Agrees To Go After Tax Cheats Causing $600 Billion Annual Tax Gap
Gottheimer questions Treasury Secretary Yellen in Financial Services Committee hearing today
Above: Gottheimer questions U.S. Treasury Secretary Janet Yellen during a House Financial Services Committee hearing today.
WASHINGTON, D.C. — Today, Tuesday, March 23, 2021, U.S. Congressman Josh Gottheimer (NJ-5) questioned U.S. Treasury Secretary Janet Yellen during a House Financial Services Committee hearing about addressing the need to reinstate the State and Local Tax (SALT) deduction and to combat tax fraudsters who avoid paying the IRS what they should, causing an annual $600 billion tax gap.
Gottheimer noted that the 2017 partisan Tax Hike Bill, which was jammed through Congress, raised taxes for a majority of Fifth District families. It gutted the SALT deduction — which was first established in 1913 — with a disastrous $10,000 cap. In fact, all four Fifth District counties and scores of middle-class families in North Jersey had an average SALT claim above the $10,000 cap. For example, in Bergen County, the average taxpayer claimed $24,783 before the cap went into place. This SALT cap affects North Jersey teachers, first responders, small business owners, and young people trying to start a family — all groups who may be struggling during this pandemic.
“It’s high time we fought back against these Moocher States that put the 2017 Tax Hike Bill into place. Our taxes need to be cut in New Jersey, not raised, as we recover from COVID-19, and removing the SALT cap has broad bipartisan support. Will the Administration support eliminating the SALT cap and fully reinstating the deduction, ending this misguided policy of double taxation on my constituents?” Congressman Josh Gottheimer (NJ-5) asked during today’s hearing.
Responding to Gottheimer, U.S. Treasury Secretary Janet Yellen said, “I do think the SALT cap is a feature of [the Tax Cuts and Jobs Act] that resulted in very disparate treatment. There are a lot of options that have been presented and I would work with you to try to ensure that the inequities that this caused are remedied in a fair and responsible way. As you mentioned, there is a bipartisan proposal to repeal the cap. President Biden discussed a proposal that would cap itemized deductions at twenty-eight percent. The caps could be increased. So, I think we need to study just what impact it has had and I look forward to working with you to find a fair way to address it.”
Gottheimer also brought up efforts to close the annual $600 billion tax gap in the nation, which is the difference between what taxpayers should pay to the IRS and what they actually pay on time, due to tax fraudsters and cheats underreporting and concealing income.
“The New York Times this week published an article stating that more than $600 billion of income goes unreported yearly to the IRS. This gap in reporting will reduce federal revenue by $1.4 trillion over the next decade. It’s a great opportunity to make sure we go after tax cheats or people who don’t pay what they should, to avoid raising taxes otherwise. Are you prioritizing looking into the revenue raisers that don’t require tax rates to increase, such as increasing the audit capabilities of the IRS, to help close the tax gap?” Congressman Josh Gottheimer (NJ-5) asked Secretary Yellen today.
Secretary Janet Yellen responded saying, “Absolutely. I think this is something that would be both fair and not involve any increase in tax rates or burdens. It would make sure those who are supposed to pay do. It does require more resources for the IRS. I’d like to work with Congress to see if we can provide that funding because I think this would be a very important initiative. I’m fully supportive of it.”
Watch video of Gottheimer’s questioning at today’s House Financial Services Committee hearing HERE.