From APM, American Public Media, and WNYC.

This is Freakonomics Radio on Marketplace.

Here's today's host of Marketplace, Sarah Gardner.

It's Freakonomics time.

Every couple of weeks we talk to Stephen Dubner.

He's co-author of the books and blog about the hidden side of everything.

Stephen, it's good to talk to you.

Great to talk to you, Sarah.

Thanks for having me.

It is April, which is every taxpayer's favorite month of course.

I thought today what we should do is take a look at the tax code we're stuck with for now.

And see if there are some improvements, however slight that we should be thinking about.

Okay, so what kind of things are we talking about here?

Well, one of the biggest failures of the current system is also the most obvious,

which is that the IRS fails to collect a huge portion of the taxes that are levied,

that are legitimately owed. So about 17% of the total tax bill, which is more than $450 billion a year.

Whoa, what say that again? 17%.

That's pretty astounding.

It's a big number. It's called the tax gap.

It's about $450 billion a year.

The biggest contributor to this gap by far is very simple cash.

It's all the cash that people earn and simply don't report to the IRS.

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