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At some point, you'd start spending a lot more money to recover less money. You'd probably be wise to back off at that point... "diminishing returns". We're no

• perpetualpatzer 7y ago
  > We're not there, though. I suspect that's true, but you don't actually know that from this dataset. Some portion of the cost is born by the auditee to respond/defend against the audit and passed on to shareholders/employees/customers. If the response costs are great with respect to the IRS's audit costs, the government could quite profitably add auditors, but have a negative overall impact on end citizens.
• SamReidHughes 7y ago
  Even if the IRS "profits" from spending $1B to collect $2B, that's a 50% processing fee on that incoming money, halving the efficiency of that marginal dollar. If that's still worth collecting, it's better to raise taxes. Really the appropriate stopping point in IRS funding has little to do with whether one of these numbers is close to another.
  • davidw 7y ago
    It's also a deterrent to people trying to evade taxes. It's not fair to raise taxes on other people who are honest and pay because it's a pain to collect from some people. I realize that's simplifying things some, and not all people who don't pay do so because they're sneaky or dishonest or whatever, but I think the broader point stands.
    • SamReidHughes 7y ago
      So how do you know we're not at the point of diminishing returns?