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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

#11

Post by nostromo »

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.

> the penalties are just paying whatever is owed anyway, perhaps plus a few minor interest penalties

This is not at all true.

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

#12

Post by RyanAF7 »

corybrown wrote: post #5
mrnobody_67 wrote: post #2

I don't get why countries always under-invest in tax collection... as long as it's ROI positive, shouldn't budgets be getting increased?

There's a faction of US politicians that are philosophically against (most) government and taxes. It's not about ROI, it's about their goals.

Interesting. A faction you say? You mean like the faction that drafted the Articles of Confederation?

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

#13

Post by masklinn »

numakerg wrote: post #4

Just one of the many sectors where budget cuts are going turn into huge losses down the line. The consequences of cutting healthcare and education are (going) to be much worse.

Exactly as designed, makes it that much harder for the next government to fix this up so you can shove all the blame on them when it starts going down the drain.

This is not something you can fix quickly either, as with State the loss of institutional memory and all the things which should have been tracked but weren't and got lost are going to be a huge supplementary shock.

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

#15

Post by __jal »

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.

Oh, but it is worse. It teaches members of the class that exploit it that taxes are for everyone else. They spend time on efforts to avoid taxes, which not only "starve the beast", but are frankly non-productive while shifting the burden on to others.

It breeds sociopathy among the executive class that doesn't need any help in that department while encouraging nonproductive "investment".

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

#16

Post by Spellman »

devoply wrote: post #6

> IRS is auditing fewer tax returns from corporations because it has fewer people and resources available to identify potential errors and follow up on questionable tax returns On one hand I do want businesses to pay their fair share. On the other hand I don't want to encourage massive tax agencies which must justify their numbers by auditing and harassing as many people as possible. Often small businesses that don't…

Generally they don't harass people unless something seems amiss and there is a large enough discrepancy to justify it.

And there's eventually a marginal tipping point where more money spent in audits won't net more recovered revenue. Generally the smaller the fry, the less you can recover from them.

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

#17

Post by jonathankoren »

mrnobody_67 wrote: post #2

I don't get why countries always under-invest in tax collection... as long as it's ROI positive, shouldn't budgets be getting increased?

I think it’s because it’s a stealth tax cut. It might be able to win the political argument for lowering taxes, but by cutting funding for enforcement, you’re encouraging scofflaws and thus get the unpopular outcome you desired without having to go on television and defend it.

A similar thing plays out when politicians want to cut popular social programs. They manufacture a budget crisis (typically through instituting a popular tax cut) and then solve the crisis by cutting the funding to the thing they already decided they didn’t like.

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

#18

Post by devoply »

Spellman wrote: post #16
devoply wrote: post #6

> IRS is auditing fewer tax returns from corporations because it has fewer people and resources available to identify potential errors and follow up on questionable tax returns On one hand I do want businesses to pay their fair share. On the other hand I don't want to encourage massive tax agencies which must justify their numbers by auditing and harassing as many people as possible. Often small businesses that don't…

Generally they don't harass people unless something seems amiss and there is a large enough discrepancy to justify it. And there's eventually a marginal tipping point where more money spent in audits won't net more recovered revenue. Generally the smaller the fry, the less you can recover from them.

I remember reading in Australia they specifically went after small businesses because as I said they had little ability to defend themselves.

> Two Australian Taxation Office whistleblowers have told a joint Four Corners and Fairfax investigation about a toxic internal culture where vulnerable small businesses and individuals are deliberately targeted to help meet revenue goals.

Perverse incentives.

https://www.abc.net.au/news/2018-04-09/whistleblower-exposes...

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

#20

Post by nostromo »

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.

“Anyone opposing more police officers and equipment is looking to break the law.”

Just as I don’t want a bored cop on every street corner, I also don’t want the IRS to be staffed to maximize revenue.

It’s a balance.

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