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.
She posits that greed and corruption have overtaken the American government's purpose, especially in the last 25 years. Money, through lobbying and other forms of influence, now dictates who the government works for. It works for large corporations, pharmaceuticals and the oil industry (for example) rather than America's citizens and workers--specifically with access to healthcare, a living wage and a clean planet.
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.
Either way the plan can be adjusted, as my sibling says, to include the revenue from subsidiaries so let's not be defeatist :)
None of them. You'll be doing business with Apple CustomerCare or whatever it's called, and they're going to pay license fees for some logo, software or what have you to those 595 companies. It's how Amazon & Co funnel their money out of Europe without hardly paying any taxes, too.
Besides, they typically already have dozens of subsidiaries that are largely invisible to most employees and business partners. This is just adding more reasons to do so.
(Source: have worked on subsidiary taxonomy of large companies before, not for tax purposes, and from the outside there is often little information, at face value, why these subsidiaries exist. Even if you asked them, it wouldn't be hard to come up with legal reasons.)
It could be illegal, but this isn't the same as comparing a few timestamps. You'd need to dive into WHY the subsidiaries exist to determine that they weren't "legal" structures.
> Even if you asked them, it wouldn't be hard to come up with legal reasons
And as I said, they might be! There are probably many reasons to split up an organization that aren't CURRENTLY worth the effort. But this suddenly makes it worth the effort and they already have the justification.
The details of what these justifications are can be interesting, but are largely specific to each entity. Here is one general example: if you have a business presence in every state, boom, 50 subsidiaries already there. Come up with a few other bogus reasons and you can easily rack up entirely legal subsidiaries that on the surface, seem like intelligent organizational choices.
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.
A business buying from another business can reclaim the VAT.
The end usually consumer cannot.
VAT is a consumption tax.
By your logic you could reason that eventually all tax is paid by consumers because they pay the companies for the products and that includes corporate income tax and so on but whenever sales tax is low you will find that companies are more than happy to absorb the surplus as profits.
VAT is the closest governments get to taxing businesses directly on their revenue streams.
How do you explain the fact that businesses can reclaim VAT they've paid, but consumers can't?
The only explanation is that VAT is a tax paid by consumers, not by businesses.
I'm not saying that there would be no effect, but it's not a complicated one.
>> and things carry on as normal otherwise
I don't think consumers will agree with you.
It's precisely how Dollar Trees and Dollar Generals have been pushing out grocery stores in the US right now, by not offering fresh produce, meat, or other traditional loss items. Planet Money even has a podcast on it: https://www.npr.org/sections/money/2019/04/26/717665452/epis...
Imagine the grocery store in your area carrying only frozen and canned meat and produce, because that is what it would push.
In other words, if you try to do multiple $9999.00 transfers in an attempt to "fly under the radar" - you will be caught out.
Concrete example, since you mention the oil industry: Exxon makes about 22.5 cents when you buy a gallon of gas at $3.00. Meanwhile, an analysis has found that gas should be taxed an extra $4.36-7.62 per gallon to fully reflect the environmental and other harms of driving: https://www.citylab.com/transportation/2015/01/the-real-reas.... So when the government doesn't impose that tax, who benefits? Exxon benefits a little because it sells more gas and collects the $0.22 of profit on each gallon. But the consumer saves $4.36-7.62 by avoiding those taxes. Exxon's profits, about $20 billion last year, are a rounding error compared to the trillion+ dollars that consumers would pay in extra taxes to address the negative externalities of driving.
Transportation, heating, agriculture, consumer products--these are the industries responsible for the fast majority of GHGs. And these are also highly competitive, commoditized industries where most cost savings get passed onto consumers. (Facebook makes more profit than Exxon, even though Exxon's revenues are more than five times as much.) That means the savings of making pollution cheap also accrues mostly to consumers. The industries where lack of competition allows corporations to command huge margins--banking, tech, advertising, etc.--are not the ones that are primarily responsible for GHGs.
"Access to healthcare" is similar. Why do people in Sweden have universal healthcare while people in America do not? Is it corporations? No, Sweden's corporate tax rate is quite a bit lower than ours. (It's similar to the current federal rate, but in the U.S. most corporations also pay a state rate. In Delaware, for example, it's an additional 8.7%.) So who benefits by Americans not having universal healthcare? It's middle-class Americans who don't pay the high middle-class taxes that middle-class Europeans pay.
Warren's focus on corporations is a total red herring, intended to make people falsely believe that you can have universal healthcare and a cleaner planet without decreasing your material quality of life. As Jimmy Carter told us, that's not in the cards. How do we know that? Because we can look at other countries who do better on these measures, and see what they do! France has much lower GHG emissions than the U.S. and universal healthcare. How do they do it? They live in houses that are half the size; they drive tiny fuel efficient cars, and have fewer of them per household; they deal with the challenges of nuclear power; their payroll taxes on the middle class are double ours; they take public transmit more often and therefore have significantly longer commutes. But their corporate taxes are even lower than ours!
I believe that the argument here is that insurance companies are the unnecessary middleman gumming up American healthcare. Making $21b in 2018, insurance companies exist to make as much money as possible--by denying coverage when they can and paying out as little as possible. They complicate the process by requiring both the providers and consumers to get tangled up in paperwork, also slowing the process (and quality) down. Her argument there is that we could provide a better experience for all and invest that $21b of profit being leeched out back into actual coverage by going to Medicare for All.
> intended to make people falsely believe that you can have universal healthcare and a cleaner planet without decreasing your material quality of life
I don't think that's what she's intending. Her plan for cleaning up the planet involves scientific investment in clean/green industries and becoming a leader in providing those services commercially throughout the world. The US is only 20% of the problem, which is why we need an industry to really push this throughout the rest of the world--something that other countries are currently leading in.
In case your curious about Warren's approach here: https://medium.com/@teamwarren/my-green-manufacturing-plan-f...
It doesn't help that there are lots of circulating analyses about insurers and management overhead that are probably just false; for instance, a popular chart depicting a 4x increase in admin costs starting in the 1990s was debunked by Kevin Drum and others, who observed that it was probably accounting for people like MRI operators on the payer rather than the provider side.
Two things pundits say that are red flags for me that they haven't really studied health economics:
1. Blaming pharmaceutical companies and prescription drug costs, which are one of the smaller overall drivers of health care expenses in the US.
2. Blaming health insurance companies for taking an outsized and material chunk of health spending.
You could $0 out pharma and insurance companies, indenturing everyone who worked for them, and we might not be meaningfully better off. We'd be paying less, but not, like, a huge amount less; people who can't afford silver-class health insurance for a family of four today still couldn't afford it in that alternate reality.
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.
I do not expect a properly staffed tax agency to.
https://en.m.wikipedia.org/wiki/IRS_targeting_controversy
(Read the fourth paragraph of this page)
If doctors started forming non-profits to do financial engineering to get tax-exempt status, I'd sure as hell hope that the IRS would devote a bit more scrutiny than usual to practitioners of that profession.
Political groups started doing financial engineering to get tax-exempt status. The IRS started auditing them a bit more closely. I don't see the issue.
> If doctors started forming non-profits to do financial engineering to get tax-exempt status, I'd sure as hell hope that the IRS would devote a bit more scrutiny than usual to practitioners of that profession.
> Political groups started doing financial engineering to get tax-exempt status. The IRS started auditing them a bit more closely. I don't see the issue.
The country's inspector general deemed it unlawful. Given the report that came out from the investigation, there seems to be more to the audits than neutral scrutiny that is not performed on the basis of ideology.
The IRS does this all the time.
And unlike criminal law, the burden of proof is on the accused, not the state.
Or is this just a meme largely spread by a demographic who is upset that their magic internet money is, in fact, subject to taxes (or, alternatively, a demographic that thinks all taxes are theft)?
Did you know that the ominous, threatening letters sent out by the IRS to crypto traders was an indiscriminate shotgun blast of mailings sent to every Coinbase customer with an account value over a certain threshold? Did you know that the IRS wanted personal info on every single Coinbase customer until that was ruled unlawful?
So yes, thousands of presumably innocent people who "followed proper accounting practices and who reported their income correctly" were harassed by a letter from a tax agency insinuating that they had misreported crypto earnings.
IRS agents are no exception.
I want the IRS to have whatever resources are necessary to collect every tax dollar owed (but not a dollar more) according to tax statue.
You are welcome to over-report them for your own satisfaction.
I'm fine with people who are unable to contribute putting less in, I'm not fine with people who exploit the system - and before some BS about welfare queens gets injected... I also care about scale, the amount of missed revenue from corporate taxes far outweighs how people below the poverty line are able to abuse the system - right now it even seems like they're getting the sharp end of the stick to support the top earners - rather than the squeeze being on the middle class.
That’s sales speak for “others should pay even proportionally more than me”.
Ahh yes punish those who worked to provide something worthwhile and reward those who couldn't be bothered to do the same.
Taxes are a membership fee for society. I'm fine with people declaring themselves not members of the society, but they don't get to use the club room then, either.
If only you could appreciate that the US was founded protesting a 5% GDP tax rate.
* founded by wealthy landowners interested in protecting their interests
* that 5% tax wasn't going towards US infrastructure
* 200+ years have passed since, and we've gone past horse-drawn carriages
This meme needs to die.
Nobody was sitting around saying "You know what will make me richer, a decade of war with England and if we win followed up with several decades of poor trade relations". The wealthy landowners who founded this country were very much going all in on a bet where the possible outcomes were lose everything or break even. They didn't do it for the money, not that there was any money in it to do it for.
Edit: Is my statement factually incorrect or ideologically inconvenient?
Of course, actually taking that into context takes away some of the dopamine hit from trying to spread the elite hatred that is currently in vogue.
I'm not even saying there is anything wrong with disliking the elite now; just keep in mind then is then, and now is now. The issues are of course going to be different, even if there may be a shred of commonality to them.
Also if you're going to talk about context, the US tax system at the time of its founding isn't relevant at all. I know you didn't bring it up, but you are still defending something largely irrelevant. It'd be like a candidate for President of the United States defending a tithe system because it's mentioned in the Bible.
Yea, that'd be silly, instead it was "You know what, the crown isn't listening to us and we're ineligible to be lords like those fat cats in england proper, let's throw a big to-do and get invited back in at a proper rank with representation."
This is incorrect as England was providing military services to the American colony. Adam smith implies that the cost of the military was actually higher than the taxes collected.
Most corporations pay the amount of tax they owe under the law, but the law is written to allow tax evasion. The IRS can’t do anything about this.
The fix is to close several well known loopholes.
The enforcement arm, which goes after people who aren't using loopholes, but committing actual tax fraud (and stuff like non-filers), has a ROI of something like $5 for every $1 spent. Cutting its budget is like burning piles of taxpayer dollars in a barrel.
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.
Local police pay for themselves in traffic and parking tickets, among other fees. So maybe we should keep adding cops until we've maximized fine revenue.
Or maybe marginal profit isn't a good way to measure law enforcement...
The question is, is this analogous to paying taxes? Perhaps to some extent—there are most likely enough uncollected taxes that discrimination in enforcement could be an issue, for instance. Although I expect that at the current level of enforcement, more investment would reduce that problem rather than exacerbate it. But more generally, do we see 'minor' tax cheating as being analogous to driving 1mph over the speed limit? I'm not so sure. Certainly the consequences should be proportional to the crime: small and accidental underpayments should simply result in having to pay the amount owed. But it seems to me that people (and corporations) should be required to pay all taxes legally owed, so over-enforcement in this area shouldn't be a concern until it got to the level where money was being spent that could be better used elsewhere. (Which obviously isn't the case when you're seeing a marginal profit on enforcement.)
I suppose the logical counter-argument would be that the money could be better spent by the people earning it in the first place—IE that taxes should be lower—and indeed I do expect this is the belief of most people who argue against enforcement.
I think laws should be simple and enforced. For example, raise speed limits so they are high enough that nobody has a reason to routinely break them, then draconian enforcement. Old white Grandpa weaving around should get the same penalty as young Black guy weaving through traffic.
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 total of $1.20 to get $1, not $.60. (And the burden doesn't inherently fall on people doing something wrong; it costs people money to get audited even when the audit reveals no malfeasance.)
Then you have to consider that IRS spending is unproductive. If the IRS spends $.50 and the taxpayer spends $.50 in order to recover $1, you haven't generated $1 for government programs, it's only $.50, but it costs the taxpayer $1. The collection efficiency of doing that is astoundingly bad -- in normal cases the collection overhead is <1%.
Meanwhile the amount of actual tax evasion in the US is quite low, so more audits don't result in a lot more compliance. (Tax avoidance is something else entirely, but IRS spending does nothing there.)
> Congress appropriated $11.4 billion for the IRS in FY 2018 and IRS enforcement programs collected $59.4 billion, for a return on investment (ROI) of about $5.2 for every $1 invested in the IRS.
https://home.treasury.gov/system/files/266/02.-IRS-FY-2020-C...
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.)
No, they're what the taxpayer has to spend on accountants and lawyers when they get audited even though they haven't done anything wrong. Or have done something wrong, but by mistake, and then the government consumes $1 in total resources to correct a $.90 mistake.
> 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.
Except that major tax fraud is a rare occurrence so there is no low hanging fruit there, and most of the actual violations are mistakes as a result of tax complexity that can't be deterred because the people don't know they're doing anything wrong. You could also end up doing the opposite -- causing even more fruitless compliance costs as taxpayers preemptively spend more on accountants and lawyers but result in no additional government revenues. Or less government revenues, if the accountants and lawyers find deductions the taxpayer had been overlooking previously (e.g. because the deduction is less than the additional accounting cost required to find it, but now you're pushed to spend that money anyway).
I'm less sure about the second point, specifically that there's no low hanging fruit there. ISTM if that were true, then investment in enforcement would not show such a large immediate profit. Doesn't that by definition demonstrate that there is low-hanging fruit? If we were close to the 1:1 point then I could see the argument, especially in conjunction with your first point, but we're not.
I do generally agree with the point that the tax system (and especially filing) should be simplified though, as long as the simplification isn't in fact a regressive tax cut in disguise.
You're talking about two different things. One is what you can get directly by auditing people, the other is the deterrent effect from doing more audits. The second has nothing to do with how profitable the first is. It may have no effect at all, if ordinary taxpayers aren't even aware of how many audits are happening. It could easily have a negative effect for people who are paying attention to it, because they respond by spending more on accountants, which increases overhead (negative externality) and is at least as likely to uncover deductions they're not taking but could than deductions they are taking but shouldn't (no increase and potential decrease in government revenue).
As for the first, consider how the "profit making" nature of audits actually works. The IRS spends thousands of dollars auditing many people who haven't done anything wrong, and causes the same people to have to spend thousands of dollars themselves to deal with the audit -- or more, if the principals of a business get bogged down dealing with it, it can easily cost the business more than it costs the IRS. That's all pure overhead and leads to nothing.
Then one of the audits out of many actually finds a mistake, and it's a business with a few million in annual revenue that has unintentionally underpaid its taxes by 2%, but has been making the same mistake for years. That nets the IRS something like half a million dollars, having spent 20% of that to find it, and caused the audited businesses to spend a further 50% of that on accountants and lawyers. So you create $3.5M in overhead to collect $5M, costing you $1M and the taxpayer $2.5M, but that cost is a deduction to the business, which costs you a further $.875M. So you've created $3.5M in overhead to collect $3.125M for actual programs. That is an extremely bad level of efficiency -- more money is going to overhead than programs. But they call this a 5:1 ratio of profit to expense -- which is still pretty bad (20% overhead) -- because they don't count the cost to the business nor the cost to the government when the business takes that cost as a deduction.
Meanwhile all of the businesses that were audited, even the ones that weren't doing anything wrong, had to go out and hire those accountants, who probably found a bunch of deductions some of them weren't taking even though they could. So the next thing that happens is that the treasury takes in a million a year less every year going forward because they induced a bunch of businesses to spend more on tax accounting. That isn't an inefficiency, they're entitled to it under the law, but it's something to keep in mind for the people who only care about government revenue and not the overhead created on the business side.
If you're not aware, the reason we don't have "some sort of easy file card" isn't any choice by the IRS, it's a choice by Congress at the behest of the tax preparation industry.
Avoidance. There's no natural tax system so suggesting the law is setup to allow tax evasion is illogical.
A problem with fraud/non-file/etc. is not enough enforcement, i.e. the IRS budget.
These are separate issues.
> law is written to allow tax evasion.
The law is not written to allow tax evasion. Tax evasion is knowingly violating the law.
The word you're looking for is tax avoidance. Everyone does some amount of tax avoidance whether it be taking deductions or carefully parsing the code to work through it. That's avoidance and it's 100% legal as you mentioned.
Second, corporate taxes are dumb. They're effectively passed through the corporation to the consumer or service user or worse just passed onto labor by reducing wages and hiring to compensate.
That is not tax evasion. If the law is used to avoid paying a tax it is legal. Tax evasion is when you don't pay taxes that you should have paid and somebody often goes to jail and/or pays penalties for it.
What would that look like?
Things like that is what I think about when I hear some of the hardline comments here.
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.
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").
The issue there isn't the IRS though, it's the tax code. The IRS is absolutely a department that needs to be staffed to maximize their revenue.
If you have an easy to navigate tax-code that doesn't require a doctoral understanding of economics, then there's not a problem for the everyday person (TBH you can also say the same thing about the law in general).
>>“Anyone opposing more police officers and equipment is breaking the law” is similar to your argument.
Here's a better statement: I believe the people who are most actively working and spending money to depower the IRS are those who seek the most to gain by hiding their financial doings. They seek to deregulate industry as a whole in the name of corporate gains while simultaneously infiltrating various branches of the government to further this agenda. These people are doing so in an (successful) effort to push more wealth from the majority into the hands of a minority. I believe this is bad for society as a whole.
Is it that you don't want IRS employees sitting around doing nothing?
Because if this resulted in losing $34B in revenue, it doesn't like they were sitting around doing nothing.
We're not there, though.
I suspect that's true, but you don't actually know that from this dataset. Some portion of the cost is born by the auditee to respond/defend against the audit and passed on to shareholders/employees/customers.
If the response costs are great with respect to the IRS's audit costs, the government could quite profitably add auditors, but have a negative overall impact on end citizens.
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.
Granted, both parties are terrible when it comes to corporate interest so... they both suck - but one really has a strong tendency to advocate for balancing the books.
It's different with police officers because the number of crimes is un-countable [1] and if you point the police at anyone they'll find crimes. The same isn't really true of a W-2 employee with a 401(k). The taxes due are by definition countable and the compliance process is largely automated. You are just responsible for truing it up at the end of the year.
[1] https://www.wsj.com/articles/SB10001424052702304319804576389...
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.
Let's take this down a level. If your friend owes you $200, and paid you back $150 because of an honest mistake, does that mean your friend no longer owes you $50 because, oops? Of course not. This is no different at the scale of the IRS.
Most AR departments will, in fact, be willing to write off some of what they're owed. There's a cost to pursuing the debts, both in employee time and in goodwill.
I didn’t read the statement as a universally applicable principle, but rather a description of the current situation.
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 kroner. Needles to say, there is now support for our tax agency from every political party, even the ones that want to cut taxes. If your tax-agents aren’t needed, then downsize them, but I’m not sure that’s anywhere.
The police on the other hand are an expense you pay to avoid paying a bigger expense.
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 directly make revenue for the government.
What? How does that make sense? Why are you making that drastic of a leap? Why?
Many government agencies make no money, as they’re not profitable organizations (I’d argue the entire government is de facto a non-profit organization but that’s a separate argument). The few that are able to make money would typically do so for their own ends (like taxing gasoline for maintaining roads). The IRS is one of the few organizations that generates income for the government specifically to spread across other agencies.
What’s insane to me is people talking about this like there’s no ceiling to how much money the IRS can take or that if the IRS went to $0 per employee that would somehow be a good thing. It’s the same thing when people say NASA generates income for the country therefore we should fund it more. Be intellectually honest with yourselves, if we funded the IRS or NASA or any other entity that makes $X/employee, there is a point where that funding becomes suboptimal. And I’m not seeing anyone discuss what the optimal amount is here, it just seems like you think the amount is “more” because taxing people is “good.”
I mean, maybe I could have put it more clearly, but I think it is fairly obvious that I wasn’t advocating for what you seem to think.
I’m just not sure what strawman you’re trying to prove wrong here, or who you’re even arguing against. Unlimited funds to tax-agencies is silly, everyone agrees on that, but in both the original and my example, the result of downsizing staff to save a few million on the budget ended up costing society billions.
At a glance, I am okay with that, and the arguments put forth so far don’t really convince me otherwise, like the number of dollars per IRS employee is a meaningless metric to me because it doesn’t tell me what’s optimal for government.
Most of the money went out of the country to heavy investment companies and hedge funds who exploited the fact that our vat-repayment system went from hundreds of auditors to just two people. Something we’re now battling international banks, investment funds and pension indexes to get partly back (at another great expense).
I’m not sure what society you live in, but this was such a negative impact on ours that even our most liberal political parties, who exist primarily because they want to cut taxes heavily, support re-staffing our tax-agency.
At the moment the IRS brings in $5.2 for every $1 spent, that's $3.2 of extra revenue per $1. But their budget is being cut.
We don't need to reach to see that wherever the line is where we break even, we're not there yet.
The intended outcome is that the statistical distribution of claims all bunch up at the edge of "being as close as possible to being illegal while still being legal." Which seems to actually be a better Nash equilibrium, economically, than one where people/corporations are so afraid of the IRS that they don't claim as much as they could.
Wow, that's a very bold accusation. Have you a single shred of evidence for this libel? Being as how this started quite a while ago, I guess all politicians and both political parties are tax frauds or employed by them: