States Losing Billions in Tax Gap

0:00States are losing billions and unpaid taxes each year through what's called the tax gap, but hardly any have a way to even measure how much. This gap covers folks who skip filing, under-report income, or pay late. A new report from the Pew Charitable Trust drops the truth. Most states just aren't tracking it. Pew says the issue flies under the radar because figuring it out is super complex, especially with state tax rules differing from the feds. Meanwhile, many states face big budget holes right now, that lost cash could plug those deficits, helping dodge tax hikes or service cuts that hit everyday people hard. Experts warn it's a missed opportunity during tough financial times. New research by Rob Warren, a former IRS agent turn professor, backs this up. He hit up all states with income taxes in 2020 and 2021, and only eight had estimated their gaps since 1992. Bottom line, states got to step up and measure these gaps to grab that revenue. It's right there, waiting to ease the squeeze without raising rates.

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