Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

accountingtoday.com

Post reply on HN
Print view View original

211–220 of 319 posts

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

#211

Post by [deleted] »

tathougies wrote: post #126
tlmchncl wrote: post #96

Earlier quoted context omitted.

It's worth noting that an FBI investigation found no evidence that the IRS was targeting conservative groups, and that the apology was issued by the Trump Administration, who might have a vested interest in making the IRS look bad. "In January 2014, James Comey, who at the time was the FBI director, told Fox News that its investigation had found no evidence so far warranting the filing of federal criminal charges in…

I'm sorry, what? Your response to my criticism that the IRS has been known to use its authority to censor political speech is to point out that they are using it to censor both conservative and liberal speech? So, my argument that the IRS is being used for censorship was basically understated, and your claim is that the IRS's willingness to censor goes well beyond what I insinuated. Thank you for making my point. Was…

[deleted]

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

#212

Post by bwing »

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.

The reason for this is almost exclusively the Earned Income Tax Credit. A single filer claiming two children and earning $11,000 would be eligible for a (fully refundable) credit of $4,410. While this credit distributes a ton of needed benefit to low-income working families, I'm sure you can see where there's a strong incentive to defraud the system here. Both unscrupulous individuals and tax preparers can make a substantial amount of money quickly.

Since you can claim self-employment income without documentation, regular audits are necessary to prove actual income. It's also common for people to claim children who don't truly qualify; again, this would only be provable through actual audits.

In contrast, the average middle-class taxpayer tends to have both less built-in incentive to game the system and less flexibility (as most of their income will be documented to the IRS).

To defend the IRS a bit more: this program is in some ways an administrative model. Taxpayers don't need to prove any need to claim the credit. There aren't multiple rounds of paperwork, and, if you aren't audited, the only interfacing you have to do with the bureaucracy is in submitting your tax return, and you'll have money deposited in your bank account in a week. It may be the most effective welfare program, even accounting for audits (many of which are triggered by obvious red flags) in its ratio of benefits to "hoops needed to jump through."

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

#213

Post by enraged_camel »

hervature wrote: post #177
MichaelApproved wrote: post #93

Earlier quoted context omitted.

And that's easily countered by saying "total profits, including subsidiaries."

And that's easily countered by having franchises and not subsidiaries

And that's easily countered by saying, "total profits, including subsidiaries and franchises."

See, we can play this game all day.

The fundamental point is this: just because people might break a law (directly or in spirit) is not an argument against having said law.

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

#214

Post by cptskippy »

matwood wrote: post #137
cptskippy wrote: post #72

Earlier quoted context omitted.

The complexity is by design to make it harder to audit and easier to hide cheating. Given clear and straightforward code/laws, it becomes hard to cheat.

> The complexity is by design to make it harder to audit and easier to hide cheating. You ascribe too much to malice, when it is typically just plain old politics. Representative will only vote to tax X if his/her constituent Y is excluded somehow. Add these types of items over many bills/years and you get what we have today.

The tax industry lobbies heavily to influence tax code and laws to maintain their relevance. The IRS has tried many times to either simplify the tax code or offer services to tax payers to simplify reconciling obligations.

Remember in 2016 when the IRS wanted to mail out prefilled tax forms that tax payers would just sign and send back for or with a check? Remember how the tax industry lobbied Congress to pass the Free File Act of 2016 which permanently bars the IRS from providing free filing services?

I suppose that wasn't malice.

What about when big corporations lobby Congress to not close loop holes?

http://www.citizen.org/documents/corporate-tax-lobbying-repo...

Call it "plain old politics" or call it "malice" but either way it's intentional.

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

#215

Post by tempestn »

AnthonyMouse wrote: post #170
ergothus wrote: post #77

Earlier quoted context omitted.

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…

The 'costs' to the taxpayer are in taxes they already owe and should have paid though. Perhaps the increased enforcement will encourage fewer people and corporations to under-pay their taxes, resulting in greater efficiency than that shown by the direct collections of unpaid taxes.

More generally, it seems strange to me to consider having to pay taxes owed as a cost that should be avoided. IE if the police had to spend money to catch a bank robber, we wouldn't weigh the cost to the robber of having to return the stolen money. (Which isn't to say that under-paying taxes is morally equivalent to bank robbery, but I think the analogy holds.)

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

#216

Post by icelancer »

pwinnski wrote: post #189
icelancer wrote: post #162

Earlier quoted context omitted.

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

Not OP, but: it becomes a cost of doing business. If you know that 10% of every dollar of revenue goes to the tax collector, you set prices and budgets accordingly. Grocery stores prices all jump by 10%, and things carry on as normal otherwise. I'm not saying that there would be no effect, but it's not a complicated one.

Uh...

>> and things carry on as normal otherwise

I don't think consumers will agree with you.

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

#217

Post by tempestn »

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…

You might be interested in the concept of tax integration. Tax laws are generally designed to take this issue into account.

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

#218

Post by pwinnski »

icelancer wrote: post #216
pwinnski wrote: post #189

Earlier quoted context omitted.

Not OP, but: it becomes a cost of doing business. If you know that 10% of every dollar of revenue goes to the tax collector, you set prices and budgets accordingly. Grocery stores prices all jump by 10%, and things carry on as normal otherwise. I'm not saying that there would be no effect, but it's not a complicated one.

Uh... >> and things carry on as normal otherwise I don't think consumers will agree with you.

You asked the question as if the answer were complicated. It's not complicated: Prices would rise across the board. It would suck, and suck most for the most financially vulnerable, but the answer is still the answer.

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

#219

Post by Loughla »

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 easier to audit low income folks. They have simple forms and simple evidence. Generally they can be done via machine [here is the source: https://www.marketplace.org/2019/04/15/study-where-irs-audit...]

Whereas rich people have complicated forms, requiring more man-hours and actual human eyeballs to get involved.

That's why it happens. Not sure why you disagree, these are facts.

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

#220

Post by SamReidHughes »

davidw wrote: post #204
SamReidHughes wrote: post #188

Earlier quoted context omitted.

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.

So how do you know we're not at the point of diminishing returns?
Post reply on HN