As states consider painful cuts, why don't more measure "tax gaps"?

The Internal Revenue Service measures how much money taxpayers owe the government, and by subtracting the amount the taxpayers actually pay, arrive at what’s called the “tax gap.” In 2022, that number neared $700 billion — and after measuring it, the IRS was able to claw back some $90 billion of the missing cash.

Many states, however, don’t measure their own tax gaps, partly because of the difficulty and expense of doing so. But putting the resources towards measuring state tax gaps could be fiscally worthwhile, according to Josh Goodman, a senior officer at the Pew Charitable Trusts who studies state fiscal policy. That’s especially true as some states consider even more painful options such as raising taxes or cutting services.

“If instead governments could collect more of what they’re already owed, they’d have money to spend on their priorities, they could avoid some of those unpleasant choices,” Goodman said. “But the starting point of that is really figuring out how big of a problem it actually is.”

“Marketplace” host Kai Ryssdal talked to Goodman about his recent research report on state tax gaps.

To listen to their conversation, use the audio player above.