board, makes it “difficult, if not impossible, for the Oversight Board, the IRS, or any other member of the tax administration community to determine with any degree of certainly that the IRS is making progress in reducing the tax gap.”

We need that progress. In troubled economic times, we need that money.