Member-only story
How to Hate Taxes a Little Bit Less
Every year, Americans short the IRS nearly half a trillion dollars. Most ideas to increase compliance are more stick than carrot — scary letters, audits, and penalties. But what if we gave taxpayers a chance to allocate how their money is spent, or even bribed them with a thank-you gift?
One of the biggest economic problems in the United States today is the tax gap, the difference between taxes owed to the federal government and what’s actually paid. The U.S. tax gap is considered quite large for a rich country; the IRS says it’s around 15% to 20% of the total amount due. This adds up to $477 billion — that’s nearly half a trillion dollars — each year in unpaid taxes.
There’s a lot of conversation these days, especially on the presidential-campaign trail, about whether to levy more taxes, especially on corporations and the wealthiest individuals. But wouldn’t it be a good start to collect the taxes that are already due but aren’t being paid? And could the tax gap be closed by letting people choose, even just a little bit, how their tax money will be spent?
In case you hadn’t realized, tax policy is a big deal.
