The enforcement of taxes in the United States is nowhere near perfection. The degree in which tax laws should be enforced and analyzed is very complex. The main question to whether the proper tax enforcement allowed depends largely on the current tax structure. Even the role of complexity in the current tax system is a factor in influencing the size of the large tax gaps and substantial amount of tax avoidance (United States Congress House of Representatives, 2010). Tax complexity is also emphasized. Tax complexity allows other ways to hide income from being taxed and, consequently, it causes an increase in the overall cost of taxation (United States Congress House of Representatives, 2010). Tax complexity can also increase the chances that
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There is always some degree of risk associated with tax evasion. In looking at examples where tax evasion is successful; the taxpayer actually gains by not paying their taxes. In situations where tax evasion is discovered by tax authorities, the taxpayer will typically have to pay the taxes due and the fines. In looking at some of the economic models; the sole decision on evading taxes at all can depend on whether the expected gain is more than the anticipated loss (Pickhardt & Prinz, 2012). This can make a taxpayer choose to evade some of their taxes. The amounts evaded by a taxpayer usually depends on the risk and if there will be a gain. The extent of the tax evasion depends on the risks that may be based on the level of income and tax liability. The IRS will make all attempts to try and find cheaters and can try punishing them more severely. A better way to enforce the tax law would involve overstating the risks involved in getting caught. The penalties involved in tax evasion have for the most part been low with minimal criminal cases. Very high penalties would help in achieving less tax evasion such as imposing larger penalties and increase the ability to detect taxpayer-evading taxes. Among the various types of potential penalties that would help lower tax evasion instances include, monetary fines that would recoup the revenue when criminal sanctions do not (Pickhardt & Prinz, 2012). By increasing penalties that would utilize fines would also be helpful. While these would be very helpful, in reality, it does not seem to be a consideration. There are reasons why extremely large penalties are not that desirable. For instance, distinguishing an honest mistake from purposely cheating is tough to determine, and this is why penalties cannot be excessive. Also, when high penalties require any kind of criminal prosecution; they are never easy or cheap to put in place. Audits for example, may take lots of different
There is always some degree of risk associated with tax evasion. In looking at examples where tax evasion is successful; the taxpayer actually gains by not paying their taxes. In situations where tax evasion is discovered by tax authorities, the taxpayer will typically have to pay the taxes due and the fines. In looking at some of the economic models; the sole decision on evading taxes at all can depend on whether the expected gain is more than the anticipated loss (Pickhardt & Prinz, 2012). This can make a taxpayer choose to evade some of their taxes. The amounts evaded by a taxpayer usually depends on the risk and if there will be a gain. The extent of the tax evasion depends on the risks that may be based on the level of income and tax liability. The IRS will make all attempts to try and find cheaters and can try punishing them more severely. A better way to enforce the tax law would involve overstating the risks involved in getting caught. The penalties involved in tax evasion have for the most part been low with minimal criminal cases. Very high penalties would help in achieving less tax evasion such as imposing larger penalties and increase the ability to detect taxpayer-evading taxes. Among the various types of potential penalties that would help lower tax evasion instances include, monetary fines that would recoup the revenue when criminal sanctions do not (Pickhardt & Prinz, 2012). By increasing penalties that would utilize fines would also be helpful. While these would be very helpful, in reality, it does not seem to be a consideration. There are reasons why extremely large penalties are not that desirable. For instance, distinguishing an honest mistake from purposely cheating is tough to determine, and this is why penalties cannot be excessive. Also, when high penalties require any kind of criminal prosecution; they are never easy or cheap to put in place. Audits for example, may take lots of different