Mind the gap
April 14, 2021

IRS Commissioner Charles Rettig told the Senate Finance Committee on Tuesday that the gap between federal taxes owed and paid "could approach and possibly exceed $1 trillion per year," more than double the official estimate of $441 billion. IRS research shows that $175 billion of those underpayments come from the wealthiest Americans, Rettig said, and other factors include the rise in untaxed cryptocurrencies, income from foreign sources, and illegal income.

Senate Finance Committee Chairman Ron Wyden (D-Ore.) called the $1 trillion tax gap "a jaw-dropping figure" and asked Rettig how the IRS could fit that. Rettig suggested better reporting of income from third parties, more electronic tax return filing, more regulation of tax return preparers, and a larger enforcement budget. After years of budget cuts, the IRS is "outgunned" by tax cheats and dodgers, he said, endorsing a proposal to take agency funding out of the discretionary stream subject to congressional whimsy and politics. President Biden has proposed raising the IRS budget by 10.4 percent, mostly to boost enforcement.

Rettig also said that while it will be a challenge and require extra hiring, the IRS expects to be ready to start making monthly payments of $250 to $300 per child by July 1, as set out in Biden's $1.9 trillion COVID-19 relief law. The IRS is "not historically" a benefits agency, he said, but it "will be working hard to deliver this program quickly and efficiently." The IRS was also responsible for sending out three rounds of COVID-19 stimulus checks over the past year. The Week Staff

May 15, 2018

On Tuesday, clothing retailer Gap "sincerely" apologized to China for a T-shirt that showed a map of China that did not include Taiwan, the self-ruled island China considers part of its territory, or Tibet and disputed parts of the South China Sea. A photo of the shirt, apparently taken at a Gap store in eastern Canada, prompted outrage on China's Weibo microblogging platform, China's state-owned Global Times reports. Gap said it had already pulled the shirts off shelves in China and destroyed them.

"Upon the realization that one of our T-shirts sold in some overseas markets mistakenly failed to reflect the correct map of China, we urgently launched an internal investigation across the group and have decided to immediately pull back this T-shirt from all the concerned global markets," Gap said in a statement. It promised "more rigorous reviews" to prevent future incidents of this type and assured Beijing that Gap respects China's "sovereignty and territorial integrity." China's Foreign Ministry responded by saying it "will follow carefully their actions and remarks later on." Joseph Wu, Taiwan's foreign minister, said China beating up on companies like Gap over Taiwan is "rather unfortunate in terms of cross-strait relations."

Gap joins Delta Air Lines, Marriott, Zara, and other brands that have recently apologized to China for running afoul of their territorial precepts, The Associated Press notes. Not coincidentally, China is home to 1.3 billion people and a growing consumer class. Peter Weber

January 8, 2018

BBC News China editor Carrie Gracie quit her job at the Beijing bureau after accusing the BBC of a "secretive and illegal pay culture," BBC News reported Sunday night. In an open letter on her blog, Gracie said that she was offered the new China editor position four years ago, and despite the challenges of living 5,000 miles from her kids "in a heavily censored one-party state" where she "would face surveillance, police harassment, and official intimidation," she accepted the job, on the condition that "I must be paid equally with my male peers."

The BBC was compelled last July to release the salaries of all employees earning more than £150,000 (about $200,300) a year, and the two male international editors, for the U.S. and Middle East, earned "at least 50 percent more" than Gracie — a 30-year BBC veteran who speaks fluent Mandarin — and the other female international editor, Gracie said. "Enough is enough." The Equality Act of 2010 "states that men and women doing equal work must receive equal pay," and "I told my bosses the only acceptable resolution would be for all the international editors to be paid the same amount," she wrote.

The BBC offered me a big pay rise which remained far short of equality. It said there were differences between roles which justified the pay gap, but it has refused to explain these differences. ... The rise of China is one of the biggest stories of our time and one of the hardest to tell. I cannot do it justice while battling my bosses and a byzantine complaints process. Last week I left my role as China Editor and will now return to my former post in the TV newsroom where I expect to be paid equally. [Carrie Gracie]

A BBC spokeswoman told BBC News that an independent audit found "no systemic discrimination against women" and the BBC is "performing considerably better than many" organizations on pay equity. Peter Weber

November 10, 2014

When people talk about the rise of income inequality, this is what they mean:

That chart, from The Economist, is based on data from a recent working paper by U.C. Berkeley economist Emmanuel Saez and Gabriel Zucman at the London School of Economics, published by the National Bureau of Economic Research. The Economist also has a good writeup of the report, which bolsters the findings from Thomas Piketty's bestselling Capital in the Twenty-First Century.

As the chart above shows, according to Saez and Zucman's findings, the top 0.1 percent of U.S. households — 160,000 families, worth an average of $73 million — now holds 22 percent of America's wealth, for the first time since 1929. The real eye-opener, though, is the top 0.01 percent — 16,000 families, worth an average of $371 million, including both the Mark Zuckerbergs and Paris Hiltons of America — own 11.2 percent of total wealth, tying 1916 as the highest percentage on record.

The super-wealthy hit (still-comfortable) bottom in 1978, the economists found, and have risen steadily since; the bottom 90 percent peaked and started their long decline in 1986. Differences in wealth generation is part of the equation — the income of the top 1 percent rose 3.4 percent a year from 1986 to 2012, versus 0.7 percent for the bottom 90 percent — but Saez and Zucman say the biggest cause of the declining middle class is rising debt.

In any case, great news for fans of the Roaring Twenties. Check out the interactive graph at The Economist. Peter Weber

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