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At ~current funding levels, the IRS brings in ~$3 for every $1 spent on it. The federal government could bring in more tax dollars just by funding the IRS at a

At ~current funding levels, the IRS brings in ~$3 for every $1 spent on it. The federal government could bring in more tax dollars just by funding the IRS at a higher level; it doesn't, for reasons.

AnthonyMouse 8y ago
> At ~current funding levels, the IRS brings in ~$3 for every $1 spent on it. The federal government could bring in more tax dollars just by funding the IRS at a higher level; it doesn't, for reasons. Here are some of those reasons. $3 for every $1 is an extremely misleading way of putting it, as though the IRS is a business and everything is good as long as it's turning a profit. A better way of putting it is that collecting taxes through enforcement has ~33% overhead, which is high. By comparison, the overhead of normal IRS tax collection is a fraction of a percent. It also only accounts for the government's side of the expense, not the cost (and stress) imposed on innocent taxpayers who get audited to no avail in order to catch the smaller number of people who were actually committing tax fraud, and who are almost always small business owners because they're the ones with unusual tax returns. So the actual cost is even higher and is paid by a group of innocent people who create a disproportionately large amount of economic value while being at high risk of becoming unviable when you impose large surprise costs and time commitments on them like that. The IRS also prioritizes its enforcement to maximize effectiveness, which means they're already taking the low hanging fruit and increased enforcement would be at the margin rather than at the existing average. For the average to be at parity you would need to be doing a lot of audits that cost more than the revenue they generate in order to cancel out the revenue gained from the net-positive enforcement that is already occurring. It's possible that we could actually raise government income by doing less enforcement, because $3 is the average. It would be a net gain to eliminate the ones where we're spending $1 to raise $.50 (or $0) as long as we keep the ones where we spend $1 to raise $20.
- mattnewton 8y ago
  We could easily solve the small buisiness problem by making the audit process happen at the government’s expense and probably still make money. We don’t have the government just tell you what you owe (like many other nations) because of the tax prep industry lobbyist and people vested on existing loopholes. I don’t believe the driving force is protecting small buisinesses from Audits- anecdotal, but small businesses in my family are still audited frequently. I believe it has to do with how unpopular the IRS is with the conservatives for ideological reasons, and they currently control the government. Our president bragged about how dodging taxes was an admirable quality- that kind of attitude is the driving force in american rhetoric, not protecting small buisiness owners.
  - AnthonyMouse 8y ago
    I completely support the idea of the IRS sending individuals a default tax return which you can just use as-is if you don't have anything to dispute or amend and be done. But that doesn't work for small businesses. If you sell hamburgers, the majority of your customers won't have informed the IRS of the transaction. If any part of your supply chain includes normal retail outlets, same thing. Small business tax returns are pretty horrific. (They're at least as complicated for large businesses too, but they actually like it that way for all the usual reasons.) > I don’t believe the driving force is protecting small buisinesses from Audits- anecdotal, but small businesses in my family are still audited frequently. And they typically don't uncover major tax fraud, right? Evidence that the existing level of enforcement is, if anything, too high. > I believe it has to do with how unpopular the IRS is with the conservatives for ideological reasons That doesn't make any sense. Both of the major parties are ideologically bankrupt and ruthlessly pragmatic. Some part of their constituency wants it this way -- and it's probably the small business owners who keep getting audited even though they're not evading taxes. > Our president bragged about how dodging taxes was an admirable quality- that kind of attitude is the driving force in american rhetoric, not protecting small buisiness owners. Not paying taxes you don't actually owe is textbook capitalism. The idea that we should be outraged at companies for not paying what the law we passed says they don't owe instead of replacing the tax laws with ones that cause them to actually owe taxes is some kind of nonsense populist rhetoric.
    - mattnewton 8y ago
      > But that doesn't work for small businesses. If you sell hamburgers, the majority of your customers won't have informed the IRS of the transaction. Hamburger joints getting extra scrutiny at the government’s expense doesn’t seem like a problem to me, especially since they often already do. The people who aren’t getting audited often enough are not Mom&Pop hamburger joints, no one is arguing that. The premise of the parent poster is that the IRS is underfunded to deal with real large scale white collar crime, and as I understand you argue that’s not possible without splash damage to small buisinesses. But they're unrelated: you can specifically target large buisinesses, and you can make the government pay for audit services for small buisinesses. > Some part of their constituency wants it this way -- and it's probably the small business owners who keep getting audited even though they're not evading taxes. That’s utter nonsense. The large Republican doners not only have large tax bills at stake but believe they should not. http://time.com/5075076/koch-brothers-tax-bill-campaign/ http://time.com/5075076/koch-brothers-tax-bill-campaign/ https://www.mcclatchydc.com/news/politics-government/article147454324.html https://www.mcclatchydc.com/news/politics-government/article... https://www.pastemagazine.com/articles/2018/05/sheldon-adelson-cuts-30-million-check-to-house-rep.html https://www.pastemagazine.com/articles/2018/05/sheldon-adels... Each one of these doners individually spends hundreds of times more than the national small buisiness association on lobbying https://www.opensecrets.org/lobby/clientsum.php?id=D000054337&year=2017 https://www.opensecrets.org/lobby/clientsum.php?id=D00005433... And it’s harder to tell the exact numbers, but probably thousands of times more more than all small buisinesses in donations. How ideologically bankrupt democrats are is irrelevant and doesn’t change what is happening here. > The idea that we should be outraged at companies for not paying what the law we passed says they don't owe instead of replacing the tax laws with ones that cause them to actually owe taxes is some kind of nonsense populist rhetoric. The idea is we should be outraged at the tax law and fix it, instead of celebrating the loopholes for billionaires.
- nrb 8y ago
  > It's possible that we could actually raise government income by doing less enforcement, because $3 is the average. It would be a net gain to eliminate the ones where we're spending $1 to raise $.50 (or $0) as long as we keep the ones where we spend $1 to raise $20. Keep in mind the likelihood that the enforcement actions we spend $1 to raise $0.50 are there to deter tens or hundreds of billions in related avoidance or fraud schemes. That's more important than the actual revenue recovered.
  - AnthonyMouse 8y ago
    That's assuming those audits are actually deterring anything. The idea that significant numbers of people are looking at detailed IRS audit statistics before choosing to commit tax fraud is somewhat farfetched. Especially when they're still busting the largest offenders and offering huge bonuses to insiders for reporting fraud.
    - nrb 8y ago
      Viewing detailed statistics is unnecessary as long as it's well-established that the IRS is looking out for and prosecuting certain schemes.
      - AnthonyMouse 8y ago
        Well-established in what? This is one of those things the media is profoundly stupid at. For example: > Johnston and her coauthor, Andrew Joy, BS, also of Western New Mexico University, reviewed data on mass shootings amassed by media outlets, the FBI and advocacy organizations, as well as scholarly articles, to conclude that “media contagion” is largely responsible for the increase in these often deadly outbursts. https://www.apa.org/news/press/releases/2016/08/media-contagion.aspx https://www.apa.org/news/press/releases/2016/08/media-contag... In other words, widespread media coverage of mass shootings has increased the number of mass shootings, because the perpetrators do it for the attention and seeing how much attention it gets encourages future perpetrators. So now the media does its level best not to inflame the public and give unnecessary publicity to these monsters.. or not. It's the same kind of thing here. The deterrent effect you're looking for comes from people talking about the major tax evasion cases the IRS is winning. It gets reduced by publicly lamenting a lower enforcement budget -- which would have no effect on deterrence if nobody was talking about it. It's way more important that people understand that the IRS is prosecuting people than whether the actual number of people they're prosecuting goes up or down. And they definitely still are.
- evancox100 8y ago
  Not sure where GP got his/her numbers, but the $3 to $1 ratio is way off. Maybe it was describing the marginal rate for additional collection of unpaid taxes? US federal income and payroll tax receipts for 2018 was approx $3,000 billion, while the IRS budget for 2018 was only $11.7 billion, a ratio of approx 256 to 1. It makes sense that the rate at the margin would be much higher than the overall rate, you've already collected all the low-lying fruit, now you're going after the scofflaws trying to avoid paying anything.
  - AnthonyMouse 8y ago
    > Not sure where GP got his/her numbers, but the $3 to $1 ratio is way off. Maybe it was describing the marginal rate for additional collection of unpaid taxes? US federal income and payroll tax receipts for 2018 was approx $3,000 billion, while the IRS budget for 2018 was only $11.7 billion, a ratio of approx 256 to 1. That's including all the taxes paid by people with unchallenged tax returns. That's basically just the cost of processing the checks. It's quite a lot more expensive to get money from someone who filed a fraudulent return and you have to do an audit to get them to pay. Especially when a lot of the audits you do won't turn up any real fraud.
    - evancox100 8y ago
      Yes, that's exactly what I said in the paragraph after that.
mattnewton 8y ago
Well, the US government is literally run by tax dodgers right now, whether or not you think that is a good thing.
- cronix 8y ago
  A lot of which is legal "dodging", which is another large problem. There are more loopholes in the tax laws than there are actual tax laws. You have to have money and assets to be able to utilize a lot of them, though. The average Joe wouldn't be able to.

At ~current funding levels, the IRS brings in ~$3 for every $1 spent on it. The federal government could bring in more tax dollars just by funding the IRS at a higher level; it doesn't, for reasons.

AnthonyMouse 8y ago

> At ~current funding levels, the IRS brings in ~$3 for every $1 spent on it. The federal government could bring in more tax dollars just by funding the IRS at a higher level; it doesn't, for reasons. Here are some of those reasons. $3 for every $1 is an extremely misleading way of putting it, as though the IRS is a business and everything is good as long as it's turning a profit. A better way of putting it is that collecting taxes through enforcement has ~33% overhead, which is high. By comparison, the overhead of normal IRS tax collection is a fraction of a percent. It also only accounts for the government's side of the expense, not the cost (and stress) imposed on innocent taxpayers who get audited to no avail in order to catch the smaller number of people who were actually committing tax fraud, and who are almost always small business owners because they're the ones with unusual tax returns. So the actual cost is even higher and is paid by a group of innocent people who create a disproportionately large amount of economic value while being at high risk of becoming unviable when you impose large surprise costs and time commitments on them like that. The IRS also prioritizes its enforcement to maximize effectiveness, which means they're already taking the low hanging fruit and increased enforcement would be at the margin rather than at the existing average. For the average to be at parity you would need to be doing a lot of audits that cost more than the revenue they generate in order to cancel out the revenue gained from the net-positive enforcement that is already occurring. It's possible that we could actually raise government income by doing less enforcement, because $3 is the average. It would be a net gain to eliminate the ones where we're spending $1 to raise $.50 (or $0) as long as we keep the ones where we spend $1 to raise $20.

mattnewton 8y ago
We could easily solve the small buisiness problem by making the audit process happen at the government’s expense and probably still make money. We don’t have the government just tell you what you owe (like many other nations) because of the tax prep industry lobbyist and people vested on existing loopholes. I don’t believe the driving force is protecting small buisinesses from Audits- anecdotal, but small businesses in my family are still audited frequently. I believe it has to do with how unpopular the IRS is with the conservatives for ideological reasons, and they currently control the government. Our president bragged about how dodging taxes was an admirable quality- that kind of attitude is the driving force in american rhetoric, not protecting small buisiness owners.
- AnthonyMouse 8y ago
  I completely support the idea of the IRS sending individuals a default tax return which you can just use as-is if you don't have anything to dispute or amend and be done. But that doesn't work for small businesses. If you sell hamburgers, the majority of your customers won't have informed the IRS of the transaction. If any part of your supply chain includes normal retail outlets, same thing. Small business tax returns are pretty horrific. (They're at least as complicated for large businesses too, but they actually like it that way for all the usual reasons.) > I don’t believe the driving force is protecting small buisinesses from Audits- anecdotal, but small businesses in my family are still audited frequently. And they typically don't uncover major tax fraud, right? Evidence that the existing level of enforcement is, if anything, too high. > I believe it has to do with how unpopular the IRS is with the conservatives for ideological reasons That doesn't make any sense. Both of the major parties are ideologically bankrupt and ruthlessly pragmatic. Some part of their constituency wants it this way -- and it's probably the small business owners who keep getting audited even though they're not evading taxes. > Our president bragged about how dodging taxes was an admirable quality- that kind of attitude is the driving force in american rhetoric, not protecting small buisiness owners. Not paying taxes you don't actually owe is textbook capitalism. The idea that we should be outraged at companies for not paying what the law we passed says they don't owe instead of replacing the tax laws with ones that cause them to actually owe taxes is some kind of nonsense populist rhetoric.
  - mattnewton 8y ago
    > But that doesn't work for small businesses. If you sell hamburgers, the majority of your customers won't have informed the IRS of the transaction. Hamburger joints getting extra scrutiny at the government’s expense doesn’t seem like a problem to me, especially since they often already do. The people who aren’t getting audited often enough are not Mom&Pop hamburger joints, no one is arguing that. The premise of the parent poster is that the IRS is underfunded to deal with real large scale white collar crime, and as I understand you argue that’s not possible without splash damage to small buisinesses. But they're unrelated: you can specifically target large buisinesses, and you can make the government pay for audit services for small buisinesses. > Some part of their constituency wants it this way -- and it's probably the small business owners who keep getting audited even though they're not evading taxes. That’s utter nonsense. The large Republican doners not only have large tax bills at stake but believe they should not. http://time.com/5075076/koch-brothers-tax-bill-campaign/ http://time.com/5075076/koch-brothers-tax-bill-campaign/ https://www.mcclatchydc.com/news/politics-government/article147454324.html https://www.mcclatchydc.com/news/politics-government/article... https://www.pastemagazine.com/articles/2018/05/sheldon-adelson-cuts-30-million-check-to-house-rep.html https://www.pastemagazine.com/articles/2018/05/sheldon-adels... Each one of these doners individually spends hundreds of times more than the national small buisiness association on lobbying https://www.opensecrets.org/lobby/clientsum.php?id=D000054337&year=2017 https://www.opensecrets.org/lobby/clientsum.php?id=D00005433... And it’s harder to tell the exact numbers, but probably thousands of times more more than all small buisinesses in donations. How ideologically bankrupt democrats are is irrelevant and doesn’t change what is happening here. > The idea that we should be outraged at companies for not paying what the law we passed says they don't owe instead of replacing the tax laws with ones that cause them to actually owe taxes is some kind of nonsense populist rhetoric. The idea is we should be outraged at the tax law and fix it, instead of celebrating the loopholes for billionaires.
nrb 8y ago
> It's possible that we could actually raise government income by doing less enforcement, because $3 is the average. It would be a net gain to eliminate the ones where we're spending $1 to raise $.50 (or $0) as long as we keep the ones where we spend $1 to raise $20. Keep in mind the likelihood that the enforcement actions we spend $1 to raise $0.50 are there to deter tens or hundreds of billions in related avoidance or fraud schemes. That's more important than the actual revenue recovered.
- AnthonyMouse 8y ago
  That's assuming those audits are actually deterring anything. The idea that significant numbers of people are looking at detailed IRS audit statistics before choosing to commit tax fraud is somewhat farfetched. Especially when they're still busting the largest offenders and offering huge bonuses to insiders for reporting fraud.
  - nrb 8y ago
    Viewing detailed statistics is unnecessary as long as it's well-established that the IRS is looking out for and prosecuting certain schemes.
    - AnthonyMouse 8y ago
      Well-established in what? This is one of those things the media is profoundly stupid at. For example: > Johnston and her coauthor, Andrew Joy, BS, also of Western New Mexico University, reviewed data on mass shootings amassed by media outlets, the FBI and advocacy organizations, as well as scholarly articles, to conclude that “media contagion” is largely responsible for the increase in these often deadly outbursts. https://www.apa.org/news/press/releases/2016/08/media-contagion.aspx https://www.apa.org/news/press/releases/2016/08/media-contag... In other words, widespread media coverage of mass shootings has increased the number of mass shootings, because the perpetrators do it for the attention and seeing how much attention it gets encourages future perpetrators. So now the media does its level best not to inflame the public and give unnecessary publicity to these monsters.. or not. It's the same kind of thing here. The deterrent effect you're looking for comes from people talking about the major tax evasion cases the IRS is winning. It gets reduced by publicly lamenting a lower enforcement budget -- which would have no effect on deterrence if nobody was talking about it. It's way more important that people understand that the IRS is prosecuting people than whether the actual number of people they're prosecuting goes up or down. And they definitely still are.
evancox100 8y ago
Not sure where GP got his/her numbers, but the $3 to $1 ratio is way off. Maybe it was describing the marginal rate for additional collection of unpaid taxes? US federal income and payroll tax receipts for 2018 was approx $3,000 billion, while the IRS budget for 2018 was only $11.7 billion, a ratio of approx 256 to 1. It makes sense that the rate at the margin would be much higher than the overall rate, you've already collected all the low-lying fruit, now you're going after the scofflaws trying to avoid paying anything.
- AnthonyMouse 8y ago
  > Not sure where GP got his/her numbers, but the $3 to $1 ratio is way off. Maybe it was describing the marginal rate for additional collection of unpaid taxes? US federal income and payroll tax receipts for 2018 was approx $3,000 billion, while the IRS budget for 2018 was only $11.7 billion, a ratio of approx 256 to 1. That's including all the taxes paid by people with unchallenged tax returns. That's basically just the cost of processing the checks. It's quite a lot more expensive to get money from someone who filed a fraudulent return and you have to do an audit to get them to pay. Especially when a lot of the audits you do won't turn up any real fraud.
  - evancox100 8y ago
    Yes, that's exactly what I said in the paragraph after that.

mattnewton 8y ago

Well, the US government is literally run by tax dodgers right now, whether or not you think that is a good thing.

cronix 8y ago
A lot of which is legal "dodging", which is another large problem. There are more loopholes in the tax laws than there are actual tax laws. You have to have money and assets to be able to utilize a lot of them, though. The average Joe wouldn't be able to.