FEDERAL TAX ALERT
A PUBLICATION OF THE NATIONAL SOCIETY OF TAX PROFESSIONALS
FEDERAL TAXES FALL AS
Even as Americans’ income rises,
they are paying a smaller share in
federal taxes, according to the latest
statistical analysis by the IRS. The
report analyzed individual 2003 income-
tax returns and it represents the latest
data available on individual tax returns.
IRS data shows that the growing
number of people who are subject to the
AMT are paying an increasing share of
the total amount of federal income taxes,
according to the Treasury Department’s
Statistics of Income Bulletin.
Falling tax rates under the Economic
Growth and Tax Relief Reconciliation
Act of 2001 resulted in a 6.1% decrease
in total individual income tax in 2003,
to $748 billion, from 2002. But, the
portion of total taxes paid under the
AMT rose 38.2%, to $9.47 billion.
While total income tax is on the
downswing, the AMT continues to take
a larger bite of earnings.
Number of returns
with taxable income
Total taxable income $4,200T
Total returns paying
Total income tax paid $748.02B $796.99B -6.1%
Number of individual
Returns affected by
UNCOLLECTED TAXES: $290 BILLION
New Government estimates of
revenue losses from uncollected taxes
are likely to increase pressure on the
Internal Revenue Service for much
tougher enforcement actions.
Getting precise numbers is very
difficult, since nobody knows for sure
how much income isn’t reported.
Millions of people who should be filing
tax returns aren’t doing so.
The IRS issued (February 14) revised
estimates of the nation’s “tax gap,” the
difference between what taxpayers
should be paying and what they
actually do pay. The study suggests
that individuals represent by far the
largest part of the problem, especially
self-employed taxpayers and others
whose earnings aren’t reported to the
government and where taxes aren’t