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Abstract: 

The Government Accountability Office has often considered tax issues, but tax-related releases have been particularly prevalent in the last year. In “Individual Income Tax Policy: Streamlining, Simplification, and Additional Reforms Are Desirable,” the GAO discussed the “large and growing structural budget deficit,” as well as the $345 billion gross “tax gap,” which is the difference between the taxes that should have been paid voluntarily and on time and what was actually paid. The overall system can be reduced to one formula:Tax Base x Tax Rates x Compliance Rate = Tax Revenue. Thus, changing the tax system ultimately means changing one or more of the elements on the left side of the equation. The total cost of a tax to taxpayers can be stated as:Tax Liability + Compliance Burden + Efficiency Costs = Total Cost of Tax to Taxpayer If a sufficient argument can be made that government coffers can be filled with less total cost to the taxpayer, then alternatives to the current system must be seriously entertained.

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