CLOSING THE TAX GAP

WHEREAS, states are experiencing budget crises of unprecedented proportions that affect all American citizens and in particular members of the American Federation of Teachers; and

WHEREAS, all states but Vermont are required to have balanced operating budgets where revenues match expenditures; and

WHEREAS, the recession that officially began in late 2007 has resulted in significantly fewer tax revenues and left states with a combined $320 billion budget deficit that required program cuts, layoffs, furloughs, hiring freezes and reduced services to balance their budgets; and

WHEREAS, the Center of Budget Policies and Priorities estimates that the states will experience a combined budget deficit of -$300 billion over the next two years with gaps persisting in many states for three or four years; and

WHEREAS, the majority of taxpayers are conscientious and responsibly pay their taxes to keep our education systems and our state, county and municipal governments running; and

WHEREAS, the failure of some taxpayers to pay their fair share of taxes reduces legally owed and much-needed revenue every single year; and

WHEREAS, a tax gap is defined as the difference between the amount of money that taxpayers should pay and the amount that is actually paid; and

WHEREAS, the federal tax gap is estimated to be more than $345 billion annually, and states that have estimated their gaps have found similar discrepancies between taxes owed and paid; and

WHEREAS, this tax gap contributes heavily to the state budget shortfalls, reduces the amount of revenue available to fund vital public services and infrastructure; and

WHEREAS, the tax gap leads to higher state and local taxes in order to make up the gap, raising the burden for the households and businesses who already pay their taxes and creating an unlevel playing field on which larger businesses have an advantage over small businesses while higher-income families with the resources to game the system increase the burden on lower-income families:

RESOLVED, that the American Federation of Teachers support policy decisions at all levels of government that measure tax gaps, reduce chances to avoid taxes and improve technology such as e-filing and the use of electronic databases for audits and collections; and

RESOLVED, that the AFT support a reform and simplification of tax laws so they are clearer and reduce opportunities to avoid or manage tax liabilities; and

RESOLVED, that the AFT work with and educate the leaders of our locals, state federations and the general public on progressive tax policy and fair and equitable enforcement of tax laws to ensure a more consistent and predictable stream of revenues.