Ep. 12: Taxing hidden wealth

The IRS knows that taxpayers hide a large chunk of their wealth overseas. According to the best estimates, Americans hold more than a trillion dollars in offshore tax havens.  But it's not easy to find those secret accounts and make tax dodgers pay their fair share. In the August issue of the American Economic Journal: Economic Policy, Daniel Reck says that an array of enforcement efforts in 2008 provide a starting point.  He and his co-authors Niels Johannesen, Patrick Langetieg, Max Risch, and Joel Slemrod looked at how special incentives, better information sharing, and more aggressive prosecution by US authorities led to the voluntary disclosure of thousands of foreign accounts. Overall, the new compliance raised nearly a billion dollars in annual tax revenue. However, Reck says that more progress is needed to understand how the ultra wealthy use complex networks of ownership to hide their assets.