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

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

#201

Post by dexterdog »

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.

> the law is written to allow tax evasion

That is not tax evasion. If the law is used to avoid paying a tax it is legal. Tax evasion is when you don't pay taxes that you should have paid and somebody often goes to jail and/or pays penalties for it.

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

#202

Post by chris11 »

berbec wrote: post #3

The act of reducing the manpower of the IRS needed to enforce the laws may have a greater effect than all the tax cuts combined. If a business is fairly certain an audit isn't coming, their effective tax rate is whatever they want it to be.

And I'd imagine that auditing high net-worth individuals and large companies takes a lot more people than smaller businesses. Larger companies will be able spend more on expensive legal advice fighting audits, and it will make business sense.

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

#203

Post by jacquesm »

DanBC wrote: post #159
jacquesm wrote: post #156

Earlier quoted context omitted.

VAT is corporate revenue tax, but between businesses you can claim it back in the EU.

No, VAT is a tax paid by consumers.

The tax is levied on the businesses who collect it on behalf of the government, it is a direct function of the amount of the invoice. So if you charge your customer less for your goods or services the tax paid goes down. VAT is short for 'Value Added Tax', in other words that which a business produces. But if your business provides no value then magically you still have to charge VAT, so clearly there is a relationship with turnover.

By your logic you could reason that eventually all tax is paid by consumers because they pay the companies for the products and that includes corporate income tax and so on but whenever sales tax is low you will find that companies are more than happy to absorb the surplus as profits.

VAT is the closest governments get to taxing businesses directly on their revenue streams.

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

#204

Post by davidw »

SamReidHughes wrote: post #188
davidw wrote: post #86

Earlier quoted context omitted.

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 not there, though.

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.

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.

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

#205

Post by corybrown »

RyanAF7 wrote: post #42
SimbaOnSteroids wrote: post #23

Earlier quoted context omitted.

No, the contemporary one that learned nothing from that folly.

Oh! The one that found success with the Laffer Curve. Right. Freedom isn't an idea. It's an actual place. In terms of kingdoms a free peoples kingdom is a Freedom; and you don't have to pay someone for the right to exist. Oddly enough we agree, there is a faction in the US pursuing its own agenda.

> The one that found success with the Laffer Curve

Care to explain? The most recent tax cuts that were supposed to pay for themselves haven't. So where are we on the Laffer Curve right now?

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

#206

Post by jfengel »

pwinnski wrote: post #187
rsynnott wrote: post #185

Earlier quoted context omitted.

This seems absolutely insane. > For those making less than $25,000, the audit rate fell 0.02% (to .69%) from 2017 to 2018. Frankly, for it to be significantly above 0 seems grossly inefficient. I would assume that average rate of return for public money spent on auditing a millionaire is... a fair bit higher than that spent auditing someone earning 25k.

Except that auditing involves tax return in which the IRS has suspicion that there is more income than claimed, right? So of all the people who reported income of less than $25,000, the IRS apparently believed that 0.69% of them actually had income of much, much more. Maybe millions.

Is that the kind of thing that would show up in an audit? That is, if you're hiding millions of dollars, you're not just fudging the numbers. You've got a web of places to stash money that aren't directly connected to you. It would take a deep investigation of your finances, not just an audit.

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

#207

Post by joelx »

gok wrote: post #174

Reading the actual study [1], the headline is a bit deceptive. The study looked at audits between 2000 and 2010, a period during which funding to the IRS increased, and found that generally more funding for audits led to more money recovered from audits (duh). But that $34.3B figure is over 10 years, so it's a tiny fraction of a percent of overall federal revenue, and it's not offset by the amount of more money the I…

As a high net worth business owner, I know a lot of wealthy people. They will simply follow prevailing trends on tax... If most of their peers are avoiding or just not paying tax, they will do the same. It is incredibly important that tax laws be strictly enforced or wealthy people will simply not pay.

Pretty much only form letters should be used for low income people.

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

#208

Post by scott_s »

gok wrote: post #174

Reading the actual study [1], the headline is a bit deceptive. The study looked at audits between 2000 and 2010, a period during which funding to the IRS increased, and found that generally more funding for audits led to more money recovered from audits (duh). But that $34.3B figure is over 10 years, so it's a tiny fraction of a percent of overall federal revenue, and it's not offset by the amount of more money the I…

I feel that your second paragraph is disconnected from your first. This study is about the IRS audit process for publicly-traded corporation, not individual filers. We can easily fund more audits of publicly-traded corporations while decreasing the number of audits of individuals, even taking care to avoid targeting poor people.

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

#209

Post by nostromo »

rsynnott wrote: post #185
cm2012 wrote: post #181

Earlier quoted context omitted.

The latest IRS changes prioritize low income over high income audit targets: https://www.google.com/amp/s/www.forbes.com/sites/rachelsand...

This seems absolutely insane. > For those making less than $25,000, the audit rate fell 0.02% (to .69%) from 2017 to 2018. Frankly, for it to be significantly above 0 seems grossly inefficient. I would assume that average rate of return for public money spent on auditing a millionaire is... a fair bit higher than that spent auditing someone earning 25k.

I wouldn't be so sure.

Millionaires have access to lawyers and tax accountants and are more difficult to pin down.

A poor person can easily be bullied to handing everything over to the IRS -- probably with just a few mean letters.

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

#210

Post by tptacek »

metamet wrote: post #198
rayiner wrote: post #182

Earlier quoted context omitted.

Jimmy Carter told people the truth. (And he got promptly voted out, and so subsequent politicians have hidden the ball with the truth.) With respect to the environment, for example, he told people to put on a sweater. Because the truth is that almost all GHGs result from consumer-facing industries where consumers are the primary beneficiaries of pollution being artificially cheap. Concrete example, since you mention…

> "Access to healthcare" is similar. Why do people in Sweden have universal healthcare while people in America do not? Is it corporations? No, Sweden's corporate tax rate is quite a bit lower than ours. (It's similar to the current federal rate, but in the U.S. most corporations also pay a state rate. In Delaware, for example, it's an additional 8.7%.) So who benefits by Americans not having universal healthcare? It'…

People are fond of blaming health insurance companies for our (demonstrable) health economics woes, but the evidence suggests that they --- in fact, the payer and benefits management side of the equation in general! --- aren't nearly as big a contributor to costs as the provider side. We pay more than Europeans do for health care administration, but we get walloped on costs for outpatient and hospital procedures.

It doesn't help that there are lots of circulating analyses about insurers and management overhead that are probably just false; for instance, a popular chart depicting a 4x increase in admin costs starting in the 1990s was debunked by Kevin Drum and others, who observed that it was probably accounting for people like MRI operators on the payer rather than the provider side.

Two things pundits say that are red flags for me that they haven't really studied health economics:

1. Blaming pharmaceutical companies and prescription drug costs, which are one of the smaller overall drivers of health care expenses in the US.

2. Blaming health insurance companies for taking an outsized and material chunk of health spending.

You could $0 out pharma and insurance companies, indenturing everyone who worked for them, and we might not be meaningfully better off. We'd be paying less, but not, like, a huge amount less; people who can't afford silver-class health insurance for a family of four today still couldn't afford it in that alternate reality.

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