SINCE THE MOST EFFECTIVE SOLUTION IS TO SIMPLIFY, DEMOCRATS NATURALLY WANT TO COMPLEXIFY (via John Resnick):

Unpaid Taxes Equal $2,680 Per Household (Jim Abrams, 3/04/07, Associated Press)

An IRS study last year concluded that the tax gap in 2001 was $345 billion. Of that, $197 billion came from underreporting on individual income tax returns and $88 billion from underreporting by corporations and the self-employed. The rest came from those not filing or not paying the proper amount.

That gap narrowed to $290 billion after enforcement efforts and late payments were factored in. Still, that left the government collecting only 86 percent of the more than $2 trillion it was owed in 2001. [...]

[C]hris Edwards, director of tax policy studies at the libertarian Cato Institute, said the taxpayer compliance rate is one of the highest in the West, well above some European countries with thriving underground economies. The U.S. rate has held steady in the mid-80 percent level the past three decades.

He compared it to seat belt use, about 81 percent despite years of efforts to educate drivers.

Edwards, in an interview, predicted there would not be any real inroads in shrinking the gap until the tax laws were simpler; that is not expected to happen soon.

"Every new loophole adds additional incentives and ability for people to cheat," he said.

Everson agreed. "We will never be able to audit our way out of the tax gap," he said. Simplification would help, he said, but reducing the gap dramatically "will take some draconian steps" that "risk imposing unacceptable burdens on compliant taxpayers."