Menu
Tax Notes logo

TAX FOUNDATION ATTRIBUTES TAX GAP TO INDIVIDUAL UNDERREPORTING.

JUL. 1, 1988

TAX FOUNDATION ATTRIBUTES TAX GAP TO INDIVIDUAL UNDERREPORTING.

DATED JUL. 1, 1988
DOCUMENT ATTRIBUTES
  • Institutional Authors
    Tax Foundation
  • Index Terms
    tax gap
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 88-7400
  • Tax Analysts Electronic Citation
    88 TNT 184-21

 

=============== SUMMARY ===============

 

"Tax evasion continues to be a serious problem despite the increase in tax reforms introduced over the past decade in an attempt to make the system more equitable and efficient," claims the Tax Foundation in its most recent newsletter. Tax evasion is measured by the tax gap, which is derived from underreported income, overstated deductions and credits, and computational errors.

According to the Foundation, underreported income by individual filers is the largest single component of the tax gap. Citing IRS statistics, the Foundation noted that the amount of the tax gap for 1987 attributable to individuals amounts to $63.5 billion or 74.8 percent of the total estimated gap of $84.9 billion. The corporate tax gap makes up the difference, accounting for 25.2 percent of the total gap.

According to the newsletter, the total tax gap is expected to widen to $114 billion by 1992. In addition, the newsletter refers to a 1987 report of the American Bar Association's Commission on Taxpayer Compliance, which noted that the dollar value of noncompliance has been increasing over time at approximately 4.1 percent annually, adjusted for inflation.

The Tax Foundation asserts that a tax gap approaching $90 billion is unacceptable because it redistributes income from honest taxpayers to dishonest taxpayers and aggravates the deficit problem. For 1987, Foundation economists estimate that a $63.5 billion individual tax gap would translate into $607.42 in additional tax per individual return. The extent of this tax evasion problem jeopardizes the United States' voluntary compliance tax system by asking individuals to support a system that they believe permits others to cheat with impunity, according to the newsletter.

The July/August issue of Tax Features, the Tax Foundation's newsletter, has been placed in the September 12, 1988 Tax Notes Microfiche Database as Doc 88-7400.

DOCUMENT ATTRIBUTES
  • Institutional Authors
    Tax Foundation
  • Index Terms
    tax gap
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 88-7400
  • Tax Analysts Electronic Citation
    88 TNT 184-21
Copy RID