Comment by jjk166 | Hacker News Reader

Comment by jjk166 | Hacker News Reader

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Remember though that tax revenue is actually dominated by the little guy.

There are some super rich tax evaders who can hide many millions from the IRS, but they are few in number and it will cost millions to recover that money after going through all the obstacles such rich people can afford to put in place.

On the other hand, imagine 100 million people all under-reporting $1200 - that's $120 Billion Dollars, or about 6 NASAs. If you actually had to go after everyone, that would be extremely expensive, but if you go after just a small percentage of people, the rest will be scared into properly reporting their income. We all know one or two people who have run into serious trouble with the IRS: enough that we are familiar with the consequences but not enough that it seems like a common and socially acceptable strategy. This is by design.

With the very wealthy, this strategy doesn't really work. Just because you manage to get one bank in switzerland to hand over some data doesn't mean my bank in the caimans is going to do the same. Even if the IRS were to catch up to me, I can afford to wait to cross that bridge when I come to it. You can take billions from certain people and they will still have net worths greater than some nation states - those who can afford to lose can afford to play the game.

It's also worth noting that the tax code has plenty of loopholes that wealthy people and corporations can use to legitimately reduce their tax burden. IRS recovery isn't going to be able to do anything about that. If you have billions of dollars, you can afford an accountant who will make sure there's nothing for the IRS to go after.

Really changing the funding of the IRS is irrelevant - were we to simplify the tax code to eliminate loopholes and make it easier for people who can't afford armies of accountants to properly pay their taxes we could both collect more money and spend less on recovery. It may be impossible to get congress to actually do that, but anyone talking about playing around with the IRS's funding is just trying to look like they're addressing a problem they really have no intention of solving.

Have some facts:

https://taxfoundation.org/summary-of-the-latest-federal-inco...

> In 2017, the bottom 50 percent of taxpayers (those with AGI below $41,740) earned 11.3 percent of total AGI. This group of taxpayers paid $49.8 billion in taxes, or roughly 3 percent of all federal individual income taxes in 2017.

> In contrast, the top 1 percent of all taxpayers (taxpayers with AGI of $515,371 and above) earned 21.0 percent of all AGI in 2017 and paid 38.5 percent of all federal income taxes.

> In 2017, the top 1 percent of taxpayers accounted for more income taxes paid than the bottom 90 percent combined. The top 1 percent of taxpayers paid roughly $616 billion, or 38.5 percent of all income taxes, while the bottom 90 percent paid about $479 billion, or 29.9 percent of all income taxes.

Lies, damned lies, and statistics.

Grouping together wages, capital gains, and misc under the label "income" rhetorically hides the unfairness of our regressive tax regime.

While it is certainly possible to give misleading statistics, these seem pretty reasonable to me? Could you say more about how you think it's misleading?

Pedantry is just another distraction, obfuscation.

GP's point is the IRS is unfairly focusing on the weakest while ignoring the worst offenders. No reasonable person disputes IRS's own repeated statements to that effect.

We can only guess the motives of any one still in denial.

Answer: https://news.ycombinator.com/item?id=24603200

Nice share, thanks.

This is Vox's explainer of the same topic.

Who pays the lowest taxes in the US? https://www.youtube.com/watch?v=kXCGbAv8YPw

Just from skim reading, theintercept's article is based on a study from ITEP and Vox's data comes from taxjusticenow.org. I'd have to dig deeper to see if they're referencing the same data of if these are just complimentary studies.

> First, these numbers refer only to federal income taxes. Both the federal and the income part are important.

> The income tax is not the only tax collected by the federal government — far from it. Just half of the taxes collected by the federal government come from the income tax. About a third come from payroll taxes — which fall much more heavily on working people, since they’re largely levied only on the first $130,000 or so of earned income.

..

> Second, the wealthy naturally pay a disproportionate share of federal income taxes because they make a disproportionate share of the country’s income. In other words, these numbers to some degree demonstrate exactly the opposite of what those who use them claim: They’re not an indication that the superrich are beleaguered, but are in part a sign of America’s staggering wealth inequality.

..

> the top 1 percent — with an average income of about $2 million — made 20.9 percent of America’s income, but paid 24.1 percent of America’s taxes. Few people will perceive this as a monstrous injustice.

> Meanwhile, the middle 20 percent of Americans— with incomes between $41,000 and $66,000 per year — make 10.9 percent of America’s income and pay 9.4 percent of America’s taxes. The bottom 20 percent, making less than $23,000, make just 2.8 percent of America’s income and pay 2 percent of America’s taxes.

https://theintercept.com/2019/04/13/tax-day-taxes-statistics...

The rich pay taxes roughly in proportion of what they earn.

https://theintercept.imgix.net/wp-uploads/sites/1/2019/04/ch...

The 98% of people paying 61.5% (a significant majority) of income taxes are all the little guy. Even a decent percentage of the 99th percentile would also be the little guy. The "super rich" capable of hiding millions from the IRS are an extremely tiny portion of the population.

One other thing there is an assumption that membership in these statistical categories are 'stable' Not really though. Lot of 'the 1%' are in it for short periods of time.

Other big issue is the super rich typically have full control over when, where, and how, a taxable event happens. For the wealthy most wealth building doesn't involve taxable events. One of my beliefs is the mortgage interest deduction is a sop to the middle class. Because otherwise the wealthy would out compete middle class families for single family homes.

> Remember though that tax revenue is actually dominated by the little guy.

That's not correct. 4.5% of returns account for almost 60% of taxes. 17% of returns account for almost 80% of taxes. And that was before the Trump tax cuts.

https://www.pewresearch.org/fact-tank/2017/10/06/a-closer-lo...

This ignores the EITC which is available to a huge swath of low income earners.

The only reason the IRS is involved is because the payment is a tax credit, rather than just a payment from some govt body.

22M Americans receive EITCs and the average payout was $3200, for a total of $70B per year.[1]

[1]https://www.cbpp.org/research/federal-tax/policy-basics-the-...

This citation is solely focused on income taxes, which make up only have of the revenue. Payroll taxes are 36% of the revenue, and are only incurred on the first ~$120k of income. I think this number would be more enlightening if it included all taxes (state property and income tax too), not just federal income taxes.

True but not really relevant to IRS income tax enforcement.

These are valid points but did any of that change since 2011, when IRS was auditing a lot more rich people and was still cost efficient? Not really.

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