Everything you need to know about Biden’s promise to tax the rich
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This appeared in The Millennial Source
In order to combat the negative effects of tax evasion, the Biden administration has made promises to enact policies that would counteract some of the measures the Trump administration took when implementing tax reforms that benefited the wealthy.
Tax avoidance and evasion have become a growing concern for economists and researchers. In a recent paper by the Internal Revenue Service (IRS) and economic researchers from the National Bureau of Economic Research (NBER), it is estimated that, by collecting all unpaid federal income tax from the top 1%, federal revenue could be boosted by about US$175 billion annually.
The authors of the paper include John Guyton and Patrick Langetieg of the IRS Research, Applied Analytics, and Statistics department. Along with Guyton and Langetieg are economic and business professors from the London School of Economics, the University of California, Berkeley and Carnegie Mellon University.
According to the paper, the researchers indicated that the top 1% of households do not report 21% of their income. Approximately 6% of this is undetectable by federal audits and is primarily a result of “sophisticated evasion” strategies including utilizing private businesses and offshore accounts. The report also indicates that tax evasion committed by the wealthy could have a negative effect on the United States’ gross domestic product.
In order to combat the negative effects of tax evasion, the Biden administration has made promises to enact policies that would counteract some of the measures the Trump administration took when implementing tax reforms that benefited the wealthy.
Tax avoidance vs tax evasion
Many of those businesses may not be subject to tax evasion, but rather, tax avoidance. Tax evasion — an illegal and punishable offense — is the act of not paying taxes owed to the federal and state government. Tax evasion is not always deliberate and can happen inadvertently.
When an individual does not report or pay their taxes, the deliberate evasion of taxes is distinguishably different from tax avoidance. However, unintentional mistakes made while filing…