Think tax evasion is a small problem? The Tax Justice Network released a report in November 2011 that showed that in the U.S., tax evasion amounts to $337.3 billion a year.
This was based on numbers from 1999 to 2006, and could be even higher in recent years as the weak economy may have led more people to hide money from the government. For example, the average tax refund decreased by $100 in 2011, maybe people are reporting less income in order to keep more of their money.
It’s hard to wrap my head around how much money that is. Congress was recently unable to agree on a plan to reduce the national deficit by $1 trillion over 10 years. Over the same time period, tax evasion will cost us well over $3.3 trillion.
I’m a big proponent of everyone following the tax rules. When we don’t, it means that everyone else has to pick up the slack. Because of this fraud, tax rates are likely higher and future generations will be paying for current expenses.
The IRS is Catching More Tax Evaders
The good news is that the IRS is doing a better job of catching people who aren’t paying their fair share of taxes.
Fraud investigations increased by 14% in 2010, while prosecution recommendations (cases that the IRS thinks should be brought to court) increased 18% and convictions increased by 4%.
Again, it’s possible that some of these increases are due to the economic situation of the past few years, but the fact that the IRS decreased its investigation time by nearly 40 days is another good sign that the IRS is doing a better job.
Don’t Give In To The Pressure
It’s really easy to hide money from the IRS. After I sold my HP TouchPad for $100 profit, it would be really hard for the IRS to track down how much I paid, how much I sold it for on eBay, and how much of a profit I made. So I could hide that pretty easily. But I’m not. I know that people don’t admit to cheating on their taxes, but the fact is that it happens. Stay true, and help reduce that $337 billion number so that future generations are stuck having to pay it!