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Remember though that tax revenue is actually dominated by the little guy. There are some super rich tax evaders who can hide many millions from the IRS, but th
by jjk166 6y ago
Remember though that tax revenue is actually dominated by the little guy.
There are some super rich tax evaders who can hide many millions from the IRS, but they are few in number and it will cost millions to recover that money after going through all the obstacles such rich people can afford to put in place.
On the other hand, imagine 100 million people all under-reporting $1200 - that's $120 Billion Dollars, or about 6 NASAs. If you actually had to go after everyone, that would be extremely expensive, but if you go after just a small percentage of people, the rest will be scared into properly reporting their income. We all know one or two people who have run into serious trouble with the IRS: enough that we are familiar with the consequences but not enough that it seems like a common and socially acceptable strategy. This is by design.
With the very wealthy, this strategy doesn't really work. Just because you manage to get one bank in switzerland to hand over some data doesn't mean my bank in the caimans is going to do the same. Even if the IRS were to catch up to me, I can afford to wait to cross that bridge when I come to it. You can take billions from certain people and they will still have net worths greater than some nation states - those who can afford to lose can afford to play the game.
It's also worth noting that the tax code has plenty of loopholes that wealthy people and corporations can use to legitimately reduce their tax burden. IRS recovery isn't going to be able to do anything about that. If you have billions of dollars, you can afford an accountant who will make sure there's nothing for the IRS to go after.
Really changing the funding of the IRS is irrelevant - were we to simplify the tax code to eliminate loopholes and make it easier for people who can't afford armies of accountants to properly pay their taxes we could both collect more money and spend less on recovery. It may be impossible to get congress to actually do that, but anyone talking about playing around with the IRS's funding is just trying to look like they're addressing a problem they really have no intention of solving.
- js2 6y ago> Remember though that tax revenue is actually dominated by the little guy. That's not correct. 4.5% of returns account for almost 60% of taxes. 17% of returns account for almost 80% of taxes. And that was before the Trump tax cuts. https://www.pewresearch.org/fact-tank/2017/10/06/a-closer-look-at-who-does-and-doesnt-pay-u-s-income-tax/ https://www.pewresearch.org/fact-tank/2017/10/06/a-closer-lo...
- refurb 6y agoThis ignores the EITC which is available to a huge swath of low income earners. The only reason the IRS is involved is because the payment is a tax credit, rather than just a payment from some govt body. 22M Americans receive EITCs and the average payout was $3200, for a total of $70B per year.[1] [1]https://www.cbpp.org/research/federal-tax/policy-basics-the-earned-income-tax-credit https://www.cbpp.org/research/federal-tax/policy-basics-the-...
- secabeen 6y agoThis citation is solely focused on income taxes, which make up only have of the revenue. Payroll taxes are 36% of the revenue, and are only incurred on the first ~$120k of income. I think this number would be more enlightening if it included all taxes (state property and income tax too), not just federal income taxes.
- js2 6y agoTrue but not really relevant to IRS income tax enforcement.
- clusterfish 6y agoThese are valid points but did any of that change since 2011, when IRS was auditing a lot more rich people and was still cost efficient? Not really.
- barrkel 6y agoHave some facts: https://taxfoundation.org/summary-of-the-latest-federal-income-tax-data-2020-update/ https://taxfoundation.org/summary-of-the-latest-federal-inco... > In 2017, the bottom 50 percent of taxpayers (those with AGI below $41,740) earned 11.3 percent of total AGI. This group of taxpayers paid $49.8 billion in taxes, or roughly 3 percent of all federal individual income taxes in 2017. > In contrast, the top 1 percent of all taxpayers (taxpayers with AGI of $515,371 and above) earned 21.0 percent of all AGI in 2017 and paid 38.5 percent of all federal income taxes. > In 2017, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid roughly $616 billion, or 38.5 percent of all income taxes, while the bottom 90 percent paid about $479 billion, or 29.9 percent of all income taxes.
- specialist 6y agoLies, damned lies, and statistics. Grouping together wages, capital gains, and misc under the label "income" rhetorically hides the unfairness of our regressive tax regime.
- jefftk 6y agoWhile it is certainly possible to give misleading statistics, these seem pretty reasonable to me? Could you say more about how you think it's misleading?
- specialist 6y agoPedantry is just another distraction, obfuscation. GP's point is the IRS is unfairly focusing on the weakest while ignoring the worst offenders. No reasonable person disputes IRS's own repeated statements to that effect. We can only guess the motives of any one still in denial.
- chillwaves 6y agoAnswer: https://news.ycombinator.com/item?id=24603200 https://news.ycombinator.com/item?id=24603200