WASHINGTON, D.C. – According to a new US Treasury study released Wednesday, the wealthiest Americans are owing to the nation hundreds of billions in taxes.
According to the report, the richest 1% of taxpayers failed to pay around $163 billion in taxes last year, accounting for roughly 28% of the total of $600 billion in unpaid taxes; while the top 5% failed to pay a total of $307 billion, accounting for 53% of the total.
The $600 billion in underpayments, according to the Treasury, is a “staggering” amount, accounting for approximately 3% of the country’s over $23 trillion annual economic output.
The total represents all of the taxes paid by the country’s poorest 90 percent of taxpayers, Voice of America reported.
According to the report, the wealthiest taxpayers are responsible for the majority of tax evasion because they have the financial means to hire accountants and tax advisers who help protect them from incurring their full income tax liability.
It further stated that “opaque” income sources such as business partnerships, proprietorships, and rental income are common among rich taxpayers.
Most working Americans, on the other hand, have federal income taxes withheld from their regular paychecks and remitted to the IRS by their employers.
“The United States collects less tax revenue as a percentage of [gross domestic product] than at most points in recent history, in part because owed but uncollected taxes are so significant,” the Treasury Department’s Natasha Sarin wrote in the report.
Policymakers will have to choose between expanding deficits, cutting spending on critical objectives, or raising taxes to compensate for lost revenue — which would be borne only by complying taxpayers, she said.
Not today’s issue
Authorities have known for a long time that the wealthiest Americans are evading taxes, but legislative efforts to address the problem have virtually always failed.
President Joe Biden is proposing increased taxes on firms and individuals earning more than $400,000 per year as part of his proposals to bolster the economy with more spending to extend the country’s social safety net.
Perhaps more crucially, he wants the Internal Revenue Service, the country’s tax collection agency, to hire additional tax enforcers, the VOA reported.
However, some politicians, particularly Republicans, have been adamant about not expanding the tax agency’s employees.
Biden’s $3.5 trillion social safety net proposal is currently being debated in Congress, along with additional legislation for $1 trillion in infrastructure expenditure.