Shrinking the Tax Gap: Approaches and Revenue Potential

Natasha Sarin and Lawrence Summers

No 26475, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Between 2020 and 2029, the IRS will fail to collect nearly $7.5 trillion of taxes it is due. It is not possible to calculate with precision how much of this “tax gap” could be collected. This paper offers a naïve approach. The analysis suggests that with feasible changes in policy, the IRS could aspire to shrink the tax gap by around 15 percent in the next decade—generating over $1 trillion in additional revenue by performing more audits (especially of high-income earners), increasing information reporting requirements, and investing in information technology. These investments will increase efficiency and are likely to be very progressive.

JEL-codes: H0 H2 H26 (search for similar items in EconPapers)
Date: 2019-11
New Economics Papers: this item is included in nep-ict, nep-iue, nep-pbe and nep-pub
Note: CF PE
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