Biden’s $7 Trillion Stealth Tax Increase
7th April 2023
A front page news article in today’s New York Times refers to “President Biden’s economic agenda, which aims to reduce the nation’s $7 trillion of uncollected tax revenue and use the funds to combat climate change, curb prescription drug prices and pay for other initiatives prized by Democrats.”
The phrase “$7 trillion of uncollected tax revenue” was a new one to me. What you and I think of as “private property,” Biden and the New York Times refer to as “uncollected tax revenue.”
Treasury Secretary Yellen is out talking about this “$7 trillion” number publicly. On April 4, she said, “Absent our new investment in the IRS, the tax gap – the gap between taxes owed and those actually paid – was estimated at around $7 trillion over the next decade.”
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I thought maybe $7 trillion was a typo or a Times error, but it comes straight from the Biden administration Treasury Department, which claims that “wealthy taxpayers…are often able to avoid a large share of the taxes they owe” via “opaque income sources that accrue disproportionately to higher earners—like partnership income, proprietorship income, and rental income.”
The Biden Treasury attributes the fantastical estimates about vast sums available for extraction (“noncompliance can reach 55 percent”) to “academic researchers.”
Yet the two papers cited by the Treasury are sketchy. Neither one was been published in a peer-reviewed academic journal. The lead author of one paper is an associate professor at the University of South Carolina; the article was published in Tax Notes, a “nonprofit” that is behind a paywall with a subscription pricing structure that could teach high earners something about opacity. If Treasury want to rely on this research for the claim that there is $7 trillion in “uncollected tax revenue” out for the picking, let Treasury make a non-paywalled copy of the research available to the public for inspection.
April 7th, 2023 at 17:26
I may be confused, but it looks to me as if the Biden administration may be confusing “uncollected tax revenue” with legal tax deductions. The way to find out, of course, would be to vastly simplify the tax structure, but where’s the fun in that?
April 8th, 2023 at 07:16
“Uncollected tax revenue” is money that somehow you have managed to keep for yourself.