FACT BRIEF

Are high earners disproportionately responsible for the majority of unpaid taxes?

Friday, February 12, 2021

By Mia Dillon

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YES

Researchers say high earners account for most of a roughly $400 billion “tax gap” between how much the federal government is owed and how much it collects.

In 2019 Lawrence Summers, a former Treasury Secretary now at Harvard, and University of Pennsylvania professor Natasha Sarin looked at data from 2011 to 2013, the latest available. In a newspaper opinion piece summarizing their work, they attributed 70% of the gap to underpayment by the top 1% of earners.

An earlier study looking at data from 2001 found that the top 10% of earners accounted for 61% of unpaid taxes.

According to the Congressional Budget Office, the Internal Revenue Service examined 46% fewer individual income tax returns between 2010 and 2018, and reduced funds and staff allocated to enforcement activities by 30%. Summers and Sarin outlined steps the agency could take to reduce the gap by at least 15%.

This fact brief is responsive to conversations such as this one.

Sources

Internal Revenue Service: Tax gap estimates for tax years 2011-2013

Tax Notes: Shrinking the tax gap—Approaches and revenue potential

Washington Post: Lawrence Summers and Natasha Sarin op-ed on tax collections

National Tax Journal: The distribution of income tax noncompliance

Congressional Budget Office: IRS enforcement and budget

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Fact briefs are short, credibly sourced summaries that offer “yes/no” answers in response to claims found online. They rely on publicly available, often primary source data and documents. Fact briefs are created by contributors to Gigafact —a nonprofit project looking to expand participation in fact-checking and protect the democratic process. See all fact briefs here.