Shrinking the Tax Gap: Approaches and Revenue Potential

25 Pages Posted: 18 Nov 2019 Last revised: 18 Nov 2021

See all articles by Natasha Sarin

Natasha Sarin

Yale University Law School and Yale School of Management

Larry Summers

Harvard University

Date Written: November 2019

Abstract

Between 2020 and 2029, the IRS will fail to collect nearly $7.5 trillion of taxes it is due. It is not possible to calculate with precision how much of this “tax gap” could be collected. This paper offers a naïve approach. The analysis suggests that with feasible changes in policy, the IRS could aspire to shrink the tax gap by around 15 percent in the next decade—generating over $1 trillion in additional revenue by performing more audits (especially of high-income earners), increasing information reporting requirements, and investing in information technology. These investments will increase efficiency and are likely to be very progressive.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Suggested Citation

Sarin, Natasha and Summers, Larry, Shrinking the Tax Gap: Approaches and Revenue Potential (November 2019). NBER Working Paper No. w26475, Available at SSRN: https://ssrn.com/abstract=3488975 or http://dx.doi.org/10.2139/ssrn.3488975

Natasha Sarin (Contact Author)

Yale University Law School and Yale School of Management ( email )

127 Wall St.
New Haven, CT 06511
United States
2034325552 (Phone)
20001-4959 (Fax)

Larry Summers

Harvard University ( email )

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
48
Abstract Views
801
PlumX Metrics