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Shrinking the Tax Gap: Approaches and Revenue Potential

Author

Listed:
  • Natasha Sarin
  • Lawrence H. Summers

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.

Suggested Citation

  • Natasha Sarin & Lawrence H. Summers, 2019. "Shrinking the Tax Gap: Approaches and Revenue Potential," NBER Working Papers 26475, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:26475
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    More about this item

    JEL classification:

    • H0 - Public Economics - - General
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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