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The US Bureau of Economic Analysis estimates that in 2018, little more than a third of business income wasn't reported in tax filings. That's roughly $700 billion. Policymakers have long railed against the tax gap with little success. Economist Ellen McGrattan lays out a dynamic theory of business taxation, and she uses the framework to tease out the impact of two potential reforms, higher business taxes, and greater tax enforcement.
By Heller HurwiczThe US Bureau of Economic Analysis estimates that in 2018, little more than a third of business income wasn't reported in tax filings. That's roughly $700 billion. Policymakers have long railed against the tax gap with little success. Economist Ellen McGrattan lays out a dynamic theory of business taxation, and she uses the framework to tease out the impact of two potential reforms, higher business taxes, and greater tax enforcement.