Folks in Iowa don’t like the idea of the federal government overspending. New deficit forecasts issued in late July project a $445 billion funding gap for the fiscal year ending on Sept. 30.
The good news is the figure is $76 billion less than predicted in February. Thanks to the recovering economy, the budget gap is narrowing. But it’s still far too big. And spending demands loom large as the federal government beefs up homeland security and pays for the War on Terrorism.
As a fiscal conservative and lifelong family farmer, spending beyond one’s means just goes against the grain. Especially when I know another giant gap exists. The one between taxes owed and taxes paid. Now I’m a tax cutter. And I believe hard-working Americans deserve to keep more of their own money. But I also believe that all taxpayers ought to pay their fair share.
Estimates indicate the tax gap may reach as high as $311 billion. That’s incredible. Certainly enough to narrow the federal deficit considerably.
The complexity of the U.S. tax code, coupled with our unique system of voluntary compliance, creates a tempting situation for cheaters to cheat. At a congressional hearing I called in July to examine ways to identify and narrow the tax gap, witnesses revealed disturbing accounts by which some businesses escape their federal tax obligations.
According to a year-long federal investigation by the Government Accountability Office, more than 100,000 businesses that applied to hire immigrant workers in the last seven years either owed back taxes, failed to file tax returns or never even registered with the IRS.
As chairman of the Senate Finance Committee, I legislate tax policy and oversee the federal tax collection agency. It’s my job to make sure the IRS strikes the right balance between serving taxpayers and enforcing tax laws.
With some $300 billion in uncollected taxes, the IRS needs to work harder and smarter. When dishonesty creeps into the system, it spoils our voluntary system of compliance and sows the seeds for even more tax evasion.
My hearing in July showed we need a better system of information-sharing among federal agencies. The GAO audit found that the immigration bureau did not even check with the IRS to verify whether companies were in compliance with federal tax laws. Just like the intelligence communities, the left hand needs to know what the right hand is doing to get the job done
.
Consider the violations found by the GAO. Of the 413,723 businesses that applied to sponsor foreign workers with the Bureau of Citizenship and Immigration Services, the IRS had no record that 19,972 even existed; 67,949 had not filed one or more tax returns; and 18,942 had unpaid tax bills reaching $5.6 billion.
Companies and individuals who do business with the federal government ought to come clean before they obtain federal services. Requiring taxpayers to confirm they are up to date on their tax obligations would help bridge the tax gap.
In another effort to expose tax cheats who shelter income using complex tax avoidance schemes, I’m advancing legislation that would reward whistleblowers who pass along inside information to the IRS.
Whistleblowers have saved American taxpayers billions of dollars in defense and health care fraud. More than $12 billion has been recovered to the Federal Treasury since I first worked to strengthen federal whistleblower laws in 1986.
The gap created by tax cheats shifts an unfair burden to honest taxpayers, pinches much-needed resources, fuels deficit-spending and grows the national debt. Iowans can rest assured I’ll continue my efforts to bridge the divide and bring dishonest taxpayers into full compliance.