Wisconsin loses $1.2 billion every year due to the “Tax Gap,” the difference between what is legally owed by taxpayers and what is actually paid. This equals one out of every $10 collected by the state as general purpose revenue. The estimate is in a new IWF report: Wisconsin’s Billion-Dollar Tax Gap–How uncollected taxes can help fill the state’s budget hole.The tax gap is important because the loss of over one billion dollars a year means less state aid to cities, towns, counties and schools. The reduced state aid results in program cuts that raise class size, slow firefighter response time and deliver fewer meals on wheels to the elderly. At the same time, property taxes go up to make up for lost state dollars. It’s a double whammy for responsible citizens and business owners who file their tax returns, pay their taxes and support the services and infrastructure needed for stable and prosperous communities. Who’s not paying taxes? Some of it is people making honest mistakes or being confused by complex tax laws. But a good deal of it is deliberate:
* Individuals, business owners and corporations skipping out on paying income tax;
* Internet buyers and others avoiding sales tax;
* Smokers sneaking around the cigarette tax by going out of state.