What If: Everybody Paid Their Taxes

What if all that money we're not collecting could be spent?
3:00 | 03/31/14

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Transcript for What If: Everybody Paid Their Taxes
-- with a master of business degree who tried to answer a few questions about the complicated US tax code. -- we know about. 3% of us -- our federal income taxes. Here's what the IRS doesn't know those that are responsible for a 450. Billion dollar shortfall and -- Is it a hundred millionaires. Thousand. They have no way of telling who's not -- and just that we got a tax gap. Which left us with a question what -- everyone paid their taxes. I and most other people. Probe would probably have to pay me less in taxes actually about the annual cost. Of the Medicare program to give you a sense of the magnitude I would be shocked. Let's be clear about those non compliant American. Did they do not include those that make under 101000 dollars a year mostly students and senior citizens. That are not obligated to pay federal income tax. It also does not include wealthy Americans. Who utilized legal but often criticized tax breaks to pay a lower rate than average 25%. Rate. Board the rest of -- here's what happened in 2012. -- the IRS collected almost into what happened. Trillion dollar federal revenue nearly half of our tax dollars went to defense and health care. Missing from this high of nearly half a trillion dollars in tax rate. Which the IRS calls the tax -- With people not paying what they know it's people not paying old that they -- And some of that about eighty billion or so is his late payments on the treasury does ultimately get back. Both are resorting to. Shady ways of avoiding income tax. -- hiding their income under their pillows they are taking cash they're avoiding. Been noticed. They are doing things that really are. Either violate the law -- -- -- -- That tax -- is money that could have been spent on everything from filling potholes and fighting terrorists. So what are we all told the truth when taxpayer rise. Our budget deficit right now is something in the neighborhood of 600 billion dollars the current tax gap at 450. Would cover a lot of that. So it it would certainly help a lot we probably. We afford to invest substantially. In education. And early child education in pre K we can make college is affordable. And we could also afford at least over a ten or fifteen year period. Two. Rebuild our crumbling -- first. So if we're all getting something in return why wouldn't we all pay our taxes people. Don't seem to see what -- getting back from taxes. We've seen about in the UK but we don't -- dependable think that we get back. So what what -- against those unknown but -- comply. Suddenly started paying their taxes and we all have a reason to thank them next year. As we approach tax day. It is sobering note -- if everybody paid taxes that are -- the typical American. Would not have to pay nearly as much taxes.

This transcript has been automatically generated and may not be 100% accurate.

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