What's needed is to make cracking down on white-collar crime profitable. Like the setup for drug task forces.
Here are some of those reasons.
$3 for every $1 is an extremely misleading way of putting it, as though the IRS is a business and everything is good as long as it's turning a profit. A better way of putting it is that collecting taxes through enforcement has ~33% overhead, which is high. By comparison, the overhead of normal IRS tax collection is a fraction of a percent.
It also only accounts for the government's side of the expense, not the cost (and stress) imposed on innocent taxpayers who get audited to no avail in order to catch the smaller number of people who were actually committing tax fraud, and who are almost always small business owners because they're the ones with unusual tax returns. So the actual cost is even higher and is paid by a group of innocent people who create a disproportionately large amount of economic value while being at high risk of becoming unviable when you impose large surprise costs and time commitments on them like that.
The IRS also prioritizes its enforcement to maximize effectiveness, which means they're already taking the low hanging fruit and increased enforcement would be at the margin rather than at the existing average. For the average to be at parity you would need to be doing a lot of audits that cost more than the revenue they generate in order to cancel out the revenue gained from the net-positive enforcement that is already occurring.
It's possible that we could actually raise government income by doing less enforcement, because $3 is the average. It would be a net gain to eliminate the ones where we're spending $1 to raise $.50 (or $0) as long as we keep the ones where we spend $1 to raise $20.
I don’t believe the driving force is protecting small buisinesses from Audits- anecdotal, but small businesses in my family are still audited frequently. I believe it has to do with how unpopular the IRS is with the conservatives for ideological reasons, and they currently control the government. Our president bragged about how dodging taxes was an admirable quality- that kind of attitude is the driving force in american rhetoric, not protecting small buisiness owners.
But that doesn't work for small businesses. If you sell hamburgers, the majority of your customers won't have informed the IRS of the transaction. If any part of your supply chain includes normal retail outlets, same thing. Small business tax returns are pretty horrific. (They're at least as complicated for large businesses too, but they actually like it that way for all the usual reasons.)
> I don’t believe the driving force is protecting small buisinesses from Audits- anecdotal, but small businesses in my family are still audited frequently.
And they typically don't uncover major tax fraud, right? Evidence that the existing level of enforcement is, if anything, too high.
> I believe it has to do with how unpopular the IRS is with the conservatives for ideological reasons
That doesn't make any sense. Both of the major parties are ideologically bankrupt and ruthlessly pragmatic. Some part of their constituency wants it this way -- and it's probably the small business owners who keep getting audited even though they're not evading taxes.
> Our president bragged about how dodging taxes was an admirable quality- that kind of attitude is the driving force in american rhetoric, not protecting small buisiness owners.
Not paying taxes you don't actually owe is textbook capitalism. The idea that we should be outraged at companies for not paying what the law we passed says they don't owe instead of replacing the tax laws with ones that cause them to actually owe taxes is some kind of nonsense populist rhetoric.
Hamburger joints getting extra scrutiny at the government’s expense doesn’t seem like a problem to me, especially since they often already do. The people who aren’t getting audited often enough are not Mom&Pop hamburger joints, no one is arguing that. The premise of the parent poster is that the IRS is underfunded to deal with real large scale white collar crime, and as I understand you argue that’s not possible without splash damage to small buisinesses. But they're unrelated: you can specifically target large buisinesses, and you can make the government pay for audit services for small buisinesses.
> Some part of their constituency wants it this way -- and it's probably the small business owners who keep getting audited even though they're not evading taxes.
That’s utter nonsense. The large Republican doners not only have large tax bills at stake but believe they should not.
http://time.com/5075076/koch-brothers-tax-bill-campaign/
https://www.mcclatchydc.com/news/politics-government/article...
https://www.pastemagazine.com/articles/2018/05/sheldon-adels...
Each one of these doners individually spends hundreds of times more than the national small buisiness association on lobbying https://www.opensecrets.org/lobby/clientsum.php?id=D00005433...
And it’s harder to tell the exact numbers, but probably thousands of times more more than all small buisinesses in donations.
How ideologically bankrupt democrats are is irrelevant and doesn’t change what is happening here.
> The idea that we should be outraged at companies for not paying what the law we passed says they don't owe instead of replacing the tax laws with ones that cause them to actually owe taxes is some kind of nonsense populist rhetoric.
The idea is we should be outraged at the tax law and fix it, instead of celebrating the loopholes for billionaires.
The problem with "at government expense" is that it annihilates the premise that this is going to increase government income. If you audit someone, they not only have to hire a tax professional, they have to spend their own time on it because they're the only one who knows their own business. But because they're the only one who knows their own business, they also need to spend their time running the business. So the amount you would have to properly compensate them would be at something like the overtime rate, but worse because it's involuntary, and for someone whose time may already be valued at six or seven figures.
The government would never actually pay that full cost, so the idea that everything's fine because the government is paying for it is silly, and if they did it would immediately put the program deep underwater.
> The premise of the parent poster is that the IRS is underfunded to deal with real large scale white collar crime, and as I understand you argue that’s not possible without splash damage to small buisinesses. But they're unrelated: you can specifically target large buisinesses, and you can make the government pay for audit services for small buisinesses.
The problem is large businesses largely aren't the ones committing tax fraud -- hardly anybody is. Large businesses pay very low taxes because they hire very good accountants, not because they have fraudulent returns. The problem isn't that we need more audits, it's that we need better tax laws.
> The large Republican doners not only have large tax bills at stake but believe they should not.
Is it surprising that the people with the most money are the largest donors? It's basically a prerequisite.
> Each one of these doners individually spends hundreds of times more than the national small buisiness association on lobbying
Because small businesses don't have huge margins to be spending on lobbying. They're not a constituency because they donate, they're a constituency because they vote.
> The idea is we should be outraged at the tax law and fix it, instead of celebrating the loopholes for billionaires.
But that isn't where the outrage is directed. Nobody is actually fixing the laws -- either party. Even the Republican proposals (tax simplification, flat tax etc.) would fix it, but they never get enough votes to pass it because it's impossible to pass anything like that with the current level of polarization. If you can't get a single vote from the other party then it only takes a small handful in your own party to be corrupted by special interests and it's impossible to fix the problem.
Keep in mind the likelihood that the enforcement actions we spend $1 to raise $0.50 are there to deter tens or hundreds of billions in related avoidance or fraud schemes. That's more important than the actual revenue recovered.
This is one of those things the media is profoundly stupid at. For example:
> Johnston and her coauthor, Andrew Joy, BS, also of Western New Mexico University, reviewed data on mass shootings amassed by media outlets, the FBI and advocacy organizations, as well as scholarly articles, to conclude that “media contagion” is largely responsible for the increase in these often deadly outbursts.
https://www.apa.org/news/press/releases/2016/08/media-contag...
In other words, widespread media coverage of mass shootings has increased the number of mass shootings, because the perpetrators do it for the attention and seeing how much attention it gets encourages future perpetrators. So now the media does its level best not to inflame the public and give unnecessary publicity to these monsters.. or not.
It's the same kind of thing here. The deterrent effect you're looking for comes from people talking about the major tax evasion cases the IRS is winning. It gets reduced by publicly lamenting a lower enforcement budget -- which would have no effect on deterrence if nobody was talking about it.
It's way more important that people understand that the IRS is prosecuting people than whether the actual number of people they're prosecuting goes up or down. And they definitely still are.
It makes sense that the rate at the margin would be much higher than the overall rate, you've already collected all the low-lying fruit, now you're going after the scofflaws trying to avoid paying anything.
That's including all the taxes paid by people with unchallenged tax returns. That's basically just the cost of processing the checks. It's quite a lot more expensive to get money from someone who filed a fraudulent return and you have to do an audit to get them to pay. Especially when a lot of the audits you do won't turn up any real fraud.
Case in point: no one would argue the Nazi regime was anything approaching "good", but when the war was done, we didn't throw away the V2 rocket and start research from scratch. We threw out all the horrible shit the Nazis did but kept their wildly successful rocket.
Likewise, it's possible to throw away the racist bullshit that perpetuates the drug war but use it's funding mechanism to fund prosecution of other crimes that would otherwise be financially infeasible to prosecute otherwise. If someone is convicted of insider trading, take all the money they gained from it and use it to prosecute other insider trading crimes.
What about the part where the war on drugs doesn’t actually reduce drug use? Sure it funds itself by sealing money from innocent people but that’s just another negative externality.
It was not necessary for the Nazis to kill millions of people to develop rockets. Oversimplifying that period of human history doesn’t make reusing failed law enforcement programs a better idea.
Neither I nor Animats ever stated that the war on drugs (or Nazism for that matter) were good things. I think that's entirely clear from even a cursory reading of our comments. In fact, I even stated that you can throw away all the bad stuff but keep one good thing.
It sounds to me like you're arguing that since the war on drugs is bad, we should never do anything affiliated with the war on drugs again. That's silly, and isn't an argument to anything anyone even came close to saying. Computers and cell phones are used in the war on drugs, should we get rid of them too?
Again, you're massively misrepresenting every argument that's been stated in this thread and using it to hold the moral high ground with the easy "Nazis are bad" argument. Of fucking course they are. Maybe read past that? Because it's not edgy. It's not "ends justify the means". It's an actual fucking argument that you're completely ignoring for an easy win.
Shame on you. You should aspire to be better than that.
This is the weirdest trolling I've ever seen.
But we did throw away all the research they did on unwilling human subjects even though it could conceivably have lead to better science if we ignored all the "racist bullshit"...
> Shiro Ishii, as the chief of the unit, was granted war crime immunity from the US occupation authorities, because of his provision of human experimentation research materials to the US.
https://www.nytimes.com/2016/02/07/your-money/vanguard-a-cha...
The UK's GAAR has this trick called a "double reasonableness test" which it uses to get rid of some types of tax _avoidance_ and that seems like an appropriate legal rule here if, in fact, the IRS does abuse this discretion.
The double reasonableness test asks this:
Could any reasonable person (not you, the jury member, judge or whatever, but some other reasonable person you're capable of imagining) think that this way of doing things was reasonable ?
Only if the answer is "No", which it will be only for the most extraordinarily tortured ways of avoiding tax, then this method of avoiding tax is prohibited. You don't go to jail or anything, your avoidance trick just doesn't work and you owe the taxes as usual.
The problem with transfer pricing is that "market price" is a context-dependent volatile fiction. If you buy a jar of peanut butter, it might cost $2 at one store and $2.50 at another on the other side of town. Which one is the market price? The difference is 25%, which at scale is enough to consume most companies' entire profit margin. And the answer is both, because the less expensive one is on the outskirts of town and the other is in the center of town where rents are higher and you pay a premium for the convenience.
Which is one of the ways international companies avoid tax. You have a 10% profit margin internationally, so you overpay/underpay by 10% for everything from your sister company and make zero profit in the high tax jurisdiction, but the entire difference is within the "market price" margin of error. It's even possible to justify the difference by making note of some value add feature/service you did or didn't have that justifies a higher or lower price.
The entire concept is a farce because the error margins are larger than typical profit margins.
Which is how you get bizarre nonsense situations like this. If Vanguard is charging less than others had historically, are they charging less than the market price, or that just the new market price?
Vanguard is in trouble for "charging" the funds below-market rate on the services provided by the management company. But the only reason there are charges to pay attention to at all is that Vanguard deliberately organized itself to return as much money as possible to investors.
Suppose you open a car dealership that gives every person who buys a car a share of the dealership. The next thing you know that dealership has the best service and the lowest prices and makes no profits, because all the owners are also customers and they care less about getting a $10 dividend than about service quality and price.
So then the argument is they're under-charging themselves and they owe tax on the difference between what they charged themselves and the fair market value. But it turns out all the customers love this ownership structure and having to compete with it has caused all the other dealerships to lose business and cut prices, and two new independent dealerships with the same structure sprang up and are now charging similar prices, meanwhile several of the incumbents with the old structure have gone out of business.
So the question is, what's the market price? It's clearly lower than it was, even the old incumbents that are still around are charging less, and losing market share while doing it. If there are now multiple companies offering the razor thin margins, isn't that the new market price? It's a price available to any member of the public and it's what anybody has to compete with if they want to enter the market.
The argument that there is a difference between what they're charging and the market price is ignoring the fact that their aggressive competition has lowered the market price down to what they're charging. But if you try to compare with what rates were like in 1975 then you get a squirrely result.
It's the same problem as with any of it. The grey area covers the entire map. The price they're charging is reasonable -- someone could charge it and operate a sustainable business, and several people do. But somebody else argues that it used to be higher. They're both right, and that's why the entire concept is a farce.
If Vanguard's tax filings are actually non-compliant, we should change the laws immediately.
There's a Matt Levine piece on this somewhere, it's worth finding and reading.