A recent study of unpublished Internal Revenue Service data has found that wealthier people are hiding their income at greater rates than those in lower income brackets.
The paper, "The Distribution of Income Tax Noncompliance," by University of Michigan economics professor Joel Slemrod and IRS economist Andrew Johns, found that when taxpayers were arrayed by their "true" income, defined as reported income adjusted for the underreporting estimated by the IRS tax gap methodology, the ratio of aggregate misreported income to true income generally increases with income. The misreporting peaks among taxpayers with adjusted gross income between $500,000 to $1 million, who understate their incomes by about 21 percent, and is lower than the peak ratio for individuals with income above $1 million.
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