7 ms·

It used to work that way but the IRS no longer prioritizes the highest earners because they can't afford to. They've been underfunded for years and auditing hig

It used to work that way but the IRS no longer prioritizes the highest earners because they can't afford to. They've been underfunded for years and auditing high earners is very expensive and often involves long legal battles which they don't have the resources to fight. Audit rates of people making $1m or more are down by 80% since 2011. Now "the top 1% of taxpayers by income were audited at a rate of 1.56%. EITC recipients, who typically have annual income under $20,000, were audited at 1.41%." Source: https://www.propublica.org/article/irs-now-audits-poor-americans-at-about-the-same-rate-as-the-top-1-percent https://www.propublica.org/article/irs-now-audits-poor-ameri...

hombre_fatal 6y ago
Maybe we just need a new agency. One that targets rich people that us plebs can support and politicians can promote. And then just keep the IRS how it is going after plebs for us to hate. Seems like institutional failure if I have to vote for IRS expansion, the same people going after my tiny coffer, for the IRS to go after anyone else. That's a dumb conflict of forces.
- Scoundreller 6y ago
  Or just start over. Dunno why my dollars that I had to go to work for and do what someone else told me to do is guiltier and more traceable than anything else.
- klyrs 6y ago
  > That's a dumb conflict of forces. That's deft political engineering. Congress is to blame. They tweak the budget to protect themselves and their true constituents (megadonors and lobbyists). We're in a peculiar situation where democrats and republicans are both on the "right" in their fiscal policies. Any blush of "left" policy is shouted down by bipartisan echoes of McCarthyism. The politicians of both parties are, by and large, upper class, and they collectively pit the middle class against the lower class. We don't need a new IRS, we need a new breed of politician. And enough funding for the IRS that it can audit those politicians and their donors fearlessly.
- StavrosK 6y ago
  Off-topic, but it strikes me as interesting how everyone always considers themselves "the masses", calling themselves "us plebes" on a forum where a six-figure salary is the norm.
  - sarakayakomzin 6y ago
    it strikes me as interesting that you're apparently not allowed to argue in favor of making things better for everyone at a relative proportional scale given the top .01%.
  - sneak 6y ago
    Low six figure salaries are barely middle class in many cities the US. The kinds of rich people being discussed in this thread are still a very small percentage of six-figure+ earners. I would venture to say (no pun intended) that most HN readers are not accredited investors.
    - StavrosK 6y ago
      Sure, but "middle class" doesn't really mean much, the median income in the US is $61k.
      - heylook 6y ago
        I'm a little thick. What are you implying here?
        StavrosK 6y ago
        I mean that "middle class" doesn't mean you're in the median.
      - JackFr 6y ago
        Is that per capita, per household or by tax return?
    - perl4ever 6y ago
csomar 6y ago
Maybe the problem is that they are a s*ty agency that randomly fines people and expect them to pay up. I don't have knowledge how the IRS works but I know at least one tax agency in this world that would fine you random amounts and just wait for your reaction. They are not in the business of fairly auditing your numbers because they'll lose, so they turn to poorer persons that they can bully. Another thing, many countries expect rich people and rich companies to hire government-certified accountants to verify your fillings (known as a Statutory auditor https://en.wikipedia.org/wiki/Statutory_auditor https://en.wikipedia.org/wiki/Statutory_auditor ). This makes it harder for these companies to do stuff the non-audited guy can easily do.
perl4ever 6y ago
There is an aspect of seeming illogic I want to call out here. Maybe it's just my lack of understanding. Assuming the IRS is underfunded, saying they focus on low income people as a consequence, when it would be more lucrative to target high earners, makes no sense. The claims could all be true, but they don't appear to be connected. Why would the total amount of funding force the IRS to spend less on individual cases? An alternative hypothesis might be that it actually is more cost effective to target people with less money, for instance, people paid mainly in cash tips, but I don't have any idea if that is plausible, I'm just saying the narrative doesn't make sense to me. In general, targeting rich people seems obvious because rich people "have the money", but mathematically, it depends on how many there are when you multiply it out. Anyway, I am very open to the idea that the IRS is being stupid and counterproductive, or politically avoiding prosecuting the rich, but I think it raises the question of "why" that is not answered by saying "underfunding". They still have funding to go after one or more high earners, right, so the total amount is irrelevant if it's taken as a given.
- clusterfish 6y ago
  Maybe IRS just knows that they're being underfunded precisely to stop them from auditing Congress's rich sponsors, so they proactively self-censor their audits to prevent further cuts?
  - EGreg 6y ago
    Pretty much this. I don’t understand how Republicans can argue cutting funding to the IRS will save the government’s spending. Instead their goal is to make the tax base richer by cutting taxes of the rich. Many of them are all about cutting taxes to the rich and corporations, doubling down on the trickle down. They even blocked payroll tax cuts to the lower and middle class: http://www.washingtonpost.com/politics/house-republicans-defeat-two-month-payroll-tax-cut/2011/12/20/gIQAj8RI7O_story.html http://www.washingtonpost.com/politics/house-republicans-def...
- content_sesh 6y ago
  Wealthy people have the resources to defend themselves in court. If you live paycheck to paycheck, you generally cannot afford lawyer fees, taking time off work for court appearances, or the risk of actually losing a case, or the probably million other things I'm not thinking about right now. It is almost always easier to go after the poor than it is to go after the rich and powerful.
JTbane 6y ago
This is infuriating, and is basically an admission that the rich are allowed to evade taxes.
- DarkmSparks 6y ago
  Its called Capitalism. Its always been the case in capitalist society that only poor people pay tax, thats why half the world had revolutions to kick it out.

hombre_fatal 6y ago

Maybe we just need a new agency. One that targets rich people that us plebs can support and politicians can promote. And then just keep the IRS how it is going after plebs for us to hate. Seems like institutional failure if I have to vote for IRS expansion, the same people going after my tiny coffer, for the IRS to go after anyone else. That's a dumb conflict of forces.

Scoundreller 6y ago
Or just start over. Dunno why my dollars that I had to go to work for and do what someone else told me to do is guiltier and more traceable than anything else.
klyrs 6y ago
> That's a dumb conflict of forces. That's deft political engineering. Congress is to blame. They tweak the budget to protect themselves and their true constituents (megadonors and lobbyists). We're in a peculiar situation where democrats and republicans are both on the "right" in their fiscal policies. Any blush of "left" policy is shouted down by bipartisan echoes of McCarthyism. The politicians of both parties are, by and large, upper class, and they collectively pit the middle class against the lower class. We don't need a new IRS, we need a new breed of politician. And enough funding for the IRS that it can audit those politicians and their donors fearlessly.
StavrosK 6y ago
Off-topic, but it strikes me as interesting how everyone always considers themselves "the masses", calling themselves "us plebes" on a forum where a six-figure salary is the norm.
- sarakayakomzin 6y ago
  it strikes me as interesting that you're apparently not allowed to argue in favor of making things better for everyone at a relative proportional scale given the top .01%.
- sneak 6y ago
  Low six figure salaries are barely middle class in many cities the US. The kinds of rich people being discussed in this thread are still a very small percentage of six-figure+ earners. I would venture to say (no pun intended) that most HN readers are not accredited investors.
  - StavrosK 6y ago
    Sure, but "middle class" doesn't really mean much, the median income in the US is $61k.
    - heylook 6y ago
      I'm a little thick. What are you implying here?
      - StavrosK 6y ago
        I mean that "middle class" doesn't mean you're in the median.
    - JackFr 6y ago
      Is that per capita, per household or by tax return?
  - perl4ever 6y ago

csomar 6y ago

Maybe the problem is that they are a s*ty agency that randomly fines people and expect them to pay up. I don't have knowledge how the IRS works but I know at least one tax agency in this world that would fine you random amounts and just wait for your reaction. They are not in the business of fairly auditing your numbers because they'll lose, so they turn to poorer persons that they can bully. Another thing, many countries expect rich people and rich companies to hire government-certified accountants to verify your fillings (known as a Statutory auditor https://en.wikipedia.org/wiki/Statutory_auditor https://en.wikipedia.org/wiki/Statutory_auditor ). This makes it harder for these companies to do stuff the non-audited guy can easily do.

perl4ever 6y ago

There is an aspect of seeming illogic I want to call out here. Maybe it's just my lack of understanding. Assuming the IRS is underfunded, saying they focus on low income people as a consequence, when it would be more lucrative to target high earners, makes no sense. The claims could all be true, but they don't appear to be connected. Why would the total amount of funding force the IRS to spend less on individual cases? An alternative hypothesis might be that it actually is more cost effective to target people with less money, for instance, people paid mainly in cash tips, but I don't have any idea if that is plausible, I'm just saying the narrative doesn't make sense to me. In general, targeting rich people seems obvious because rich people "have the money", but mathematically, it depends on how many there are when you multiply it out. Anyway, I am very open to the idea that the IRS is being stupid and counterproductive, or politically avoiding prosecuting the rich, but I think it raises the question of "why" that is not answered by saying "underfunding". They still have funding to go after one or more high earners, right, so the total amount is irrelevant if it's taken as a given.

clusterfish 6y ago
Maybe IRS just knows that they're being underfunded precisely to stop them from auditing Congress's rich sponsors, so they proactively self-censor their audits to prevent further cuts?
- EGreg 6y ago
  Pretty much this. I don’t understand how Republicans can argue cutting funding to the IRS will save the government’s spending. Instead their goal is to make the tax base richer by cutting taxes of the rich. Many of them are all about cutting taxes to the rich and corporations, doubling down on the trickle down. They even blocked payroll tax cuts to the lower and middle class: http://www.washingtonpost.com/politics/house-republicans-defeat-two-month-payroll-tax-cut/2011/12/20/gIQAj8RI7O_story.html http://www.washingtonpost.com/politics/house-republicans-def...
content_sesh 6y ago
Wealthy people have the resources to defend themselves in court. If you live paycheck to paycheck, you generally cannot afford lawyer fees, taking time off work for court appearances, or the risk of actually losing a case, or the probably million other things I'm not thinking about right now. It is almost always easier to go after the poor than it is to go after the rich and powerful.

JTbane 6y ago

This is infuriating, and is basically an admission that the rich are allowed to evade taxes.

DarkmSparks 6y ago
Its called Capitalism. Its always been the case in capitalist society that only poor people pay tax, thats why half the world had revolutions to kick it out.