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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 a

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.
    - pnutjam 7y ago
      Maybe offtopic, but why should we expect police to exercise discretion? That's how you end up with disproportionate crime being prosecuted in neighborhoods of color. I think laws should be simple and enforced. For example, raise speed limits so they are high enough that nobody has a reason to routinely break them, then draconian enforcement. Old white Grandpa weaving around should get the same penalty as young Black guy weaving through traffic.
      - tempestn 7y ago
        I don't disagree, but until and unless all laws (not just speed limits) are written with sensible exceptions and thresholds included, police and prosecutorial discretion are the only avenues we have to create a semblance of reasonableness.
AnthonyMouse 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. That's because the point where $1 in IRS spending brings in $1 in government revenue is well past the optimal level. First, it's not just government spending that matters. If you have the IRS spend $.60 and the taxpayer spend $.60 to recover $1, you're spending a total of $1.20 to get $1, not $.60. (And the burden doesn't inherently fall on people doing something wrong; it costs people money to get audited even when the audit reveals no malfeasance.) Then you have to consider that IRS spending is unproductive. If the IRS spends $.50 and the taxpayer spends $.50 in order to recover $1, you haven't generated $1 for government programs, it's only $.50, but it costs the taxpayer $1. The collection efficiency of doing that is astoundingly bad -- in normal cases the collection overhead is <1%. Meanwhile the amount of actual tax evasion in the US is quite low, so more audits don't result in a lot more compliance. (Tax avoidance is something else entirely, but IRS spending does nothing there.)
- ceejayoz 7y ago
  Instead of contrived, low-ball numbers, you could use the real ones: > Congress appropriated $11.4 billion for the IRS in FY 2018 and IRS enforcement programs collected $59.4 billion, for a return on investment (ROI) of about $5.2 for every $1 invested in the IRS. https://home.treasury.gov/system/files/266/02.-IRS-FY-2020-CJ.pdf https://home.treasury.gov/system/files/266/02.-IRS-FY-2020-C...
  - AnthonyMouse 7y ago
    What contrived numbers? The argument was that the government should increase IRS resources until they're spending $1 for every $1 they recover. I provided several reasons why that would be inefficient, independent of what the current numbers are.
- tempestn 7y ago
  The 'costs' to the taxpayer are in taxes they already owe and should have paid though. Perhaps the increased enforcement will encourage fewer people and corporations to under-pay their taxes, resulting in greater efficiency than that shown by the direct collections of unpaid taxes. More generally, it seems strange to me to consider having to pay taxes owed as a cost that should be avoided. IE if the police had to spend money to catch a bank robber, we wouldn't weigh the cost to the robber of having to return the stolen money. (Which isn't to say that under-paying taxes is morally equivalent to bank robbery, but I think the analogy holds.)

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.
  - pnutjam 7y ago
    Maybe offtopic, but why should we expect police to exercise discretion? That's how you end up with disproportionate crime being prosecuted in neighborhoods of color. I think laws should be simple and enforced. For example, raise speed limits so they are high enough that nobody has a reason to routinely break them, then draconian enforcement. Old white Grandpa weaving around should get the same penalty as young Black guy weaving through traffic.
    - tempestn 7y ago
      I don't disagree, but until and unless all laws (not just speed limits) are written with sensible exceptions and thresholds included, police and prosecutorial discretion are the only avenues we have to create a semblance of reasonableness.

AnthonyMouse 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. That's because the point where $1 in IRS spending brings in $1 in government revenue is well past the optimal level. First, it's not just government spending that matters. If you have the IRS spend $.60 and the taxpayer spend $.60 to recover $1, you're spending a total of $1.20 to get $1, not $.60. (And the burden doesn't inherently fall on people doing something wrong; it costs people money to get audited even when the audit reveals no malfeasance.) Then you have to consider that IRS spending is unproductive. If the IRS spends $.50 and the taxpayer spends $.50 in order to recover $1, you haven't generated $1 for government programs, it's only $.50, but it costs the taxpayer $1. The collection efficiency of doing that is astoundingly bad -- in normal cases the collection overhead is <1%. Meanwhile the amount of actual tax evasion in the US is quite low, so more audits don't result in a lot more compliance. (Tax avoidance is something else entirely, but IRS spending does nothing there.)

ceejayoz 7y ago
Instead of contrived, low-ball numbers, you could use the real ones: > Congress appropriated $11.4 billion for the IRS in FY 2018 and IRS enforcement programs collected $59.4 billion, for a return on investment (ROI) of about $5.2 for every $1 invested in the IRS. https://home.treasury.gov/system/files/266/02.-IRS-FY-2020-CJ.pdf https://home.treasury.gov/system/files/266/02.-IRS-FY-2020-C...
- AnthonyMouse 7y ago
  What contrived numbers? The argument was that the government should increase IRS resources until they're spending $1 for every $1 they recover. I provided several reasons why that would be inefficient, independent of what the current numbers are.
tempestn 7y ago
The 'costs' to the taxpayer are in taxes they already owe and should have paid though. Perhaps the increased enforcement will encourage fewer people and corporations to under-pay their taxes, resulting in greater efficiency than that shown by the direct collections of unpaid taxes. More generally, it seems strange to me to consider having to pay taxes owed as a cost that should be avoided. IE if the police had to spend money to catch a bank robber, we wouldn't weigh the cost to the robber of having to return the stolen money. (Which isn't to say that under-paying taxes is morally equivalent to bank robbery, but I think the analogy holds.)