IRS budget cuts cost $34.3B in lost revenue from big business • Hacker News Board

Re: IRS budget cuts cost $34.3B in lost revenue from big business

#161

Post by meddlepal » Tue, Aug 20, 2019, 7:27 PM UTC

nostromo wrote: post #35

kurthr wrote: post #33

Earlier quoted context omitted.

Yeah, the people "getting away with it" in this case aren't those paying withholding or even mostly individuals... they're corporations bilking the government and every other taxpayer. It's more like cutting back on the FBI when there's an outbreak of organized crime...

The problem is Congress, not the IRS. Most corporations pay the amount of tax they owe under the law, but the law is written to allow tax evasion. The IRS can’t do anything about this. The fix is to close several well known loopholes.

Minor nit:

> law is written to allow tax evasion.

The law is not written to allow tax evasion. Tax evasion is knowingly violating the law.

The word you're looking for is tax avoidance. Everyone does some amount of tax avoidance whether it be taking deductions or carefully parsing the code to work through it. That's avoidance and it's 100% legal as you mentioned.

Second, corporate taxes are dumb. They're effectively passed through the corporation to the consumer or service user or worse just passed onto labor by reducing wages and hiring to compensate.

Re: IRS budget cuts cost $34.3B in lost revenue from big business

#162

Post by icelancer » Tue, Aug 20, 2019, 7:27 PM UTC

Causality1 wrote: post #151

MuffinFlavored wrote: post #83

Earlier quoted context omitted.

I read her plan to tax businesses with $100m in profit is easily sidestepped by spinning off child-subsidiaries of your businesses right around that $100m mark and report back "womp womp, no over $100m profits here".

Always strange to me they tax corporate profit instead of corporate revenue. "We spent all our money so we don't pay any taxes."

How would you propose to do this fairly in very high revenue but very high expense businesses like grocery stores?

Re: IRS budget cuts cost $34.3B in lost revenue from big business

#163

Post by derefr » Tue, Aug 20, 2019, 7:28 PM UTC

Kapura wrote: post #14

Greed is winning in America. Any person or political party that is trying to reduce staffing for a tax collection agency is trying to get away with tax fraud or they are working for somebody who is. It is far past the time to recognise this.

I've always thought of the tax system as adversarial, sort of like the justice system: it's supposed to be the goal of individuals and corporations to "try to get away with tax fraud" (i.e. to selfishly claim as few assets and as many deductions as possible), and it's supposed to be the goal of the government to catch all the fraudulent claims and punish them in a way where individuals/corporations are the exactly-right amount of disincentivized from this behavior, without causing undue losses in GDP from trying to chase the long tail of enforcement.

The intended outcome is that the statistical distribution of claims all bunch up at the edge of "being as close as possible to being illegal while still being legal." Which seems to actually be a better Nash equilibrium, economically, than one where people/corporations are so afraid of the IRS that they don't claim as much as they could.

Re: IRS budget cuts cost $34.3B in lost revenue from big business

#164

Post by rayiner » Tue, Aug 20, 2019, 7:28 PM UTC

The article is rather misleading. Here is the underlying article, which will be published this year but was actually received in September 2016: https://www.ntanet.org/wp-content/uploads/proceedings/2016/1... (follow the link in the article, which lists the receive date as September 30, 2016).

The article mentions the Tax Cuts and Jobs Act of 2017 (Trump's tax cuts). But the IRS budget cuts discussed in the article are actually from 2015, stemming from the kerfuffle over the IRS allegedly targeting conservative groups for increased scrutiny.

Separately, the article fails to address the nature of the additional revenue that could hypothetically have been collected. Pages 26-27 of the article address the study's finding that "the IRS collects a larger portion of proposed deficiencies when it has fewer resources." In the authors' view, that could be because "the IRS focuses on weaker taxpayer positions when its resources are limited." In other words, a larger enforcement budget leads the IRS to go after cases where the IRS is less certain it will win because the facts are more debatable. The authors do not assess the merits of those cases or whether it would be socially desirable to pursue them.

Re: IRS budget cuts cost $34.3B in lost revenue from big business

#165

Post by bduerst » Tue, Aug 20, 2019, 7:28 PM UTC

Causality1 wrote: post #151

MuffinFlavored wrote: post #83

Earlier quoted context omitted.

I read her plan to tax businesses with $100m in profit is easily sidestepped by spinning off child-subsidiaries of your businesses right around that $100m mark and report back "womp womp, no over $100m profits here".

Always strange to me they tax corporate profit instead of corporate revenue. "We spent all our money so we don't pay any taxes."

Because there are a number of thin-profit margin industries that wouldn't exist if you taxed revenue. You'd see more dollar marts and less grocery stores, for example.

Re: IRS budget cuts cost $34.3B in lost revenue from big business

#166

Post by TheBranca18 » Tue, Aug 20, 2019, 7:29 PM UTC

salawat wrote: post #113

dsfyu404ed wrote: post #85

Earlier quoted context omitted.

> founded by wealthy landowners interested in protecting their interests This meme needs to die. Nobody was sitting around saying "You know what will make me richer, a decade of war with England and if we win followed up with several decades of poor trade relations". The wealthy landowners who founded this country were very much going all in on a bet where the possible outcomes were lose everything or break even. The…

I second this. Also, read the Declaration of Independence. It is quite succinctly stated the long list of grievances that led to the founding. Of course, actually taking that into context takes away some of the dopamine hit from trying to spread the elite hatred that is currently in vogue. I'm not even saying there is anything wrong with disliking the elite now; just keep in mind then is then, and now is now. The iss…

It's not hatred to ask people that are hoarding almost all the wealth in a country to spend more in taxes. That's just a progressive tax system. There isn't anything controversial about it even if not everyone thinks it's the right thing to do.

Also if you're going to talk about context, the US tax system at the time of its founding isn't relevant at all. I know you didn't bring it up, but you are still defending something largely irrelevant. It'd be like a candidate for President of the United States defending a tithe system because it's mentioned in the Bible.

Re: IRS budget cuts cost $34.3B in lost revenue from big business

#167

Post by smileysteve » Tue, Aug 20, 2019, 7:30 PM UTC

spamlord wrote: post #153

alanwil2 wrote: post #61

Amazon doesn't pay taxes despite being worth $793 billion. How can I do this?

Amazon pays taxes, not sure how anybody still believes this piece of misinformation. You do realize it is Congress who creates the tax rules to begin with, so if anyone is at fault for the tax 'loop holes' these companies leverage, it's corrupt legislators. "In 2017, Amazon paid close to $1 billion in income tax. In 2018, the amount jumped to $1.18 billion, accounting for local, state, and international taxes." https…

> "In 2017, Amazon paid close to $1 billion in income tax. In 2018, the amount jumped to $1.18 billion, accounting for local, state, and international taxes."

Your quote glaringly leaves out federal....

Re: IRS budget cuts cost $34.3B in lost revenue from big business

#168

Post by arcticbull » Tue, Aug 20, 2019, 7:31 PM UTC

eximius wrote: post #147

arcticbull wrote: post #94

Earlier quoted context omitted.

I for one look forward to finding out which of the 595 Apple subsidiaries I'll be doing business with moving forward. I guess what I'm saying is that yes, it's possible that some companies will put in the legwork to restructure into a few subsidiaries, but this tax wouldn't have applied to them in the current regime anyways. The biggest ones, on the other hand, are unlikely to do the leg-work. Either way the plan can…

I think you have it backwards. The biggest companies that are already avoiding taxes can justify the lawyer costs to do it again. Besides, they typically already have dozens of subsidiaries that are largely invisible to most employees and business partners. This is just adding more reasons to do so. (Source: have worked on subsidiary taxonomy of large companies before, not for tax purposes, and from the outside there…

You know how your bank is required to report any transaction to FinCEN in excess of $10,000 on what's called a CTR, or currency transaction report? Some enterprising criminals decided to break up their deposits into two $5000 transactions to avoid this. So naturally, they made that a crime called structuring [1]. I don't see why it wouldn't be illegal to break up your company into a thousand subsidiaries to evade taxes. My point is, this is solve-able, but we have to make the first move.

[1] https://en.wikipedia.org/wiki/Structuring

Re: IRS budget cuts cost $34.3B in lost revenue from big business

#169

Post by ryanmercer » Tue, Aug 20, 2019, 7:32 PM UTC

Abolish all of the tax code, pass a federal sales tax, almost entirely do away with the IRS, much more efficient - the end.

Re: IRS budget cuts cost $34.3B in lost revenue from big business

#170

Post by AnthonyMouse » Tue, Aug 20, 2019, 7:33 PM UTC

ergothus wrote: post #77

nostromo wrote: post #35

Earlier quoted context omitted.

The problem is Congress, not the IRS. Most corporations pay the amount of tax they owe under the law, but the law is written to allow tax evasion. The IRS can’t do anything about this. The fix is to close several well known loopholes.

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.

> 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 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.)