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

#221

Post by thoughtexprmnt » Tue, Aug 20, 2019, 9:11 PM UTC

joelx wrote: post #207

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.

I'm sure that strategy of "simply not paying" works great, right up until the day it doesn't and you find yourself facing huge fines and prison.

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

#222

Post by gok » Tue, Aug 20, 2019, 9:12 PM UTC

chris11 wrote: post #200

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…

> Also unmentioned is the very real negative externalities that IRS audits cause. Audits disproportionately affect poor people [2], who are also the least able to spend time dealing with them. The United States already has extremely low tax evasion rates [3]. Rather than spending money to catch more of the very few cheaters by audits, other country's tax authorities have found "nudge" letters were found to be similar…

Audit based on size of underreporting? That's like saying only buy winning lottery tickets. You don't know how accurate a tax filing is up front; that's why there are audits.

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

#223

Post by sokoloff » Tue, Aug 20, 2019, 9:15 PM UTC

cronix wrote: post #125

inetknght wrote: post #111

Earlier quoted context omitted.

I don't see any guarantee here that splitting a business will create jobs. 1) Business A has 1B in profits with X number of employees, gets taxed. 2) Business B splits into 10 businesses with 100M in profits and X/10 number of employees per business unit, and doesn't get taxes.

Sounds like Business B is going to need 9 new buildings. Are they built already?

Why would they need new buildings? If all their operations fit into their current buildings today, they'd all still fit tomorrow as well.

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

#224

Post by Loughla » Tue, Aug 20, 2019, 9:16 PM UTC

isoskeles wrote: post #149

moksly wrote: post #134

Earlier quoted context omitted.

Your comparison is a little flawed. IRS staff are a net surplus for the government, and its quite silly to get rid of someone who makes money. We did it in Denmark during our new public management period. It cost us billions in tax evasion and fraud, and at one point someone did the math. Turned out our tax-agents cost 500.000 danish kroner a year, but they gave the state a net positive of 1.5-10 million Danish krone…

Well then, we should make the entire government and every single person in the country an IRS employee so we’ll have infinite money by that logic. How do you factor in for the point where these agents having diminishing returns? Is it when the agency brings in as much as they cost? If so, why is that the reasonable place to employ to? The purpose of the IRS is to collect taxes to fund other agencies that don’t direct…

What a weird argument. The other person says "hey, look, we learned that cutting this service had a negative effect on our country, and we learned from our lesson" and your response is "Well then make everyone part of that service"

What? How does that make sense? Why are you making that drastic of a leap? Why?

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

#225

Post by refurb » Tue, Aug 20, 2019, 9:23 PM UTC

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.

It’s not insane at all. Note that’s AGI - adjusted gross income.

If we stopped auditing those with AGIs less than $25,000, then all I’d have to do is take enough deductions (retirement contributions, unreimbursed business expenses, medical expenses, loss from property sales, tuition, etc) to get my AGI below $25,000 and I’d never have to worry about being audited.

Ever.

One way to significantly reduce your taxes is to lower your AGI. So if anything, the lower AGIs would be a good place to start looking for tax cheats.

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

#226

Post by sokoloff » Tue, Aug 20, 2019, 9:24 PM UTC

nostromo wrote: post #152

arcticbull wrote: post #97

Earlier quoted context omitted.

The IRS sees maximum revenue at the point where everyone is paying their taxes as specified in the IRC. Anything short of that, people are evading taxes, intentionally or unintentionally. You are in fact arguing that the state shouldn't necessarily collect all it's owed. I doubt that attitude would get you far in the Accounts Receivable department at any business. It's different with police officers because the numbe…

> if you point the police at anyone they'll find crimes. The same is true for our tax laws. I can almost guarantee every adult over 30 has made an error in their tax return. There are a million examples. Here's one: do you know someone that has stayed with a friend or family member rent free? The guest should have claimed the fair rent value of this non-monetary "gift" on their tax return. But literally nobody does.

Gifts between individuals under $15K/yr have no tax consequences.

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

#227

Post by tasty_freeze » Tue, Aug 20, 2019, 9:25 PM UTC

nybble41 wrote: post #192

tasty_freeze wrote: post #173

Taxing businesses at all has been objected to as double taxation: the business is taxed, then the residual profits are distributed to shareholders, who are taxed. It isn't a fringe idea: in 2015, many of the Republican candidates in the running for President stated they thought making corporate tax rates 0% would not only "boost the economy", it would essentially remove all tax laws from the books, greatly simplifyin…

> So, to get to the point: why should I pay higher tax to protect the business interests of Grumman, and GE, and farmers, and Apple, etc? You'll end up paying those taxes regardless. When companies are taxed directly then those taxes are baked into the prices of everything they sell, just like every other business expense. This functions like an inefficient and regressive sales tax except that, unlike normal sales ta…

Thank you for replying instead of simply downvoting.

That isn't true. If the assertion is that if Apple has to pay $10B/year more in taxes, than they will raise the price of their products $10B/year and keep a fixed profit, that assumes there is complete price elasticity.

In reality, they might raise the price of their products some, but that is fine -- the people who use the products and benefit from the government's expenditures to promote Apple's business interests are exactly who should be paying for them.

I don't buy Apple products, so I shouldn't be subsidizing their products via taxes.

As for calling it a regressive tax, the costs of production of the product should be built into the product price. If it is abnormally low because Apple isn't paying their share of taxes, that is a market distortion. It is regressive if you only stop at first order thinking. Apple's prices would go up, which hurts some consumers, but they would also be paying significantly more in taxes, which helps consumers.

Let's pick another example. Would it be OK with you if the government decided to donate $5B/year of crude oil to Exxon? Hey, it would make Exxon's bottom line look great. I don't think anyone (except Exxon) thinks that would be right, yet that is exactly what is being done in kind: Exxon not paying much/anything in taxes, and $B spent every year globally to keep the supply of oil flowing. (As for $5B, I just picked a number out the air).

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

#228

Post by ummonk » Tue, Aug 20, 2019, 9:27 PM UTC

unforeseen9991 wrote: post #9

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.

Exactly, considering the penalties are just paying whatever is owed anyway, perhaps plus a few minor interest penalties. They make more the fines and interest combined by a long shot just by deploying the saved funds elsewhere.

Tell that to Al Capone.

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

#229

Post by arcticbull » Tue, Aug 20, 2019, 9:29 PM UTC

sokoloff wrote: post #226

nostromo wrote: post #152

Earlier quoted context omitted.

> if you point the police at anyone they'll find crimes. The same is true for our tax laws. I can almost guarantee every adult over 30 has made an error in their tax return. There are a million examples. Here's one: do you know someone that has stayed with a friend or family member rent free? The guest should have claimed the fair rent value of this non-monetary "gift" on their tax return. But literally nobody does.

Gifts between individuals under $15K/yr have no tax consequences.

And if I'm not mistaken the amount over $15K counts solely to reduce your $11,400,000 lifetime exclusion, and only once you exceed that number do you actually have to pay taxes. [1]

[1] https://www.nerdwallet.com/blog/taxes/gift-tax-rate/

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

#230

Post by sokoloff » Tue, Aug 20, 2019, 9:31 PM UTC

matwood wrote: post #127

BurningFrog wrote: post #74

Earlier quoted context omitted.

One way to maximize revenue would be for every tax payer to be audited every year. Things like that is what I think about when I hear some of the hardline comments here.

> One way to maximize revenue would be for every tax payer to be audited every year. Oddly enough, the government has the information to do this for many (most?) tax payers every year and send them the forms pre-filled out ready to sign. Unfortunately, the tax prep companies fight letting the government do this.

Around 1/3 of returns are business returns. I don't think the IRS has anywhere near enough information to auto-file those. Anyone who has charitable contributions (and frankly, probably anyone who is itemizing deductions) also likely has return information which the IRS does not have access to. Anyone who is amortizing discount points on real estate or has stock trades from stocks purchased prior to Jan 1, 2011 is in a situation where the IRS can't auto-file for them. In 2017 (last year of returns before the Tax Cuts and Jobs Act rules changes which will reduce the number of those itemizing), about 30% of personal returns itemized.

I do suspect that a lot of "extremely simple" returns could have a pro-forma return auto-prepared by the IRS (and I'd support the IRS trying to permit that, in part because "f*%k Intuit").