Tax 'Cheating' by Ordinary Taxpayers: Does the Underreporting of Income Contribute to the 'Tax Gap'?

The extent to which taxpayers underreport their gross income represents taxes that go unpaid every year. The IRS and the Economic Policy Institute estimate the amount of taxes owed but not paid at $353 billion, equal to about 15% of the total taxes owed. These taxes not paid through our “voluntary and timely” system of taxation are often known as the “tax gap.”. Full Story

Muddy Waters: The AMT and the U.S. Tax Code

Few aspects of our nation’s muddled tax code exemplify the snowball effect of complexity better than the alternative minimum tax (AMT). The AMT—which is owed when tax computed using AMT rules exceeds the regular tax—was introduced by the Tax Reform Act of 1969 to ensure that high-income individuals could not use deductions and exemptions to completely eliminate their tax liability. Today, however, the AMT ensnares not just high-income taxpayers paying little or no tax, but many more people than its creators probably ever intended. Indeed, one of the most critical issues facing our nation today is the increasing burden being placed on the middle class by the AMT. Full Story

Wrong-Headed Reactions to Information Overload Threaten Sound Decision-Making

A long-running debate about whether to develop a unique set of financial reporting standards for small and medium-sized entities (SME) or, alternatively, to extract from existing standards [e.g., U.S. GAAP or International Financial Reporting Standards (IFRS)] a slimmed-down set of requirements to serve as these enterprises’ primary source of guidance, has gathered considerable steam over the past several years and may be headed for resolution over the near term. .Full Story