Golden age of rich America’s tax evasion may be drawing to close 

Golden age of rich America’s tax evasion may be drawing to close 

A trillion here, a trillion there and pretty soon you are talking real money. Were the US Internal Revenue Service to collect all that it is owed under current law, the $1tn yearly shortfall would pay for Joe Biden's infrastructure bill four times over. Most of this evasion is carried out by the top 1 per cent of US taxpayers “” the group that complains most about headline rates. In practice, the rich pay considerably less than advertised.

Rather than increase US tax rates, therefore, Biden's priority should be to enforce the ones that he inherited. The $1tn annual evasion, which Chuck Rettig, head of the IRS, estimated in testimony to the US Senate this week, does not include the breaks and shelters that make the US tax code so notoriously leaky. Last year, 55 of America's largest companies, including Nike and FedEx, paid nothing in corporate taxes in spite of collectively making about $40bn in profits.

The headline US corporate income tax rate is 21 per cent, which Biden wants to lift to 28 per cent. However, the official rate is not the point. The effective US corporate tax rate is just 11.2 per cent, which is below that of Ireland.