According to the Treasury Department, the wealthiest Americans, the top 1%, fail to pay an estimated $163 billion every year in taxes, roughly 28% of all lost tax revenue, the Treasury Department, in a post defending Biden’s tax plan.
According to the Treasury Department, the wealthiest Americans, who represent the top 1%, avoid paying an estimated $163 billion in taxes annually, CBS reported.
In a blog post, the Treasury Department defended President Biden’s tax plan while calling for stronger enforcement of tax laws.
According to the Treasury Department, The Hill reported that the top 1 percent of earners by annual income is responsible for approximately 28 percent of all lost tax revenue.
In the blog post, the Treasury Department argued that the richest Americans could avoid paying their fair share of taxes because their wealth allows them to employ tax experts who can better shield them from reporting their actual incomes.
The Treasury said that complicated incomes are more frequent among high earners, such as those derived from partnerships and proprietorships. These types of incomes have a far greater noncompliance rate that reaches as high as 55 percent.
“Today’s tax code contains two sets of rules: one for regular wage and salary workers who report virtually all the income they earn,” wrote Natasha Sarin, deputy assistant Treasury secretary for economic policy, “and another for wealthy taxpayers, who are often able to avoid a large share of the taxes they owe.”
The Treasury Department said that the Internal Revenue Service (IRS) is currently unable to collect about 15 percent of taxes owed due to the lack of resources, which is also led to a fall in auditing rates. The decline in audit rates has decreased more for higher earners than for low-and moderate-income earners in the last decade, assisted by the Earned Income Tax Credit.
To adequately increase audits and enforce tax laws against large corporations and high earners, the IRS would need additional money to hire and train agents to examine thousands of pages of sophisticated tax filings, the Treasury said in the post.
To that end, the Biden administration is pushing to raise the budget of the IRS by $80 billion over the next ten years to increase enforcement and taxpayer services and IT departments.
The Treasury also called for increased third-party reporting by financial institutions, which would help the IRS better target sophisticated tax evasion. The Treasury estimates would generate an estimated $1.6 billion annually in revenue alone from collecting taxes already do.