Hank Paulson, the US Treasury head, has outlined how his department plans to narrow the US tax gap.
Speaking to the Senate Finance Committee, Paulson said that the Treasury had developed 16 proposals, which originally appeared in the Budget, aimed at narrowing the difference between what the IRS thinks it is owed and what it collects. The revised proposals followed discussions with Eric Solomon, the Treasury's assistant secretary for tax policy, and the departing IRS commissioner Mark Everson.
Paulson stressed that he would try to minimise the extra work for taxpayers that the new proposals will create.
"We must consider the impact of any new rules on the vast majority of Americans who already pay what they owe, and better target our enforcement efforts to minimise additional burdens," Paulson said.
Paulson also said that a simpler code would improve compliance.
Data on the 2001 tax gap showed that the majority of it was caused by underreporting. But Paulson admitted it would be difficult for underreporting to fall significantly "without adding draconian and painful requirements on all taxpayers".
Paulson asked the Senate Finance Committee to enact the 16 revised Budget proposals. ITR
