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Tax Cheats Cost Uncle Sam $3 Trillion; Cost You $2200 in 2010

·Editor in Chief

Americans may not be as bad as our friends in Greece, but we do share something in common: A culture of tax evasion.

"This is a big problem," says David Callahan, senior fellow at Demos and editor of Policy Shop.

How big?

Tax evasion has cost the U.S. government $3 trillion over the past decade, Callahan says, citing IRS data. "It is a major contributor to budget deficits and the accumulation of national debt since 2001."

Furthermore, every individual tax filer will have to pay an extra $2200 in 2010 tax to "subsidize" the tax cheats, according to Callahan.

For the record, Callahan is not referring to the roughly 45% of (mainly poor) U.S. households who will pay no federal income taxes this year. (See: The Only Thing More Complex Than the Tax Code Is Figuring Out How to Fix It)

That is a "separate situation," he says, suggesting the bulk of tax evasion is being done by wealthy Americans, particularly small business owners like doctors, lawyers and restaurateurs.

"In estimating the tax gap, the IRS found that the largest share of tax evasion—over 50 percent—was by individuals with business income," Callahan writes at OurFiscalSecurity.org. "A more detailed breakdown of losses in 2008 by the scholar John Slemrod and IRS analyst Andrew Johns found that the single biggest source of lost revenue was from proprietors of businesses who don't report the full amount of their income. Other big cheaters include professionals whose income comes through S corporations, partnerships, and real estate."

In sum, wealthy Americans "disproportionately cheat" on their taxes, he says. "[They] have many ways to defer income, hide it in trusts and all sorts of fancy things the rest of us can't do."

In response, the IRS has stepped up effort to audit the returns of wealthy Americans, which Callahan says is about reestablishing a sense of fairness in the code as much as catching lawbreakers or recouping lost revenue.

"They feel if they bring attention to their campaign to reduce tax evasion by the wealthy it will make ordinary people more willing to pay their taxes and believe more the system is fair," he explains. "If you think 'the guy at the top is getting all these loopholes', you think 'why should I be the chump to pay every dime? The IRS is well aware of that dynamic."

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @atask or email him at altask@yahoo.com