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Comment by samstave | Hacker News Reader

I find it odd that the IRS does a lot of heavy lifting to go after Joe-Blue-Collar but completely seems blind to the thousands of money launderers both individuals and corps.

Personally, I think the entire financial system is broken and should be squashed.

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Intentional budget cuts and a harder target.

https://www.propublica.org/article/irs-sorry-but-its-just-ea...

> For now, the IRS says, while it agrees auditing more wealthy taxpayers would be a good idea, without adequate funding there’s nothing it can do. “Congress must fund and the IRS must hire and train appropriate numbers of [auditors] to have appropriately balanced coverage across all income levels,” the report said.

> Since 2011, Republicans in Congress have driven cuts to the IRS enforcement budget; it’s more than a quarter lower than its 2010 level, adjusting for inflation.

Budget increases will not increase enforcement of rich, politically connected individuals. It will just increase the number of "low hanging fruit" middle-class people they will go after.

Besides, many of the best tax evasion strategies are legal -- you just need an army of lawyers and a large pile of cash to deploy them.

interesting. what makes you think so?

With enough lawyers you can get a low settlement value if you are found wrong.

Your average middle class person can't afford to risk taking the irs to court.

If you doubled or tripled the number of cops in LA, would they solve more difficult crimes in the monied and lawyered Hollywood Hills? Or would they go after more petty crime in South Central, where it’s easy to get a conviction?

that's a poor comparison. The IRS are not cops, and the monied and lawyered do not commit petty crime at a high level whereas they do commit tax evasion at a much higher level.

https://en.m.wikipedia.org/wiki/IRS_Criminal_Investigation

ok, so where I from tax fraud is also known as tax sin Steuersünde. it's not like an obstacle that you evade or a game where you dodge the ball. it's fraud and a crime, and not a game to win.

consequentially the German IRS has bought data from Swiss and Liechtenstein tax haven whistleblowers. several times so. and to the amazement and applause of the public, very prominent figures went to jail. like soccer legend Uli Hoeneß.

the corresponding Wikipedia article is surprisingly not available in English yet:

https://de.m.wikipedia.org/wiki/Steuers%C3%BCnder-CD

long story short: if you, the American people, elect representatives who want a fair system, you will get a fair system.

of course IRS will go after tax fraud at scale if you make them do that.

> many of the best tax evasion strategies are legal

Isn't the premise of the linked paper that the wealthy use these foreign banks to avoid getting caught underreporting their income and assets? That's not legal.

Tax evasion is by definition illegal so not sure what you mean.

You might consider that your "it's all broken" feelings are exactly what is desired by the people who have worked to hamstring the IRS and generally tilt things in their favor.

The more cynical individual voters are about the system, the easier it is for people with money and power to shift outcomes to the ones that benefit them. It's the political equivalent of a FUD strategy.

Next, you’re going to tell me that social security isn’t going to collapse any day now…

They've been saying it since the 30s. I guess eventually it has to collapse!

The IRS doesn't do a lot of heavy lifting.

The IRS does a lot of stuff that can be easily handled by a computer--matching up data from various sources to make sure it agrees. Once it needs a human eyeball, though, they do very little.

It's just your Joe-Blue-Collar guy has most of his finances already reported to the IRS, anything wrong and the matching computer will catch it.

This is the truth of the matter. Most errors/fraud for Joe-Blue-Collar revolves around refundable tax credits as there's a pretty good chance he's not even paying any income tax.

The EITC is particularly complex (blame Congress) and therefore error/fraud-prone, but many aspects of typical errors/fraud can be mechanically detected (is this a qualifying child? is this qualifying child being claimed on another return? is there undocumented non-W2/1099 income being used to support this claim?).

They can also hire private companies to help, like they’re doing with crypto and some chain analysis company (I forget which, maybe multiple).

It’s a bit frightening that the IRS can deputize a corporation but I guess with crypto you live by the sword, die by the sword. Maybe the dystopia imagined by crypto enthusiasts is a self-fulfilling prophecy. You get the government you prepare for?

Most countries around the world did not have an income tax for people before the WWI. It was introduced as a way to fund the wars (defense, akhem), and as a way to come out of the ruins. It was only meant to be a temporary measure. A century later, we're still paying the income tax, and for some countries that's still funding defense/wars...

https://www.investopedia.com/articles/tax/10/history-taxes.a...

The IRS was made to lay off of the rich by their friends in Congress. Their enforcement budgets have been cut.

There is probably an easier conclusion and that is the cost/benefit analysis of chasing illegal money.

Firstly, a lot of what is happening is legal or at least a grey-area. Secondly with the complexities of multi-juristiction money and 100s of layers of obscurity that a rich person can afford to put between them and their money (legally), would you bother spending 100s of 1000s of dollars looking into it after which you might not find anything that can be prosecuted?

It costs little to look at a much simpler Joe-Blue-Collar worker. Sad but true.

The only way I can imagine it being resolved is by requiring full traceability for all financial transactions so I can literally tell where all the money in an account originated from. Can't see that happening.

Even if Joe manages to evade $1000 in taxes, that won't even buy a good meal in a posh restaurant to even discuss the matter with a local politician. They are the easy target and they have no bribing power, so the have no sympathy of powers that be.

Yes, lets go back to the old ways. We’ll exchange seashells instead

> Personally, I think the entire financial system is broken and should be squashed.

It's uglier than you can imagine.

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