IRS Report Shows Closing the Tax Gap Would Not Close the Deficit
The latest tax gap report from the IRS has generated much media attention—and much misunderstanding.
6 min readScott Hodge is President Emeritus & Senior Policy Advisor at the Tax Foundation, which he led as President for over two decades, between 2000 and 2022. Scott Hodge is recognized as one of Washington’s leading experts on tax policy, the federal budget, and government spending. After taking over the Tax Foundation, he grew the organization from a modest, six-person group with a storied brand into a national powerhouse with a staff of over 30, informing smarter tax policy at the federal, state, and global levels.
Scott led the development of the Tax Foundation’s most successful programs, the Taxes and Growth Dynamic Tax Modeling project and the State Business Tax Climate Index, two projects that have changed the terms of the tax debate, encouraged competition towards pro-growth tax policies, and demonstrated to policymakers and taxpayers alike the impact of the tax code on our daily lives. Combined with his experience in tax policy of more than 35 years, Scott was one of the driving forces of tax reform that culminated in the historic 2017 Tax Cuts and Jobs Act (TCJA). Congress and the White House turned to Scott and the Tax Foundation for guidance in crafting the once-in-a-generation legislation.
The TCJA was just the latest in a string of developments in tax policy that Scott helped foster. During the 1990s, he helped design the major tax components of the Contract with America that became the eventual centerpieces of the 1997 tax bill and the Bush tax cuts in 2001 and 2003.
Scott has written and edited three books on the federal budget and streamlining the government and has authored hundreds of studies on tax policy and government spending. He has also written dozens of editorials and opinion pieces for publications such as The Wall Street Journal, The Washington Post, USA TODAY, the New York Post and The Washington Times. And he has conducted more than 1,000 radio and television interviews—including with NBC Nightly News, CBS Evening News, CNN, Fox, Hardball with Chris Matthews, and C-SPAN.
Before joining the Tax Foundation, Scott was Director of Tax and Budget Policy at Citizens for a Sound Economy. He also spent ten years at The Heritage Foundation as a fellow analyzing budget and tax policy. He holds a degree in political science from the University of Illinois at Chicago.
The latest tax gap report from the IRS has generated much media attention—and much misunderstanding.
6 min readCan an organization rightfully be called a “nonprofit” if it almost always makes money? And what if most of that organization’s income comes from “business income,” should it legitimately be considered a “charity”?
7 min readWhat can Former President Trump’s previous tariff efforts—specifically the safeguards he authorized on imported washing machines in 2018—tell us about his most recent proposal for a 10 percent tariff on all imports?
5 min readThe early evidence indicates that making a “good return greater” through Opportunity Zone tax incentives is an ineffective and poorly targeted way to raise the living standards of low-income residents.
6 min readMoving from one athletic conference to another can mean millions in additional revenue sharing from lucrative broadcasting contracts and other revenue streams, all tax-free.
6 min readExplore IRS clean energy tax credits, including Direct Pay, the IRA and CHIPS Act tax provisions, and Section 1603 grant program. See more.
7 min readLawmakers should avoid delivering social and economic benefits through the tax code whenever possible and work to simplify or repeal the tax expenditures already in the tax code.
7 min readA better-designed tax system should be a goal of any fiscal consolidation package. That said, our simulations suggest that even substantially higher tax increases are insufficient to curtail long-run debt-to-GDP growth.
14 min readFederal spending, deficits, and debt are at unsustainable levels. The proposed federal budget is laden with redundant programs, obsolete programs, corporate welfare, and nationalized industries. As Congress begins to craft the FY 2024 federal budget, it needs to establish a process of systematically reviewing programs and priorities.
12 min readOver the long run, tax policies that grow after-tax incomes and the economy do more to boost charitable giving than policies that try to incentivize people to be charitable.
9 min readNew CBO data shows that the current U.S. fiscal system—both taxes and direct federal benefits—is very progressive and very redistributive.
7 min readWhile supporters of the federal estate tax may be correct that only a fraction of estate tax returns eventually pays the estate tax, IRS data shows that it disproportionately impacts estates tied to successful privately owned businesses. Thus, it acts as a second or third layer of federal tax on these successful businesses over the owners’ lifetime.
9 min readIf ever there was a paycheck protection program, defending people from bracket creep may be the most important one ever designed.
6 min readThe Inflation Reduction Act focused more on enforcement and hiring more auditors rather than programs that make it easier for taxpayers to comply with the code and the IRS to administer it.
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9 min readThe latest CBO long-term budget outlook paints a troubling picture of fiscal irresponsibility. Rather than halt this rampant spending, Congress is actively adding programs that will exacerbate these long-term trends.
7 min readThe Senate has begun debate on the so-called Chips bill, which would provide $52 billion in grants and $24 billion in tax credits to supposedly strengthen the production of semiconductors in the U.S.
3 min readAs part of President Biden’s proposed budget for fiscal year 2023, the White House has once again endorsed a major tax increase on accumulated wealth, adding up to a 61 percent tax on wealth of high-earning taxpayers.
4 min readCongressional Democrats are reported to be weighing a special tax on the assets of billionaires to raise revenues to pay for their Build Back Better spending plan. There are two fundamental challenges to such a plan.
7 min readOne has to wonder how stable or sustainable the Democrats’ spending program can be if it must rely so heavily on the taxes paid by such a small number of taxpayers as in the top 1 percent.
4 min read