It would be tough to find people who enjoy paying taxes, but it’s easy to find people who say it’s their duty as Americans to pay Uncle Sam’s tax tab.
As lawmakers debate more taxes for the rich and more budget money for the Internal Revenue Service to go after tax cheats, new survey numbers from the IRS highlight the fact that most people regard taxes as a civic duty and have little tolerance for people who try to shirk their tax obligations.
Nearly everyone — 94% of people — either completely or mostly agreed that it’s every American’s civic duty to pay taxes, according to an annual IRS report released Thursday. Though that’s a one-point decline from one year earlier, the IRS noted the “perspective has remained stable since 2017.”
Meanwhile, 87% of people said it was not at all acceptable to cheat on any amount of their income taxes, the 2,000-person survey said. That’s the same percentage as one year earlier, but actually up two percentage points from when the IRS asked the question in 2018.
The responses are part of the IRS’s annual Data Book, a compendium of its activities during Fiscal Year 2020, which stretched from October 2019 to September 2020.
Tax code fairness has been a hot topic, stoked by the Biden administration’s calls for more taxes on the wealthy and an investigative series from ProPublica showing how billionaires take advantage of the tax code to shrink their tax bills.
While taxpayers’ attitudes about their obligation to pay have largely held firm, the same IRS report chronicled a continuing dip in the number of audits the IRS conducts — the action the agency takes to ensure people are paying everything they owe. Falling audit numbers have been a years-long story as the IRS’ staff shrinks, along with its budget when accounting for inflation.
The new IRS report did reveal a relative increase in audits of millionaires; the numbers of concluded audits for millionaires are up from 2018, but far below 2011 numbers.
A bipartisan deal on infrastructure spending could bring on even more scrutiny to high-net worth taxpayers. The proposed bill to upgrade roads, bridges and public transit would be financed in part by giving an additional $40 billion to the IRS to conduct enforcement, according to the Wall Street Journal. That extra funding to catch tax cheats would theoretically help narrow the “tax gap,” or the difference between what Americans owe in taxes versus what they actually pay.
IRS Commissioner Charles Rettig has estimated that the tax gap could be as high as $1 trillion. Meanwhile, the Treasury Department said there was a $584 billion tax gap in the 2019 tax year.
The new IRS survey on taxpayer attitude shows most people believe it’s their civic duty to pay their taxes — but bear in mind it’s not asking about their attitudes on the amount of taxes they pay, or their feelings on what others should pay.
What’s a fair amount of tax might be more debatable. More than half (55%) of taxpayers say they pay their fair share, according to a Gallup poll from May, but 65% of Democratic-leaning poll participants agreed with the statement and 46% of Republican- leaning participants said that was true.
Over two-thirds (69%) of people supported more taxes for the rich, in a recent poll from Americans for Tax Fairness, an organization in favor of more taxes on top earners. (The Democratic/Republican split within the poll sample was roughly even.)
President Joe Biden is proposing tax hikes for rich households so that they can pay their “fair share,” but that could be a tough sell to Republicans.
Biden, among other things, would raise the top income rate from 37% to 39.6%. That move would personally cost Biden an extra $1,000 to $2,000 on his income tax bill, according the estimates of some accountants.
Vice President Kamala Harris and Second Gentleman Doug Emhoff would have to pay roughly $30,000 more under the proposed tax hike, the accountants said.