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[flagged] IRS: billions in overdue/unpaid taxes to be collected with new funding (apnews.com)
46 points by MilnerRoute on Feb 8, 2024 | hide | past | favorite | 48 comments


One might think that people who claim their priority is "law and order" would strongly support enforcing existing laws without fear or favor.

One might think that people who claim their priority is reducing the budget deficit would strongly support spending tens of billions to increase revenues by hundreds of billions.

But when we observe that people's actions contradict their claims, we should stop believing their claims.


I worked for a major US Federal agency that audits the private sector. The amount of money we recovered for the government significantly exceeded our budget. However, most people have a naive model of the cost-benefit relationship that greatly overestimates the benefit of increasing the auditing budget.

First, even if the recovered money exceeds the budget, the amount of recoverable money tends to be fixed to a first approximation. Audits already tend to follow the 80/20 rule. The marginal increase in recovered money quickly becomes less than the marginal increase in budget. You might find a new seam of recoverable money but those tend to dry up quickly while agency budget increases are forever.

Second, the indirect compliance costs to the government can exceed the directly recovered money, even ignoring the economy at large. The government may find $75M in new money for an audit cost of $25M if they start auditing something they have historically ignored and therefore tends to have sloppy compliance. This will create a lot of compliance activity in the private sector. On the surface, this looks like a free $50M to the government. However, these compliance costs can increase government procurement costs in excess of the direct recovery. The US government is aware of this and is therefore circumspect about over-auditing for diminishing returns as that can show up as a net cost elsewhere in the budget.

Most money recovered in audits is from sloppy record-keeping, ignorance, ambiguity, etc and not fraudulent intent at scale. There is always some fraud but that isn't the meat-and-potatoes of it. Increases in auditing incentivizes more rigorous processes in the private sector, which comes at a cost to the economy, but also reduces future audit recoveries. Increasing audits isn't an infinite money glitch.


I don't expect people to be fully consistent in their actions. The world is a complicated place, and people will have conflicting motives.

There's a strong belief that somehow rich people are uniquely capable of "creating jobs", while jobs the government creates don't count. Surely if we let the rich get richer, that money will trickle down on the rest of us. It's not totally inconsistent, if you overlook the fact that it never actually works that way.

Still... this one does have a strong note of "laws for thee, but not for me". Or even more weirdly, "... but not for the person I imagine I'm going to be some day, even if it's worse for the person I actually am and almost certainly will remain."


We have a spending problem, not an income problem. Taking more of people’s money isn’t going to solve the core problem that our spending needs serious cuts. You think your political opponents are bad faith actors because you’ve never actually listened to their core beliefs and only know about them through a lense painted by their opposition who favor bigger government.

Conservatives want the government cut down significantly, not to find creative ways to get more money.


If they want to cut the spending, then they have to actually cut the spending. Cutting the revenue-generating portion of the government doesn't reduce spending, outside of the comparatively trivial sum spent on revenue collection.

Actually cutting spending is hard. It's easy to decry the overall number, but you have to cut actual programs. The vast majority of it goes to things like social security, medicare, and the military -- things people are reluctant to cut. Of what's left, it's a lot harder to find "waste" than people think. At most they zero in on programs that matter a lot to other people... and comprise a trivial fraction of the overall budget.

The budget is big because people want it to be big. Actually reducing the size of it is hard. Meantime, there is zero reason why we should allow people to break the law to avoid paying for the money that Congress appropriates.


Perhaps we can derive the core beliefs of the Republican party from their 2020 platform. Given that that is how political parties typically express such things, it seems reasonable.


The joke here being that they didn't have a 2020 platform.

“RESOLVED, That the Republican National Convention will adjourn without adopting a new platform until the 2024 Republican National Convention.”

https://prod-cdn-static.gop.com/docs/Resolution_Platform_202...

Strictly, that meant that the 2016 platform remained in force, and they blamed the inability to derive a new one on COVID. But it doesn't speak particularly well of them not to be seriously considering the fundamental statement of what it is the party wants to do.


I'm gonna have to push back a bit on that.

I've had major frustrations precisely because conservatives do not cut down on the government when they finally get elected. Spending always goes up.

What we have, at least in the US, are tax and spend big "liberals" on one side. And don't tax, but spend even bigger anyway "conservatives" on the other.

Please don't try to sell us on the myth of conservatives being good financial stewards because the recent historical data clearly bears all that out to be nonsense. There is currently no option in the US for you to vote for if you believe we need, for instance, a drawdown in spending.


Yeah you’re right that when it comes to execution the actual cutting of programs rarely happens. This past year has been the first time we’ve seen a GOP that’s actually forcing cuts in my lifetime. It’s also worth noting this has been at the behest of a minority of the party and that most of them do seem okay with the status quo. Still these politicians are elected on platforms of doing this it’s just that

A. A lot of them definitely are grifters

B. The ones that aren’t have to deal with political realities that make slashing income easier than slashing spending.


They are bad faith actors. They pass no legislation to reduce spending, in fact, they just keep spending more and more. You don't buy a $1M house and then make payments like it was $500K, that's just flat out stupid.


> want the government cut down significantly

Yet another claim trivially refuted by actions.

We should stop repeating transparently bogus claims like this.


You should stop thinking your partisan view points are facts. This is the core doctrine of every American conservative, it isn’t a refutable claim. You can make the case that the elected politicians are corrupt and do not follow through on promises, in which case you won’t find many conservatives that disagree.


It is a refutable claim. Those voters continue to vote the same people in. We can derive from their action, that politicians not reducing spending isn’t a concern they hold highly.


No you can derive that they find those politicians better than the alternative and nothing more. Republicans not cutting spending as voters would like isn’t going to make them democrats no matter how much you’d like that to be the case.

The fact is they have been very successful at stopping democratic policy over the years and just this year they have forced concessions on spending out of democrats, including the president after he stated that wouldn’t happen.


If the dem party kept saying they were pro-choice but then started filling seats with mostly pro-life judges, they would lose voters. Some things are a bridge too far for people. Republican voters don’t think spending is an important enough issue to put their foot down and say enough is enough.


When a political party frightens the public about deficit spending and unsustainable debt while that party is out of power, and then when the party is in power they cut taxes for the wealthy while increasing spending, it's easy to infer that their claims of fiscal responsibility were just a ruse to gain power.


Yeah it’s wild that people getting rich off insider trading don’t want to raise taxes on themselves. How many millionaires are in the Senate and House? How many made their millions in their government position?


What some people may not realize is the shrinking of the IRS started from a backlash of well-documented abuses by the agency that peaked in the 80's

I'm very cynical of "but this time it will be different, we're going after the rich!". Anyone who has ever dealt with government bureacrats, knows that they generally end up following the path of least resistance which in this case will be the middle class.


The backlash in the 80's probably should have involved a simplification of the tax code instead of defunding the IRS.


Please don’t make excuses for properly funding tax collection of legitimate taxes owed. If you want independent oversight, implement it.

I pay all of my taxes due, and I expect the same from other taxpayers, regardless of income bracket and total tax liability.


> I pay all of my taxes due, and I expect the same from other taxpayers...

What are "taxes due"? And at what point does "Creative-but-legal accounting" turn into "Tax fraud"?

The tax code is complex and arcane enough that if you give a suitably complicated set of taxes to several different tax preparers, they will almost certainly all come back with different numbers - all of which are "correct," in the sense of being compliant with tax code.

But at some point, which honestly isn't that much annual income, it becomes worth having your own private accountant to wrangle your side businesses and such for the tax benefits. A friend of mine did this out of college (accounting/finance major) - on paper, he was responsible for doing some freight routing for trainloads of raw materials, but in reality he was about 25% that and 75% "keeping up with the details of the company owner's side businesses, all of which were legal and legitimate, but all of which served as tax breaks for the owner's hobbies." Hunting guide company? A reasonable amount of your firearms expenses are tax deductible for training, practice, equipment evaluation, etc. Fishing company? Same for a lot of your boat expenses and such.

I'm not sure if that really needs fixing or not, but a $50k/yr dedicated accountant is cheaper than taxes fairly quickly. Especially if they can do other work for you too.


There is independent oversight through the tax courts but your typical person off the street can't afford to defend themselves from the united states government.

You have an idealistic assumption that people who are targeted for audits or fines are all guilty of tax fraud. This isn't true. Sometimes is just a matter of them losing supporting documentation.


I have had non filing and delinquent tax issues with the IRS due to life events. I have been audited. I have no complaints, and resolved all issues directly with the IRS without professional representation. They are civil servants doing a necessary but usually unpleasant job, collecting taxes that pay for civilization. Disclosing my bias, I like civilization funded.


Your experience is anecdotal. Here's an anecdotal horror story to counter it https://www.nytimes.com/2015/05/01/us/politics/rules-change-...

The political narrative is that the IRS will be on the front lines of the battle for social equity and maybe that's the intention but I've personally experienced the realities of government bureaucracy and the overreach of federal law enforcement.


> a backlash of well-documented abuses by the agency that peaked in the 80's

If they're well-documented it's not here: https://en.wikipedia.org/wiki/List_of_allegations_of_misuse_... or here: https://en.wikipedia.org/wiki/Internal_Revenue_Service


There is def. a middle ground we have to find here, but underfunding for decades is definitely not the right place to be either. If you have ever had to call the IRS in the last decade and get anything at all done, you will find it nearly impossible to do. Their system is down, or the one person on the planet that knows how to do X is on vacation, so call back in a few weeks, etc.

So you go through your congress critter, and hope they can find the right person for you, which they generally manage to do, but it takes them 6 months. Or in my case, I have an issue from 2019 still pending. My congress critter has even changed, so I have to re-initiate and start the process all over again whenever that happens. Luckily it's a case where they owe me a little money and I don't really need it.

The IRS desperately needs the funding. But of course they could become over-funded and cause stupid ridiculous problems in the other direction.


That's unfounded speculation that goes against the explicit statements made by the IRS. Knee-jerk cynicism is not a replacement for facts.


So we should defund any agency that has had well-documented abuses in the past 40 years?


What's well-documented is Republican affinity for wealthy tax cheats and opposition to good governance.


> earlier this month the IRS announced that it had recouped half a billion dollars in back taxes from rich tax cheats.

I can't wait to be told why this is a bad thing.


I'm no fan of e.g. Jeff Bezos. But here are a few things he doesn't do with his money:

- Kill People - Torture people - Lock people up

So I'd much rather have him keep his money than have to hand it over to people who will use it for these purposes. Yeah, I know, I know, they build roads and it's absolutely impossible to build roads without extorting the entire population.


When the rich get overtaxed, the hardworking-and-still-budget-strapped middle class often gets overtaxed as well, and the poor suffer for the lessened spending power of all of the above.

More money in the hands of an efficient government isn't always a good thing.


Letting tax evaders operate is a tax break for criminals, not even for rich people.


If you tax people less, they have less incentive to evade.


The money obtained from making criminals pay could fund tax cuts for everyone who was, previously, shouldering the whole burden of society alone.


The criminals are running the government. If you or I did anything like the congress critters we’d be jailed (just look at insider trading).


> Tax cheats

> over taxed


Meta: Why are there multiple political / social commentary posts on every page of HN now? Was it always like this, or is it worse now? If you want to read social/political "news", well, literally every other media source in existence can provide those stories for you. Why on Hacker News? It'll just be a comment thread of political arguing.


Propaganda spreads to pollute all available niches.


Agreed.

It is always posts repeating left/center-left dogmas. Agree or disagree, fine. It is also fair to dismiss the entire exercise as meaningless bickering. However I find it hard to describe this as "intellectual curiosity", when the discussion is narrowly limited to specific brands of sloganeering.

Entire books have been written on some of the common disputes arising on this site. There's rarely anything new added in the usual short comments here. Most commonly I read a pop culture interpretation/regurgitation of the same concepts. Perhaps it was something a talking head repeated somewhere?

When I have made the mistake of engaging, I'll cite an author or perhaps link a short article by the same author summarizing some of the points. Inevitably, posters will smear the source for having, "an agenda". As if all of politics isn't framed from within "agendas".

It is bad enough on explicitly partisan posts like this one, but I'm also noticing politics creeping into other benign areas. A discussion about Google's practices will always lead down the rabbit hole of "more regulation and government can solve that!". Observations around the business cycle, state managed economy and how these factors fuel monopolies are less welcome. Perhaps John Oliver didn't give those talking points.


The technologists that read HN have created a surveillance panopticon that will make it very easy for the state to go after unpaid taxes – particularly those who can't afford the army of accountants, laywers, and lobbyists required to hide their income, offshore their businesses, or otherwise avoid paying their fair share.

SV techbros will happily sell your data to whichever tyrant is paying, including the federal government.

https://www.csis.org/analysis/surveillance-sale

https://epic.org/issues/consumer-privacy/data-brokers/

https://energycommerce.house.gov/posts/how-your-online-data-...

https://www.wyden.senate.gov/news/press-releases/wyden-relea...


If the government needs funding to get money. Should I be able to invest in that venture?


While people will be worrying about whether they will be shaking down regular tax payers, the ultimate goal is to claw back the pandemic PPP loans that were fraudulently requested and not paid back.

They've only started reviewing these and there's a lot more for them to grind through.

The question however is how long it will take them to go through each loan.


I don't know if this is true, but I certainly hope it is. That whole PPP thing is one of the biggest upward transfers of wealth this country has ever seen. Disgusting.


What's the point if they're gonna squander them on war.


If we are running 3 trillion in deficit spending a year, and at current rate we likely will never pay down the deficit,

Why do we still need to tax the working poor?


Because they can't fight back... the rich have the means to just make it disappear.


The Rich have to write and vote on the bill that will raise their taxes.




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