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If you're wondering if the "Efficiency Department" is actually about efficiency, or if they're just cosplaying political Santa Claus, look for cuts to the IRS.

If you're wondering if the "Efficiency Department" is actually about efficiency, or if they're just cosplaying political Santa Claus, look for cuts to the IRS. The IRS is the most bang for the buck government department. Every dollar spent there nets out many more, because they're chronically under-resourced to audit the whales who can trivially hide their tax obligations. Naturally whenever there's a hint that the department could be even close to properly funded, the media, overwhelmingly owned by the class of people who evade taxes as a sport, gin up controversy. It's no wonder that the richest man in the history of the world has bought his way into the building and been provided with gasoline and matches.

yostrovs 2y ago
The IRS Individual Master File, running on IBM mainframes, may be the oldest software alive. Perhaps there's a need for an update. https://www.guinnessworldrecords.com/world-records/636196-oldest-software-system-in-continuous-use https://www.guinnessworldrecords.com/world-records/636196-ol...
- xethos 2y ago
  Yeah, I'm sure there are no weird edge cases in America's byzantine tax laws that have been spotted and squashed in the software Sounds like fun to find and fix them all again though!
- mullingitover 2y ago
  I agree! However, the brain trust Musk is running is absolutely not qualified to do it. They're getting tripped up on basic COBOL trivia[1]. [1] https://www.fastcompany.com/91278597/elon-musk-doge-cobol-language https://www.fastcompany.com/91278597/elon-musk-doge-cobol-la...
- hindsightbias 2y ago
  Why update what isn’t broken?
  - wmf 2y ago
    US tax filing is broken compared to many European countries that automatically prepare the tax return.
    - hindsightbias 2y ago
      That’s by congressional design. Don’t blame the mainframe. DOGE just shut down the auto prepare because gov’t is bad and wasteful.
- wmf 2y ago
  The IRS hired a guy to rewrite the Master File in Java a few years back and they ran out of money when he was almost finished.
AnthonyMouse 2y ago
> The IRS is the most bang for the buck government department. Every dollar spent there nets out many more, because they're chronically under-resourced to audit the whales who can trivially hide their tax obligations. This is just a trope. Auditing big whales is often not the most efficient use of resources because their taxes are a) much more complicated, and so more expensive to audit and b) more likely to have been done by a team of competent lawyers, so even though they're engaged in all kinds of shenanigans, the shenanigans are legal and there is no money to be had by auditing them. Where the IRS can "turn a profit" is by auditing small and medium businesses, because they're more likely to have screwed up, and auditing them is cheap to the IRS. But this has a different problem. It isn't cheap to the taxpayer being audited; they pay an order of magnitude more to go through the audit than the IRS does. And then most of them are innocent, even though the IRS makes it back from the few that aren't. For obvious reasons the innocent ones hate this with the fire of a thousand suns, because nobody compensates them for their costs even though they did nothing wrong. But if you actually did compensate them for their costs then it wouldn't be net-positive for the IRS to do all those audits.
- mullingitover 2y ago
  > This is just a trope. Do you have citations to back up this assertion? The GAO seems to say otherwise[1]. [1] https://www.gao.gov/products/gao-24-106112 https://www.gao.gov/products/gao-24-106112
  - AnthonyMouse 2y ago
    It's saying the same thing: > GAO found that, as income increased, IRS recommended more taxes per audit, on average, but generally closed fewer audits. They close fewer audits because the audits require more resources (and partially because there are fewer of those taxpayers). Meanwhile the other effect also shows up clearly in their numbers: Average additional tax for the $500k-1M group (midpoint $750k) was ~$20k or 2.67%, for $1M-5M (midpoint 3M) was ~$40k or 1.33%, for $5M-10M (midpoint 7.5M) was ~$86k or 1.15%. Percentage for the top group is unknown because that bracket is open-ended, but $360k for the group that contains billionaires is likely to continue the trend. They get less as a percentage from the people with better tax lawyers. It's more in absolute dollars because by definition they have more money, but since it also costs more to audit them it's not necessarily worth it. Notice also that these are heuristics and the actual numbers change with the number of audits. There are going to be some people who are obviously cheating on their taxes, e.g. someone else filed a 1099 or W-2 for paying them and then they filed a return that didn't include the income. The IRS is going to put them at the front of the list to be audited and then that audit is going to show a positive recovery for the IRS. The more audits you do, the lower the recovery rate gets, because you started with the ones with huge obvious problems and doing more audits means auditing people who are more likely to be innocent. This is also why the "bang for the buck" calculation is pretty meaningless. Suppose there is one person you can audit for $2000 and then recover a million dollars (+$998,000), and then an unlimited number of people you could audit for $1000 and recover an average of $800 (-$200). If you do one audit of the one who is obviously cheating, you've recovered 500 times more than you put in! Clearly you should keep going. If you audit 100 people, you've spent $101,000 and recovered $1.08M, that's still almost ten times more than you spent! Clearly you should keep going? Except that only one of them was net positive and the additional audits have actually reduced your net gain from $998k to $978k while auditing a significant number of innocent people. What matters is the incremental returns from additional audits, not the average returns from existing audits. And taking into account as a cost the burden of auditing innocent people.

yostrovs 2y ago

The IRS Individual Master File, running on IBM mainframes, may be the oldest software alive. Perhaps there's a need for an update. https://www.guinnessworldrecords.com/world-records/636196-oldest-software-system-in-continuous-use https://www.guinnessworldrecords.com/world-records/636196-ol...

xethos 2y ago
Yeah, I'm sure there are no weird edge cases in America's byzantine tax laws that have been spotted and squashed in the software Sounds like fun to find and fix them all again though!
mullingitover 2y ago
I agree! However, the brain trust Musk is running is absolutely not qualified to do it. They're getting tripped up on basic COBOL trivia[1]. [1] https://www.fastcompany.com/91278597/elon-musk-doge-cobol-language https://www.fastcompany.com/91278597/elon-musk-doge-cobol-la...
hindsightbias 2y ago
Why update what isn’t broken?
- wmf 2y ago
  US tax filing is broken compared to many European countries that automatically prepare the tax return.
  - hindsightbias 2y ago
    That’s by congressional design. Don’t blame the mainframe. DOGE just shut down the auto prepare because gov’t is bad and wasteful.
wmf 2y ago
The IRS hired a guy to rewrite the Master File in Java a few years back and they ran out of money when he was almost finished.

AnthonyMouse 2y ago

> The IRS is the most bang for the buck government department. Every dollar spent there nets out many more, because they're chronically under-resourced to audit the whales who can trivially hide their tax obligations. This is just a trope. Auditing big whales is often not the most efficient use of resources because their taxes are a) much more complicated, and so more expensive to audit and b) more likely to have been done by a team of competent lawyers, so even though they're engaged in all kinds of shenanigans, the shenanigans are legal and there is no money to be had by auditing them. Where the IRS can "turn a profit" is by auditing small and medium businesses, because they're more likely to have screwed up, and auditing them is cheap to the IRS. But this has a different problem. It isn't cheap to the taxpayer being audited; they pay an order of magnitude more to go through the audit than the IRS does. And then most of them are innocent, even though the IRS makes it back from the few that aren't. For obvious reasons the innocent ones hate this with the fire of a thousand suns, because nobody compensates them for their costs even though they did nothing wrong. But if you actually did compensate them for their costs then it wouldn't be net-positive for the IRS to do all those audits.

mullingitover 2y ago
> This is just a trope. Do you have citations to back up this assertion? The GAO seems to say otherwise[1]. [1] https://www.gao.gov/products/gao-24-106112 https://www.gao.gov/products/gao-24-106112
- AnthonyMouse 2y ago
  It's saying the same thing: > GAO found that, as income increased, IRS recommended more taxes per audit, on average, but generally closed fewer audits. They close fewer audits because the audits require more resources (and partially because there are fewer of those taxpayers). Meanwhile the other effect also shows up clearly in their numbers: Average additional tax for the $500k-1M group (midpoint $750k) was ~$20k or 2.67%, for $1M-5M (midpoint 3M) was ~$40k or 1.33%, for $5M-10M (midpoint 7.5M) was ~$86k or 1.15%. Percentage for the top group is unknown because that bracket is open-ended, but $360k for the group that contains billionaires is likely to continue the trend. They get less as a percentage from the people with better tax lawyers. It's more in absolute dollars because by definition they have more money, but since it also costs more to audit them it's not necessarily worth it. Notice also that these are heuristics and the actual numbers change with the number of audits. There are going to be some people who are obviously cheating on their taxes, e.g. someone else filed a 1099 or W-2 for paying them and then they filed a return that didn't include the income. The IRS is going to put them at the front of the list to be audited and then that audit is going to show a positive recovery for the IRS. The more audits you do, the lower the recovery rate gets, because you started with the ones with huge obvious problems and doing more audits means auditing people who are more likely to be innocent. This is also why the "bang for the buck" calculation is pretty meaningless. Suppose there is one person you can audit for $2000 and then recover a million dollars (+$998,000), and then an unlimited number of people you could audit for $1000 and recover an average of $800 (-$200). If you do one audit of the one who is obviously cheating, you've recovered 500 times more than you put in! Clearly you should keep going. If you audit 100 people, you've spent $101,000 and recovered $1.08M, that's still almost ten times more than you spent! Clearly you should keep going? Except that only one of them was net positive and the additional audits have actually reduced your net gain from $998k to $978k while auditing a significant number of innocent people. What matters is the incremental returns from additional audits, not the average returns from existing audits. And taking into account as a cost the burden of auditing innocent people.