PRESS RELEASE: EXPERTS AGREE THAT TAX ENFORCEMENT REVENUE WILL BE FAR GREATER THAN CBO ESTIMATE
FOR IMMEDIATE RELEASE
November 18, 2021
Maddy McDaniel, Communications Director
[email protected] or 914-471-7716
EXPERTS AGREE THAT TAX ENFORCEMENT REVENUE WILL BE FAR GREATER THAN CBO ESTIMATE
CBO Methods Will Undercount Revenue From Build Back Better Act’s Tax Enforcement Plan, According to a Range of Experts
WASHINGTON, D.C. — Yesterday, former U.S. Treasury Secretary Lawrence Summers wrote an op-ed in the Washington Post explaining why reforming the IRS will bring in more revenue than stated by recent and anticipated estimates, including the Treasury Department’s estimate and the upcoming Congressional Budget Office (CBO) score.
Summers joins a wide array of economists and tax experts who agree that the Treasury and CBO estimates don’t fully account for the potential revenue that would be captured by restoring the enforcement capabilities of the IRS. If the Treasury Department’s estimate of $400 billion over the next decade is correct, the Build Back Better Act will be paid for — but experts believe even that estimate is conservative.
Here’s what economists and tax experts have said about the potential revenue from restoring tax enforcement:
The CBO’s methods for scoring Build Back Better’s increased IRS enforcement are wrong, and rely on outdated assumptions
Former Treasury Secretary Larry Summers: “In this case, it would be irresponsible to not recognize that the CBO estimate for tax-compliance efforts is conservative to the point of implausibility…I am confident that the proposed investments can generate much more revenue than the CBO assumes.”
Former IRS Commissioners Fred Goldberg Jr. and Charles O. Rossotti and Former IRS Official Fred Forman: “The CBO’s estimate of the BBB’s IRS-related provisions undercounts expected revenue because of incorrect assumptions… We believe the CBO estimate is materially wrong because it relies on assumptions that are not applicable in current circumstances, while not incorporating the transformational funding for enforcement, technology, and services.”
Goldberg Jr., Rossotti, and Forman: “The CBO ignores or downplays key changes and advancements that will impact tax collection and assumes the IRS will continue to be stuck in the 1980s in terms of technology and service… The CBO estimate is simply too low.”
Scott Levy for the Yale Law Journal: “The guidelines are meant to help the CBO and the other scorekeepers apply consistent methods and reach accurate results, but they actually force the CBO to reach inaccurate results when scoring enforcement and program integrity activities.”
Assistant Secretary for Economic Policy at the Department of the Treasury, Ben Harris: “In this one case, I think we’ve made a very strong empirical case for C.B.O. not having an accurate score. The question is would they rather go with C.B.O. knowing C.B.O. is wrong, or would they want to target the best information they could possibly have?”
Former CBO director Douglas Elmendorf: “I think Congress should always look beyond the budget estimate when deciding what to do about legislation.”
Reforming tax enforcement could bring in well over Treasury’s estimate of $400 billion in revenue
Center on Budget and Policy Priorities: “The Congressional Budget Office’s (CBO) September estimate of how much added revenue would come from improving IRS enforcement is lower than a more recent Treasury Department estimate, and even the higher Treasury estimate may be conservative.”
Biden Administration: Modernizing tax compliance would result in revenue of $700 billion over the course of 10 years.
IRS Commissioner Charles Rettig: “It would not be outlandish to believe that the actual tax gap could approach, and possibly exceed, $1 trillion per year. […] I think a modernized IRS could actually beat that.”
Former IRS Commissioners Fred Goldberg & Charles Rossotti: Modernizing tax compliance would allow the U.S. to recover $1.4 trillion in unpaid taxes over 10 years.
Professor Daniel Reck of the London School of Economics, Professor Max Risch of Carnegie Mellon University, and Professor Gabriel Zucman of UC Berkeley: “We conservatively estimate that increased enforcement to close the income tax gap for the top 1 percent could yield $175 billion in currently uncollected income tax revenue per year [1.75 trillion over 10 years].”
About Invest in America
Invest In America is a national rapid response operation advocating for robust public investment to rescue the economy from the COVID crisis and create prosperity for the future, and to fight back against fear-mongers who use deficit concerns as a scapegoat to starve American communities and businesses of resources.
The operation consists of two components: Invest in America, the charitable and public education arm, which is a fiscally sponsored project of Economic Security Project funded by the William and Flora Hewlett Foundation and Economic Security Project co-chair Chris Hughes; and Invest in America Action, the advocacy and social welfare arm, which is a fiscally sponsored project of Economic Security Project Action funded by Chris Hughes and the Omidyar Network.