The US Is Doing a Terrible Job Collecting Taxes
Before Congress talks about spending cuts to shrink the $1.7 trillion budget deficit, it should figure out how to get its hands on the almost $700 billion it’s owed but hasn’t been paid.
Have you paid your taxes?
Photographer: Joe Raedle/Getty Images
The US budget deficit for fiscal 2023 ending Sept. 30 was an eye-watering $1.7 trillion. Any pragmatic politician knows that reducing such a massive shortfall will require some combination of higher taxes and spending cuts. But before we demand more from hardworking families and individuals, we need to ask a fundamental question: Is Uncle Sam doing his best to collect what's due?
The latest Internal Revenue Service estimates are the that almost $700 billion in taxes went unpaid in 2021. This figure, called the tax gap, is the difference between what Americans owed and what the government collected. This estimate, however, is based on outdated assumptions about how the economy runs. Former IRS Commissioner Charles Rettig puts the true tax gap at more than $1 trillion , which is more than half of what the US needs to close the budget deficit.