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> "No business would fail to fund a unit that, on average, brought in $7 for every dollar spent. Shareholders would rebel and bring lawsuits, or at least oust t

> "No business would fail to fund a unit that, on average, brought in $7 for every dollar spent. Shareholders would rebel and bring lawsuits, or at least oust the management or board of directors," Olson wrote in her preface to the report. "Yet this is precisely what we are doing with the IRS budget."[0] Sounds like the IRS should be the most funded government agency. [0] https://www.irs.gov/newsroom/national-taxpayer-advocate-delivers-annual-report-to-congress-focuses-on-tax-reform-irs-funding-and-identity-theft https://www.irs.gov/newsroom/national-taxpayer-advocate-deli...

anonymouzz 8y ago
Yeah, especially because tax avoidance is an insanely difficult problem to fight once it gets big enough. I mean it's impossible to prosecute at once even 10% of the country for not paying taxes. Imagine the US going through a Greece episode, which was caused in big part by tax avoidance. To this day it's perfectly fine in Greece to ask for a ~20% "cash discount" in almost any shop, which of course means simply not paying the VAT tax (similar to the US sales tax). Edit: let me self-correct - this does not seem to be an actual problem in the US - with this plot: https://en.m.wikipedia.org/wiki/Tax_evasion#Government_response https://en.m.wikipedia.org/wiki/Tax_evasion#Government_respo...
- hardtke 8y ago
  The US has a very high tax compliance rate because most of our income is reported through 3rd parties (w2, 1099, etc.). For income that is not reported through a 3rd party, we have low compliance rates as well. For income subject to little or no information reporting, the misreported income is 63% of total according to the IRS. https://www.irs.gov/pub/irs-soi/p1415.pdf https://www.irs.gov/pub/irs-soi/p1415.pdf
  - sandworm101 8y ago
    >> because most of our income is reported through 3rd parties For most people and most of their income. I seriously doubt it true that most income, as in >50% of all income earned by all US entities, is so reported. Corporate income is massive. Corporations, the wealthy, private contractors ... their income is not automatically reported. Note too that "income" includes all income, not just net profits subject to tax.
    - barry-cotter 8y ago
      Indeed. It is trivially easy to get people to conspire to evade taxes for the benefit of other people for similar payment to that they could get working for clean companies when they could pay massive fines or go to prison for doing so. Equally it is simple to find these people when any one of them could go to the government and inform them of your illegal actions when first informed or as a whistleblower after years doing so. The difference between the US and Mexico in terms of corruption is not that the people in the US are pure of heart, it’s that coordinating corrupt and illegal activities is next to impossible when law enforcement are clean.
      - isoskeles 8y ago
        > when law enforcement are clean What are some differences between law enforcement in the US and Mexico?
        barry-cotter 8y ago
        Fundamentally, that the FBI is run by people who don’t take bribes and who promote people who find corruption in state or local law enforcement or other government offices. In Mexico there are states where the chief of police is owned by the narcos, in the US, a single department being corrupt from top to bottom is probably the biggest scandal since WWII. https://en.m.wikipedia.org/wiki/Rampart_scandal https://en.m.wikipedia.org/wiki/Rampart_scandal
jandrese 8y ago
It has diminishing returns, but right now the budget is still on the steep part of the graph so funding it makes a lot of sense unless you're a tax cheat.
thaumasiotes 8y ago
> "No business would fail to fund a unit that, on average, brought in $7 for every dollar spent. > "Yet this is precisely what we are doing with the IRS budget." They might, if $8 out of the $7 brought in by that unit were cannibalized from other units.
SamReidHughes 8y ago
Imagine if VISA charged a 14% fee on your tax payments. That's the math here.
- elihu 8y ago
  Perhaps the previous paragraph of context helps: > IRS Funding Decisions Fail to Take Into Account “Return on Investment.” On a budget of $11.8 billion, the IRS collected $2.52 trillion in FY 2012. That translates to an average return-on-investment (ROI) of about 214:1. Yet the appropriations process treats the IRS like any other discretionary spending program, with no explicit recognition that each dollar appropriated for the IRS generates substantially more than one dollar in additional revenue. Last year, the IRS Commissioner estimated in a letter to Congress that proposed reductions in the IRS budget would cause tax collections to fall seven times as much. > > “No business would fail to fund a unit that, on average, brought in $7 for every dollar spent. Shareholders would rebel and bring lawsuits, or at least oust the management or board of directors,” Olson wrote in her preface to the report. “Yet this is precisely what we are doing with the IRS budget.”
  - dragonwriter 8y ago
    > No business would fail to fund a unit that, on average, brought in $7 for every dollar spent. Shareholders would rebel Even if the money it brought in came mostly from the shareholders, and disproportionately those most engaged in corporate governance?
  - SamReidHughes 8y ago
    I read the paragraph. It says the marginal return is 7:1. And that's only counting the IRS's side of the costs.
deleted 8y ago
[deleted]
conanbatt 8y ago
Except the math is the opposite: for every dollar the IRS spends, people lose 7 dollars. If all the money were to go to the IRS, congratulations, you achieved communism.
- sublupo 8y ago
  If only... It costs 7 dollars plus hundreds of dollars in lawyer and attorney's fees to properly prove in an audit that you paid your taxes

anonymouzz 8y ago

Yeah, especially because tax avoidance is an insanely difficult problem to fight once it gets big enough. I mean it's impossible to prosecute at once even 10% of the country for not paying taxes. Imagine the US going through a Greece episode, which was caused in big part by tax avoidance. To this day it's perfectly fine in Greece to ask for a ~20% "cash discount" in almost any shop, which of course means simply not paying the VAT tax (similar to the US sales tax). Edit: let me self-correct - this does not seem to be an actual problem in the US - with this plot: https://en.m.wikipedia.org/wiki/Tax_evasion#Government_response https://en.m.wikipedia.org/wiki/Tax_evasion#Government_respo...

hardtke 8y ago
The US has a very high tax compliance rate because most of our income is reported through 3rd parties (w2, 1099, etc.). For income that is not reported through a 3rd party, we have low compliance rates as well. For income subject to little or no information reporting, the misreported income is 63% of total according to the IRS. https://www.irs.gov/pub/irs-soi/p1415.pdf https://www.irs.gov/pub/irs-soi/p1415.pdf
- sandworm101 8y ago
  >> because most of our income is reported through 3rd parties For most people and most of their income. I seriously doubt it true that most income, as in >50% of all income earned by all US entities, is so reported. Corporate income is massive. Corporations, the wealthy, private contractors ... their income is not automatically reported. Note too that "income" includes all income, not just net profits subject to tax.
  - barry-cotter 8y ago
    Indeed. It is trivially easy to get people to conspire to evade taxes for the benefit of other people for similar payment to that they could get working for clean companies when they could pay massive fines or go to prison for doing so. Equally it is simple to find these people when any one of them could go to the government and inform them of your illegal actions when first informed or as a whistleblower after years doing so. The difference between the US and Mexico in terms of corruption is not that the people in the US are pure of heart, it’s that coordinating corrupt and illegal activities is next to impossible when law enforcement are clean.
    - isoskeles 8y ago
      > when law enforcement are clean What are some differences between law enforcement in the US and Mexico?
      - barry-cotter 8y ago
        Fundamentally, that the FBI is run by people who don’t take bribes and who promote people who find corruption in state or local law enforcement or other government offices. In Mexico there are states where the chief of police is owned by the narcos, in the US, a single department being corrupt from top to bottom is probably the biggest scandal since WWII. https://en.m.wikipedia.org/wiki/Rampart_scandal https://en.m.wikipedia.org/wiki/Rampart_scandal

jandrese 8y ago

It has diminishing returns, but right now the budget is still on the steep part of the graph so funding it makes a lot of sense unless you're a tax cheat.

thaumasiotes 8y ago

> "No business would fail to fund a unit that, on average, brought in $7 for every dollar spent. > "Yet this is precisely what we are doing with the IRS budget." They might, if $8 out of the $7 brought in by that unit were cannibalized from other units.

SamReidHughes 8y ago

Imagine if VISA charged a 14% fee on your tax payments. That's the math here.

elihu 8y ago
Perhaps the previous paragraph of context helps: > IRS Funding Decisions Fail to Take Into Account “Return on Investment.” On a budget of $11.8 billion, the IRS collected $2.52 trillion in FY 2012. That translates to an average return-on-investment (ROI) of about 214:1. Yet the appropriations process treats the IRS like any other discretionary spending program, with no explicit recognition that each dollar appropriated for the IRS generates substantially more than one dollar in additional revenue. Last year, the IRS Commissioner estimated in a letter to Congress that proposed reductions in the IRS budget would cause tax collections to fall seven times as much. > > “No business would fail to fund a unit that, on average, brought in $7 for every dollar spent. Shareholders would rebel and bring lawsuits, or at least oust the management or board of directors,” Olson wrote in her preface to the report. “Yet this is precisely what we are doing with the IRS budget.”
- dragonwriter 8y ago
  > No business would fail to fund a unit that, on average, brought in $7 for every dollar spent. Shareholders would rebel Even if the money it brought in came mostly from the shareholders, and disproportionately those most engaged in corporate governance?
- SamReidHughes 8y ago
  I read the paragraph. It says the marginal return is 7:1. And that's only counting the IRS's side of the costs.

deleted 8y ago

[deleted]

conanbatt 8y ago

Except the math is the opposite: for every dollar the IRS spends, people lose 7 dollars. If all the money were to go to the IRS, congratulations, you achieved communism.

sublupo 8y ago
If only... It costs 7 dollars plus hundreds of dollars in lawyer and attorney's fees to properly prove in an audit that you paid your taxes