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Computer Scientists Wield Artificial Intelligence to Battle Tax Evasion
- raverbashing 11y ago> Could the federal tax laws — 74,608 pages of legal gray areas and welters of credits, deductions and exemptions — be accurately rendered in an algorithm? Funny how the discussion is never to simplify the code Government is very good at creating their own problems. Then they get to complain about how there's not much money for actual benefits to the population The tax code should be designed to fit into 100 pages (or even better, 20 pages) Reducing nominal taxes AND complex deductions would probably result in a net gain in revenue
- tonyedgecombe 11y agoIn the UK we now have an office of tax simplification: https://www.gov.uk/government/organisations/office-of-tax-simplification https://www.gov.uk/government/organisations/office-of-tax-si... I think they have a long way to go yet.
- willis77 11y agoIn the US our office of tax simplification would also need an oversight committee on tax simplification regulation, an office of tax simplification administrative affairs, a center for tax simplification reform, and an office of tax simplification simplification.
- nickpsecurity 11y agoAnd its own SWAT team. Heck, even Dept of Education has one these days. It's a good way to get attention to one's political viewpoints. :)
- baobabaobab 11y agoTo top it off, congress wouldn't actually allocate funds to any of it.
- m1sta_ 11y agoHas anyone tried to get something like Watson to understand tax law?
- 6d6b73 11y agoLet's first solve AI, and tackle hard problems such as this later :)
- throwupaway1138 11y agoIf it's easier to "solve" AI then to break down Tax Law, then something is off.
- toomuchtodo 11y agoThat was the joke.
- ThomPete 11y agoThat's because its most likely way harder to do than create that algorithm. Politics is not a rational game and can't be dealt with as a rational discipline. Instead it's a constant changing organism that tend to become more and more complex. I agree it should be simpler, but that would probably require a crisis bigger than the 30's.
- zby 11y agoWhy do you think that politics is irrational? Because people don't bother to inform themselves what is really good for them and vote irrationally? This is rational behaviour actually - the expected value of their vote is so minimal that it does not matter - so they might as well use voting to improve their mood.
- ThomPete 11y agoIt's irrational because it's not about being right but about getting it your way. So even if you are right about ex. the rules should be simpler from the perspective the general taxpayer, then someones special interest might trump that. The ability to navigate in the complexity is a good thing for those who can afford the financial advisor. And because there is not one truth because there are not one interest it become impossible to look at it from a rational perspective.
- hga 11y agoFunny how the discussion is never to simplify the code Naw, they do upon occasion simplify it, see e.g. the Tax Reform Act of 1986 (https://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986 https://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986) ... which allows them to start another cycle.
- methou 11y agoWhy not just build a big platform contains all the data, then write kernels for each type of 'violation', learn a pattern, find suspects, then use results to improve the kernel. Human labor + Machine intelligence, Yay! Eventually you'll have all kinds of tax law text covered, and patterns of violations.
- raverbashing 11y agoSure, makes sense Except there are new changes to the tax code with some frequency Not sure if it would be easy to find violations or to filter out 'correct usage' (which seems to have some level of subjectivity as well) Benford's law seems to be a nice proxy for some kinds of frauds as well https://en.wikipedia.org/wiki/Benford%27s_law https://en.wikipedia.org/wiki/Benford%27s_law
- joosters 11y agoFunny how the discussion is never to simplify the code If you simplify the code, it's bound to adversely affect some people, even if it helps others. The losers will loudly protest the changes and you will be a very unpopular politician. So it rarely happens.
- raverbashing 11y agoI agree but that applies to pretty much every change
- harmegido 11y agoNot exactly. This is an example of a change that would positively benefit millions of people a little bit and likely negatively impact (tens of?) thousands of people greatly. The overall benefit would be positive, but the majority aren't impacted quite enough to be very vocal, whereas the minority is and would be extremely vocal. This is not the case with all potential policy changes. Some go the other way (e.g. introducing trade tariffs - large benefit to minority in manufacturers, small negative impact on majority of consumers). And some changes benefit or hurt the majority greatly (e.g. minimum wages help a lot of people quite a bit).
- vellum 11y ago> Funny how the discussion is never to simplify the code Intuit would lobby against it. http://techcrunch.com/2013/03/27/turbotax-maker-funnels-millions-to-lobby-against-easier-tax-returns/ http://techcrunch.com/2013/03/27/turbotax-maker-funnels-mill...
- dsjoerg 11y agoYou would probably like Common Good then: http://www.commongood.org/ http://www.commongood.org/
- MathsOX 11y ago> Funny how the discussion is never to simplify the code This has been the conversation in every political debate for (at least) the past decade. It could be the one broad sentiment shared across party lines. Almost everyone agrees on simplifying the tax code, especially corporate tax, it just becomes more difficult when vested interests are adversely affected when the rubber meets the road.
- nmrm2 11y agoAlso, "simplify the tax code" is too often used as code language for wiping out progressive taxation (on the right) or wiping out corporate subsidies (on the left). Which makes the politics of the issue that much more intractable.
- rayiner 11y agoEveryone wants to simplify the tax code. They just want to simplify the parts other people like. We could cut out a big chunk by getting rid of farm subsidies. My wife (went to high school and college in Iowa) doesn't think that's acceptable. We could simplify by getting rid of all the handouts for older people (mortgage interest deduction). My parents, who save tens of thousands in taxes each year from their McMansion, don't like that idea. I'd love to have a flat tax with no brackets. But my liberal friends like the whole progressive taxation thing. The tax code is a soup but it's one that reflects an equilibrium of all these interests. Also, the idea of government creating a complex tax code just for funsies is naive. The tax code is huge because accounting is complicated, and taxation is basically a superset of accounting. The GAAP rules are 25,000 pages. That's probably the lower bound in how much you can simplify the tax code (without incorporating the GAAP by reference, which basically would outsource writing tax law to a private organization).
- _yosefk 11y agoAlso because they have computers. When they didn't have them, somehow the tax code was shorter: http://www.berglas.org/Articles/ImportantThatSoftwareFails/ImportantThatSoftwareFails.html http://www.berglas.org/Articles/ImportantThatSoftwareFails/I...
- muzz 11y agoMortgage interest deduction isn't so much a handout for "older people" as it for middle and upper incomes, ie those who can afford to buy homes and who have the income level to be in a higher bracket.
- ams6110 11y agoI own a home with a mortgage. I would gladly trade the exemption for a simple, fair tax code. Accounting in large part is complicated because of the tax code. Revenues - Expenses = Profit is not complicated otherwise.
- harryh 11y ago> Revenues - Expenses = Profit is not complicated otherwise. LOL. Nope.
- nickpsecurity 11y agoLet's not forget one significant driver of complex tax code: the IRS almost always has dirt on people with pretty one-side results when they come after you. Rather than speculation, a number of ex-IRS auditors made this claim. The idea was that they have a limited amount of resources to find tax cheats and it's hard to prove on some of them. So, they first make the tax laws favor them by creating lots of uncertainty which already appears for other reasons. Then, they hit hard in terrifying ways when they come after people with little resources to fight back: huge fine, people kicking in their doors, seizures of property, etc. One agent wrote that the goal was a form of terrorism where the few hits they made would scare others into compliance despite the fact they didn't have resources to get to them all. So, it won't get simpler. It benefits IRS's strategy and many stakeholders using exemptions, too.
- muzz 11y agoThe IRS does not make tax laws.
- nickpsecurity 11y agoThey have influence on that process. They also decide on the grey areas which implicitly defines laws. Main point, though, is that they benefit from and ruthlessly exploit the situation. For that reason, they won't push hard to change it.
- togusa 11y agoSoon: tax consultants using artificial intelligence to battle tax anti-tax invasion artificial intelligence leading to a new arms race...
- nickpsecurity 11y agoHeck yeah! Matter of fact, I proposed this when the tax shelter boom was happening a long time ago and I said then I doubted it was original. The reason is that scandals like BCCI show the accounting has to be a maze as much as possible. So, logically, the next trick is to have software that automates creating that maze while still able to get the truth out of its for parties with access. And get money to the right place. At the time, I saw malware authors doing it with program obfuscation kits. Accounting information systems were often boring programs following simple rules. The obfuscation of accounting similarly followed straight-forward rules albeit with different rules for different schemes. Automating them should also be straight-forward. And need no AI whatsoever: just templates, heuristics, and maybe source code in Unlambda or INTERCAL. http://www.madore.org/~david/programs/unlambda/ http://www.madore.org/~david/programs/unlambda/
- togusa 11y agoYep. I work in finance and have seen inference engines used to work out investment goals. It doesn't take much to turn those into tax goals :) There is a ton of money in writing something that does this.
- sebastianconcpt 11y agoWho is John Galt?
- WesternStar 11y agoSomeguy who lives in Brooklyn. Has a trust fund.Tells you about how great he is and how the man is always keeping him down.
- on_ 11y agoWhile Rand isn't the most likeable of charachters and her argument is often persented as anti-povery, on a high level contributing to society through your work is an amazing privelege. Financial contributions to society may not need a large monolithic arbitrater to handle all of the granular details with limited oversite.
- kirk21 11y agoMaybe governments should stop being such a big spenders. The problem is that they never cut their costs and people seem to accept that (at least in Europe). What are these people (politicians) even doing the whole day? Most countries in Europe are super small and quite easy to manage.
- wsc981 11y agoI agree with you. Belgium was almost 2 years without a real government and it managed just fine imo: https://www.washingtonpost.com/blogs/answer-sheet/wp/2013/10/01/589-days-with-no-elected-government-what-happened-in-belgium/ https://www.washingtonpost.com/blogs/answer-sheet/wp/2013/10...
- gaius 11y agoWell this is how it works: there's an economic boom and profits are up and payrolls and bonuses are up and because these things are taxed as percentages tax revenue goes up too. Some of it gets spent on stuff, like schools and hospitals or whatever, but most of it goes on the salaries of public sector workers. Then there's a downturn, profits are down, people are getting laid off, no bonuses are paid and because these things are taxed as percentages, tax revenues are down. But your public sector workers demand to be kept in the style to which they have been accustomed, and the money has to come from the government's "real" spending. Then the next cycle rolls around, and every time the public sector ratchet up their pay and benefits a little more, until eventually that's all the government can spend money on. There is a very good case that people employed by the government, should not get a vote, because they cannot be objective.
- Retric 11y agoNot really, governments regularly cut back in the short term. The real long term ratchet is people keep wanting the government to do more, ex the EPA did not exist in 1969. Health benifits don't get to provide 1990's levels of care they need to keep up with an ever expanding array of new and more expencive treatments. Domestic partners now qualify for government benifits. The public never says, we don't need you to do this anymore. Hell we have started doing DNA testing for Robbery's.
- abdias 11y agoWhy not use it to find corruption in government - that would be much more useful for the most.
- thrill 11y agoBuffer overflow.
- tomohawk 11y agoBetter idea: use the AI to aid people in filling out their taxes instead. Even better idea: simplify the tax code
- gaius 11y agoSingapore's tax code fits on 4 pages of A4 and they have a 99% compliance rate.
- eru 11y agoIt's more hassle to cheat than to pay your taxes, since they are also famously low.
- mamon 11y agoAlso, since tax rules are so simple there are no ways to cheat, because that usually comes with complex and vague rules of tax deductions, which Singapore simply does not have.
- eru 11y agoYes, you'd have to hide your income. And that's harder than getting it misclassified in a more complex system.
- 0x49 11y agoWhile Singapore may have some low taxes, it doesn't really tell you the whole story. owning a cars/road taxes are extremely expensive: http://www.expatsingapore.com/content/view/1152 http://www.expatsingapore.com/content/view/1152 A friend of mine drives a company car there (because it costs so much to own). It cost the company $100,000 for a license and this was after getting picked in a lottery. There is also a government black box in the car that will track where you drive and determine your tax rate. unless you are rich or are an employee of a big company, you pretty much don't drive there. http://thehearttruths.com/2013/08/16/are-taxes-in-singapore-really-low/ http://thehearttruths.com/2013/08/16/are-taxes-in-singapore-... In reality, you are effectively paying a 60% income tax rate...although it looks like much less on paper. Another article on living expenses in Singapore (from the same blog): http://thehearttruths.com/2013/08/02/how-much-do-you-need-to-earn-to-survive-in-singapore/ http://thehearttruths.com/2013/08/02/how-much-do-you-need-to...
- deleted 11y ago[deleted]
- grkvlt 11y ago> A recent paper by Mr. Rosen and four other computer scientists [...] demonstrated how an algorithm could detect a certain type of known tax shelter used by partnerships. The bit.ly link to the paper in the article is broken. The actual PDF can be found here - http://taxprof.typepad.com/files/taxpaper.pdf http://taxprof.typepad.com/files/taxpaper.pdf
- maxharris 11y agoThe tax code should be simplified, and tax rates should be flattened as well. A vast improvement over the status quo would be that everyone pays the same low percentage, no matter the amount they make. If you make your money honestly (and the vast majority of us do), it isn't morally right that you get soaked from the very moment you begin to succeed.
- Frondo 11y agoOf course it's morally right--the people who are doing best in society have the highest obligation to society, just like the strongest and most capable in a family should be the one bringing in the bread. We even instinctively recoil when we see the deadbeat who won't work, forcing their children/siblings/whatever to support them. We even used to have a common phrase for it, noblesse oblige, though that's fallen out of favor in the last generation.
- afsina 11y agoSociety is not your family. Your responsibilities are very different in both. But the main issue is who decides what your social obligations are? Helping people is a moral issue and right for "me", but may not be a moral issue for somebody else. So, I disagree, this is not an obligation. I know that this is the debate of the likes of Rawls versus Rothbard. Just could not help replying.
- Frondo 11y agoWell, ultimately, we all decide what our social obligations are, because we live in a democratic society. We discuss, we persuade, we elect, we vote, and so on. The conversation never really ends, and each new generation chooses again for itself where to draw the line. But things, historically, have gone pretty good for everyone, the more the rich chip in, and pretty badly for almost everyone(though better for the rich, of course), the less they do. Now, I get that a lot of people decide "these are the principles I think are important, and damn the consequences," but I think that's silly--if a principle I like ends up leading to a crummy society in one way or another (e.g. I don't think pollution should be regulated, full stop, and suddenly everyone has shitty air quality), then I'm going to rethink that principle. Others stick to their guns no matter what.
- xacaxulu 11y agoYay. Solving the important problems of our lifetime...</sarcasm>