Tax evasion is a growing problem.
The IRS depends heavily on self-reporting of income and voluntary compliance with the tax laws. Auditing only reaches fewer than one percent of taxpayers. Not surprisingly, there is strong evidence that more and more taxpayers are failing to fully report income and pay all the taxes they owe. If compliance were perfect, the two figures should be the same. But when tax rates were raised in 1990 and 1993, the gap rose as the tax saving from noncompliance increased.