US Treasury Secretary Janet Yellen said Wednesday that if the IRS were properly funded and therefore could crack down on tax traps, the US could raise more revenue without raising taxes. .
“The tax gap is huge, and I think we would have a fairer tax system and collect more tax revenue without the need to increase rates if we provided the IRS with adequate resources to be able to address this problem,” Yellen said during her testimony before Senate. .
Yellen noted that the tax gap, known as the difference between what the IRS is owed and what it will collect, is estimated at $ 7.5 trillion over the course of the next decade.
One of the legislators at the hearing mentioned that last year alone $ 570 billion owed was not paid.
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The IRS has been battling both the downsizing and dwindling resources. In the collection pool, specifically, there was a 19% decrease in workers between fiscal year 2013 and fiscal year 2018. It has lost half of its revenue offices, the agency said, and about a third of its strength. employment in general during the last decade.
Funding as of fiscal 2018 was $ 11.4 billion, down from $ 12.15 billion in 2010.
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In order to raise revenue to fund upcoming initiatives, including a clean energy and infrastructure push, as well as a people-centered national program effort, Biden has proposed raising rates for individuals and families earning more than $ 400,000. from 37% to 39.6%.
He has also proposed increasing the corporate tax rate from 21% to 28%. Those rates were lowered in 2017 with former President Trump’s Tax Cuts and Jobs Act.
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Yellen said she believed it was appropriate to raise the corporate tax rate that Biden proposed, but added that the government needs to be concerned and aware of the competitiveness of US companies.