On Friday the IRS released its “tax gap” figures for tax year 2006. The previous measurement was five years earlier in 2001.
The tax gap is the difference between what taxpayers should be paying and what is actually paid. And while the newest figures may make you choke, they are not too much worse than 2001.
The gross tax gap in 2006: $450 billion.
The gross tax gap in 2001: $345 billion.
What contributes to the tax gap is failing to file, failing to report all income, and simply failing to pay. The biggest contributing factor is the underreporting of income.
A comprehensive explanation of the 2006 tax gap can be found on the IRS website.