Unreported Income Rose in Early Part of Decade

Americans avoided paying taxes on a record $1 trillion in income in 2003, according to a new federal government report.

The annual study by the Commerce Department’s Bureau of Economic Analysis shows the gap between true income and the amount Americans reported on income-tax filings increased 35% from 2000 to 2003, a period when tax rates were falling. In the previous four decades, the gap has increased when taxes were raised and contracted when rates were lower.