The richest 1 percent dodge taxes on more than one-fifth of their income, study shows
The top 1% of the highest-earning American
This is a far larger percentage than the IRS's methods had previously assumed, according the working paper published Sunday and first reported on by the Wall Street Journal. ]
Out of the 21% of unreported tax, around 6 percentage points are linked to sophisticatedUnder-reported income is almost twice as high among the top 0.1% of earners, largely because of tax evasion through foreign bank accounts and pass-through businesses, like partnerships and S-corporations, the report says. The research found offshore accounts made up about $15 billion of evaded taxes, with the top 0.1% accounting for most of that.
To be in the top 1% of earners in the US, a family must meet an annual income threshold of $421,926, according to 2018 data from the Economic Policy Institute. But the average annual earnings for these top earners is actually $1,316,985.
For a decade, audit rates and staffing at the IRS have declined because of budget cuts, but Democrats and President Joe Biden are seeking to change that by expanding the agency, the Journal said, noting that additional enforcement could increase tax revenue by $1 trillion over a decade. Last week, Biden said he was considering a tax hike for the wealthiest Americans in order to fund an infrastructure and jobs package. Those making more than $400,000 could see taxes raised to nearly 40% under the plan.Earlier in March, Democrats including Sen. Elizabeth Warren proposed an ultramillionaire tax on the top .05% of earners, which would raise $1.4 trillion over a decade, based on Forbes billionaire data.