- New IRS data shows some high-income Americans aren't paying any taxes.
- Sen. Ron Wyden of Oregon requested data from the IRS about taxpayers who haven't filed returns.
- Nearly 1,000 taxpayers earning more than $1 million have not paid and could be owed billions.
The average American taxpayer pays $16,615 a year in income taxes, but for some of the wealthiest Americans, that number is zero. That's because they simply aren't paying.
According to IRS data requested and released by Sen. Ron Wyden of Oregon, chairman of the Senate Finance Committee, more than 10,000 high-income earners with annual incomes of $200,000 or more received tax returns retroactively to the 2017 tax year. They are shown to each owe at least $100,000 in unreported taxes.
Approximately 1,000 taxpayers with annual incomes of $1 million or more failed to pay their taxes multiple times. from 2015 to 2020, according to an IRS memo viewed by Insider. These taxpayers collectively owe more than $34 billion as of May 2023. Of this group of high-income non-filers, 58 have incomes of at least $10 million and have total debts of more than $16.5 billion.
Taxpayers making at least $10 million paid an average of $7,914,363 in income taxes in 2020, according to IRS data. This means the IRS and the American public are losing a lot of money.
“For the past decade, Congressional Republicans have led the way in cutting IRS resources to excuse tax fraud by the wealthy, and this data shows they are succeeding,” Wyden said in a statement to IRS Commissioner Danny Wuerffel. stated in a letter to. “Maybe if you're a wealthy tax fraudster who doesn't even care about filing your tax returns, you'll get away with it.”
It's no secret that America's ultra-wealthy often pay less in taxes than people expect, due to legal elements of the tax code and, in some cases, underreporting of income. IRS and economists found in 2021 that the top 1% of earners underreported nearly a quarter of their income, and the top 0.1% of earners underreported nearly twice that rate. did. The Treasury Department revealed that the top 1% of American earners evade $163 billion in taxes annually, and the top 0.05% evade $120 billion annually.
Scrutinizing the benefits of the super-rich: For every extra dollar spent on an audit for the top 90th percentile of income earners, researchers can earn up to $12 more, according to a paper by economists from Treasury, Harvard University and the University of Sydney. It has been found. The paper examined IRS audits from 2010 and 2014 and found that every dollar spent on an audit of the top 0.1% of earners could result in a return of up to $6.29.
But audits of the ultra-wealthy are more expensive and time-consuming, and audits have declined sharply in recent years. In 2012, 13.6% of Americans earning at least $10 million had their personal income returns examined. By 2018, that number had dropped to 9.2%, and the IRS recommended an additional $177,176,000 in taxes to the group.
Some of them have decreased This could be due to decreased funding to the IRS, whose budget has been cut over the past decade or so. An infusion of funds from the Biden administration's Inflation Control Act has helped turn things around somewhat, with authorities now recovering $38 million from 175 billionaires and another 1,600 taxpayers who still owe millions. is being pursued.
“This data shows that despite the current political rhetoric being peddled by our Republican colleagues, it remains extremely rare for wealthy individuals to be the subject of prosecution for willful failure to report violations, and thousands of “It is clear that individuals continue to evade responsibility for failure to file,” Wyden wrote. “I urge the IRS to begin enforcement actions against all millionaire non-filers as part of our continued effort to leverage Inflation Control Act funds to restore equity in tax compliance. I strongly urge you to do so.”
