The Tax-Gap.

"The National Taxayer Advocate's 2003 Annual Report to Congress estimates that, in the year 2001, the amount of tax voluntarily and timely paid by taxpayers was approximately $311 billion less than the actual tax liability of taxpayers. The Report attributes the tax gap to underreporting ($249 billion), underpayment ($32 billion) and nonfiling ($30 billion). The Report indicates that the tax gap is growing and, as a consequence, law-abiding taxpayers are being asked to pay more than their fair share of taxes to make up for the resulting revenue shortfall. In addition, the Federal Budget deficit is projected to be $477 billion for fiscal year 2004."

- from the February 26, 2004, letter to Mr. George K. Yin, Chief of Staff, Joint Committee on Taxation, from Senators Baucus and Grassly, Ranking Member and Chairman, respectively, of the Joint Committee. In the letter, the Senators ask the staff to come up with proposals to reduce the size of the "tax gap". That report was given by the staff recently.

The report, IMHO, will not collect appreciably more taxes but make it even less fair on citizens who pay their taxes, by increasing and making more complex reporting requirements, making penalties more severe, and taking away deductions and exclusions that serve one social tax policy or another. The problem is that (a) people think government does a poor job of handling its money and are justified in cheating, and (b) their sense of duty is, in any event, eroded by their upbringing.

I refer the reader to Jesus' parable of the Widow's mite. He praises her for her faithfulness to an institution, the Temple, which was largely unfaithful.