Richest 1% of Americans Hide a Fifth of Their Income From the IRS
A new study found that the IRS can miss earnings hidden in sophisticated ways. It could support calls to give the agency more funding after years of budget cuts.
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More than 20% of the wealthiest Americans’ income isn’t being reported to the Internal Revenue Service, according to a new study that calculates U.S. tax evasion is far higher than previously estimated.
Random audits of the rich can detect some tax evasion, but the study’s authors found that the IRS easily misses income hidden in sophisticated ways, including in private businesses and offshore structures. Collecting all unpaid income tax from the top 1% would boost revenue to the U.S. Treasury by $175 billion a year.
“We stress that our estimates are likely to be conservative with regard to the overall amount of evasion at the top,” the authors wrote.