Closing the tax gap is necessary and sufficient for solving inequality

In sum, the official “tax gap” and the related problem of aggressive tax avoidance drain the U.S. government of hundreds of billions of dollars of needed revenue every year. The failures of tax enforcement increase inequality both directly—because high-income and corporate taxpayers are mainly responsible for the revenue shortfall—and indirectly—because the revenue could be invested in ways that enhance broad-based prosperity. The IRS does not have the resources to adequately enforce the tax laws, with the problem getting significantly worse over the past decade. And the IRS’ audit priorities are out of balance. Policymakers intent on addressing overall economic inequities must address how U.S. tax laws are enforced.