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Yeah, the people "getting away with it" in this case aren't those paying withholding or even mostly individuals... they're corporations bilking the government a

by kurthr 7y ago

Yeah, the people "getting away with it" in this case aren't those paying withholding or even mostly individuals... they're corporations bilking the government and every other taxpayer. It's more like cutting back on the FBI when there's an outbreak of organized crime...

nostromo 7y ago
The problem is Congress, not the IRS. Most corporations pay the amount of tax they owe under the law, but the law is written to allow tax evasion. The IRS can’t do anything about this. The fix is to close several well known loopholes.
- ceejayoz 7y ago
  The IRS can't go after people using legal loopholes, but that has little to do with what's being discussed here. The enforcement arm, which goes after people who aren't using loopholes, but committing actual tax fraud (and stuff like non-filers), has a ROI of something like $5 for every $1 spent. Cutting its budget is like burning piles of taxpayer dollars in a barrel.
- munk-a 7y ago
  Honestly I'd just like to see a minimum VAT lifetime tax, when a product reaches the USA it should be charged on value equal to a sane minimum VAT (as value added inside the country is charged) less VAT applied on a per-segment basis in supplier countries. If Bermuda has a 0% VAT and apple is adding 90% of sale value in that country by affixing a sticker... then the US should collect the money Bermuda is leaving on the table - it may not directly benefit US tax payers (since those countries with low VATs may then choose to raise them) but that should help even out the benefit of shipping a bunch of commodities to a random island to slap a sticker on - it'll encourage less globalized supply networks by removing some perverse incentives to ship the item off to every corner of the globe and... we might just help the environment while doing it.
- sachdevap 7y ago
  "Most corporations pay the amount of tax they owe under the law" <- That's what the IRS is there to ensure. Legal tax evasion is not a problem in discussion here.
- ergothus 7y ago
  And yet, we've been in a state for decades where a $1 increase in IRS budget results in more than $1 in income, yet their budget has continued to be cut. I'm all for closing down those well-known loopholes, but that doesn't mean there won't be loopholes, or just people/companies not paying what they owe. At this stage, those of us that ARE paying our taxes are the ones being taken advantage of.
  - tempestn 7y ago
    Exactly. It seems obvious that you would want at the very least to fund the agency to the point where you no longer see a marginal profit for each dollar spent. At that point you're still very far from maximizing taxes collected.
    - nostromo 7y ago
      Should we do this for other types of law enforcement? Local police pay for themselves in traffic and parking tickets, among other fees. So maybe we should keep adding cops until we've maximized fine revenue. Or maybe marginal profit isn't a good way to measure law enforcement...
      - tempestn 7y ago
        I certainly agree with you that it isn't a good model for local law enforcement. The main reason being that there are many areas where we expect police to exercise some discretion. Speed limits being the main one that comes to mind—for whatever reason, speed limits are set at a level that the majority of the population do not follow to the letter, and we consider it unreasonable for police to issue tickets for driving 1mph over the limit. However obviously doing so would be legal and profitable. Also, since nearly everyone breaks this law to some extent, there is a great deal of room for discrimination in enforcement. (Of course one could argue that the proper solution would be to set realistic speed limits that most people will follow, and I would agree with that, but that's not the situation we have now.) The question is, is this analogous to paying taxes? Perhaps to some extent—there are most likely enough uncollected taxes that discrimination in enforcement could be an issue, for instance. Although I expect that at the current level of enforcement, more investment would reduce that problem rather than exacerbate it. But more generally, do we see 'minor' tax cheating as being analogous to driving 1mph over the speed limit? I'm not so sure. Certainly the consequences should be proportional to the crime: small and accidental underpayments should simply result in having to pay the amount owed. But it seems to me that people (and corporations) should be required to pay all taxes legally owed, so over-enforcement in this area shouldn't be a concern until it got to the level where money was being spent that could be better used elsewhere. (Which obviously isn't the case when you're seeing a marginal profit on enforcement.) I suppose the logical counter-argument would be that the money could be better spent by the people earning it in the first place—IE that taxes should be lower—and indeed I do expect this is the belief of most people who argue against enforcement.
- wang_li 7y ago
  >but the law is written to allow tax evasion. Avoidance. There's no natural tax system so suggesting the law is setup to allow tax evasion is illogical.
- ska 7y ago
  A problem with loopholes is Congress. A problem with fraud/non-file/etc. is not enough enforcement, i.e. the IRS budget. These are separate issues.
- meddlepal 7y ago
  Minor nit: > law is written to allow tax evasion. The law is not written to allow tax evasion. Tax evasion is knowingly violating the law. The word you're looking for is tax avoidance. Everyone does some amount of tax avoidance whether it be taking deductions or carefully parsing the code to work through it. That's avoidance and it's 100% legal as you mentioned. Second, corporate taxes are dumb. They're effectively passed through the corporation to the consumer or service user or worse just passed onto labor by reducing wages and hiring to compensate.
- dexterdog 7y ago
  > the law is written to allow tax evasion That is not tax evasion. If the law is used to avoid paying a tax it is legal. Tax evasion is when you don't pay taxes that you should have paid and somebody often goes to jail and/or pays penalties for it.

by kurthr 7y ago

nostromo 7y ago

The problem is Congress, not the IRS. Most corporations pay the amount of tax they owe under the law, but the law is written to allow tax evasion. The IRS can’t do anything about this. The fix is to close several well known loopholes.

ceejayoz 7y ago
The IRS can't go after people using legal loopholes, but that has little to do with what's being discussed here. The enforcement arm, which goes after people who aren't using loopholes, but committing actual tax fraud (and stuff like non-filers), has a ROI of something like $5 for every $1 spent. Cutting its budget is like burning piles of taxpayer dollars in a barrel.
munk-a 7y ago
Honestly I'd just like to see a minimum VAT lifetime tax, when a product reaches the USA it should be charged on value equal to a sane minimum VAT (as value added inside the country is charged) less VAT applied on a per-segment basis in supplier countries. If Bermuda has a 0% VAT and apple is adding 90% of sale value in that country by affixing a sticker... then the US should collect the money Bermuda is leaving on the table - it may not directly benefit US tax payers (since those countries with low VATs may then choose to raise them) but that should help even out the benefit of shipping a bunch of commodities to a random island to slap a sticker on - it'll encourage less globalized supply networks by removing some perverse incentives to ship the item off to every corner of the globe and... we might just help the environment while doing it.
sachdevap 7y ago
"Most corporations pay the amount of tax they owe under the law" <- That's what the IRS is there to ensure. Legal tax evasion is not a problem in discussion here.
ergothus 7y ago
And yet, we've been in a state for decades where a $1 increase in IRS budget results in more than $1 in income, yet their budget has continued to be cut. I'm all for closing down those well-known loopholes, but that doesn't mean there won't be loopholes, or just people/companies not paying what they owe. At this stage, those of us that ARE paying our taxes are the ones being taken advantage of.
- tempestn 7y ago
  Exactly. It seems obvious that you would want at the very least to fund the agency to the point where you no longer see a marginal profit for each dollar spent. At that point you're still very far from maximizing taxes collected.
  - nostromo 7y ago
    Should we do this for other types of law enforcement? Local police pay for themselves in traffic and parking tickets, among other fees. So maybe we should keep adding cops until we've maximized fine revenue. Or maybe marginal profit isn't a good way to measure law enforcement...
    - tempestn 7y ago
      I certainly agree with you that it isn't a good model for local law enforcement. The main reason being that there are many areas where we expect police to exercise some discretion. Speed limits being the main one that comes to mind—for whatever reason, speed limits are set at a level that the majority of the population do not follow to the letter, and we consider it unreasonable for police to issue tickets for driving 1mph over the limit. However obviously doing so would be legal and profitable. Also, since nearly everyone breaks this law to some extent, there is a great deal of room for discrimination in enforcement. (Of course one could argue that the proper solution would be to set realistic speed limits that most people will follow, and I would agree with that, but that's not the situation we have now.) The question is, is this analogous to paying taxes? Perhaps to some extent—there are most likely enough uncollected taxes that discrimination in enforcement could be an issue, for instance. Although I expect that at the current level of enforcement, more investment would reduce that problem rather than exacerbate it. But more generally, do we see 'minor' tax cheating as being analogous to driving 1mph over the speed limit? I'm not so sure. Certainly the consequences should be proportional to the crime: small and accidental underpayments should simply result in having to pay the amount owed. But it seems to me that people (and corporations) should be required to pay all taxes legally owed, so over-enforcement in this area shouldn't be a concern until it got to the level where money was being spent that could be better used elsewhere. (Which obviously isn't the case when you're seeing a marginal profit on enforcement.) I suppose the logical counter-argument would be that the money could be better spent by the people earning it in the first place—IE that taxes should be lower—and indeed I do expect this is the belief of most people who argue against enforcement.
wang_li 7y ago
>but the law is written to allow tax evasion. Avoidance. There's no natural tax system so suggesting the law is setup to allow tax evasion is illogical.
ska 7y ago
A problem with loopholes is Congress. A problem with fraud/non-file/etc. is not enough enforcement, i.e. the IRS budget. These are separate issues.
meddlepal 7y ago
Minor nit: > law is written to allow tax evasion. The law is not written to allow tax evasion. Tax evasion is knowingly violating the law. The word you're looking for is tax avoidance. Everyone does some amount of tax avoidance whether it be taking deductions or carefully parsing the code to work through it. That's avoidance and it's 100% legal as you mentioned. Second, corporate taxes are dumb. They're effectively passed through the corporation to the consumer or service user or worse just passed onto labor by reducing wages and hiring to compensate.
dexterdog 7y ago
> the law is written to allow tax evasion That is not tax evasion. If the law is used to avoid paying a tax it is legal. Tax evasion is when you don't pay taxes that you should have paid and somebody often goes to jail and/or pays penalties for it.