But the IRS "tax gap" stats, the federal Government Accountability Office points out, do not figure in the federal government's "revenue loss due to offshore noncompliance." In other words, the official IRS stats simply ignore an entire tax-evasion universe.
The IRS does have an excuse for this analytical failure. Chronic budget underfunding has left the agency woefully understaffed, with not enough resources to adequately investigate or crack down on wealthy tax evaders. In 2018, the IRS acknowledged last month, America's millionaires ended up 80 percent less likely to be audited than they had been in 2011.
"Every year," observes ProPublica's Paul Kiel, "the news gets better for the rich especially those prone to go bold on their taxes."
Indeed, instead of cracking down on tax evasion, federal tax policy is now rewarding it. The IRS tax-gap research identifies "under-reported business income" as the single largest domestic source of that gap. Most of this under-reported business income flows to partnerships, sole proprietorships, and other business entities that "pass through" all the income they generate to their owners. The 2017 Trump tax cut lowers the tax rate on "pass-through" income, in effect "solving" the problem of the rich evading taxes by slashing the taxes the rich by law need to pay.
What do we need to be doing to turn things around? We need to "go bold" on fighting income and wealth concentration. How could we do that? Analysts Alexandra Thornton and Galen Hendricks at the Center for American Progress have just released a valuable new study, Ending Special Tax Treatment for the Very Wealthy, that cogently examines a variety of attractive options.
Front and center among these choices: an annual "wealth tax" on the assets of the super rich. A mere 2 percent annual levy, the study notes, "would gradually address the enormous amounts of untaxed wealth accumulated especially by the top 0.1 percent over the past few decades."
But moves like a wealth tax, the authors stress, will only succeed if we also take on the challenge of stopping the super rich from shifting assets offshore to evade their U.S. tax liability.
And we can certainly do that, maintain Berkeley's Zucman and his fellow researchers. The key to tax-enforcement success: enacting "sanctions against the suppliers of tax evasion services."
"If policymakers were willing to systematically put out of business the financial institutions found facilitating evasion," the three researchers write, "then the supply of evasion services would shrink, and tax evasion at the top could be reduced dramatically."
Don't hold your breath waiting for the Trump administration to take any serious step down that road. Veteran tax journalist David Cay Johnston has just broken the news that a promising IRS investigation into a massive tax dodge that benefited the only Koch family billionaire who backed Donald Trump's presidential campaign shut down soon after Trump became president.
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