Great news: Tax cheating looks pretty darn stable

The IRS has released a new estimate of the “tax gap,” which is the amount of federal taxes owed but not paid. Basically, this is the amount of cheating on federal taxes. The IRS report contains good news. Tax cheating is not a growing problem relative to the size of the economy, despite all the political rhetoric to the contrary.

The IRS found that the annual gross tax gap for 2014–2016 was $496 billion. After late payments and enforcement actions, the net tax gap was $428 billion. Of the net total, $306 billion stemmed from individual income taxes, $34 billion from corporate income taxes, $87 billion from payroll taxes, and $2 billion from estate taxes. …

The flip side of the gross tax gap is the “voluntary compliance rate,” which is the tax paid on time divided by the estimated full amount owed. The IRS report shows that the voluntary compliance rate rose from 83.7 percent in 2011–2013 to 85.0 percent in 2014–2016. The IRS projects the rate to be 85.1 percent in 2017–2019.

[For this we need another 87,000 IRS employees? — Ed]