Five Former Treasury Secretaries: Fund the IRS
nytimes.com
nytimes.com
A global minimum tax rate won't actually fix those institutions tax avoidance, it just makes life harder for everyone else. There are so many more topics to address than just raising an arbitrary tax number. But having that global tax rate, makes it look like they at least tried. Either they don't know what they're doing, or they're intentionally deflecting from the problem. Either way it's not good.
https://www.treasury.gov/tigta/auditreports/2020reports/2020...
The treasury created $8T in bond sales just last year, and accelerating. Bond sales fund every level of the government. Tax revenue will never pay the debt. Buyers know this. It doesn't matter. It's irrelevant.
This would be trivially solved by simple and flat taxes, but the main problem with fair and flat taxes is they lack the flexibility to be used as a political social engineering tool.
However, I seem to remember something about this very issue in history before, and for some reason this period is a theme this morning - something to do with wealthy peasants being an ongoing problematic resitance to policies that promise justice to everyone if they just give up everything. https://en.wikipedia.org/wiki/Dekulakization
The window has not shifted and the crimes of the 20th century are still very much in the minds of people. These guys and the rest of the out of touch Davos crowd basically want to engineer a version of China for the rest of the world. You're never going to guess who won't be giving up their stuff.
It is important to express contempt at these people. They show up in every generation, and the results are always the same.
How do simple flat taxes solve the underreporting problem? Surely there is still an incentive not to report rental & proprietorship income if it is not well tracked? Perhaps there is a lower incentive if these mostly affect wealthier people and the marginal rate was lower, but the incentive is still there.
Strange that flat taxes keep getting proposed by exactly the same people proposing other political social engineering tools designed to entrench the power of established economic elites, which, compared to status quo progressive taxes, is what flat tax proposals they make invariably also do.
Every change in public policy is a “political social engineering” tool, and the only time people tell you theirs isn't is when they think you won't like what it is part of trying to engineer.
(And its particularly amusing when the supposed reason its is different is that it “lacks flexibility”, when the flexibility in what it replaces doesn't come from the features it replaces, but higher-level features of the political system that are untouched by the proposal, leaving all of the flexibility in place.)
Flat taxes are too penalizing to the poor.
They force you to set a rate that the poor can afford (or make tax exemptions for necessities like food) but they further force the government to cut back social programs due to a lack of funding, further harming primarily the poor.
It's not about "making every country china". Modest progressive tax codes aren't "take everything" codes. Heck, even the most aggressive wealth taxes I've heard about amount to taking 3% of current networth for people with networths > $50 million. That's not "taking everything" or making everyone "poor". Yet those sorts of taxes would be able to fully fund programs like universal healthcare.
I'd be curious if you could cite a source for this information.
https://www.cnbc.com/2021/03/01/elizabeth-warren-bernie-sand...
Also note this is a wealth and not income tax. When talking about federal taxes and progressive taxes we are generally talking about income tax. A wealth tax solves the problem of millionares/billionares using loop holes to avoid the income tax system/paying low income taxes.
what is a flat tax?
is it something like: "everyone pays 5%"? if so, how does that solve the problem of misreporting?
More seriously, based on the level of digitization that has happened in the financial sector over the last 20 years, I think it would be truly shocking if we didn’t have a tremendous reduction in manpower associated with auditing records.
Firstly, most American file their taxes using software that all but makes it impossible for them to be wrong in any significant way.
Secondly, that is aided by the fact that all major financial institutions pipe their customers data straight into the government and into each other. There is very little space for lying or hiding assets. The whole system is computerized.
And to be frank, I doubt that the pursuit of major tax evaders is really a function of lack of resources. I’d strongly wager that it’s a lack of political will. If the authors are being truthful about the existence of a small number of large, known entities simply not filing returns, then we can assume that somebody in the chain of authority has made the explicit decision to not pursue. Adding more bodies without changing that fundamental decision won’t help.
>Secondly, that is aided by the fact that all major financial institutions pipe their customers data straight into the government and into each other. There is very little space for lying or hiding assets. The whole system is computerized.
That is true for me and you, but is it true for the people who they are actually trying to catch? Someone with hundreds of millions or billions isn't going to be using TurboTax or have most of their income funneling through a checking account at Wells Fargo.
>And to be frank, I doubt that the pursuit of major tax evaders is really a function of lack of resources. I’d strongly wager that it’s a lack of political will.
These are the same reasons. They have a lack of resources because there is a lack of political will.
Before the 2000s, it was not uncommon for average earners to get a visit from an auditor. Based on some of the publications by the IRS I have read, it’s now significantly less likely for average earners to get audited than high-income earners. Beyond that, the probability that a high-income earner is growing relative to average income earners.
Given the sheer volume of people in the average-and-below bucket, it makes intuitive sense that changes to the audit rate in that group would have an outsized impact on the overall headcount requirements.
The IRS computerized collecting payroll information decades ago, so any recent reductions have simply been politically motivated.
In Germany, while you do submit everything digitally it's all scanned and filed on paper, and to some extent the digitally some digitally submitted information is printed at tax office before processing. Obviously when you have nonlinear data, i.e. paper receipts and invoices and a lot of other paper data, more data means more physical labour.
In effect the IRS is stuck at some level doing audits by hand while handed a deluge of low level data.
You're looking at the wrong end of the problem. Taiwan has a centralized digital receipt standard and apparently had it for years. Lot's of people still like paper, but in general that digital receipt is easy to check. Germany on the other hand rolled out standardized tamper proof paper receipts. So of course you have audit paper records when the source of the information is paper.
And just in case you come back with a calculation on the estimated number of coffee shops in italy compared to just Starbucks. Starbucks is obviously just of the institutionalized crooks.
This discussion is basically the same as guilt tripping peoples straw usage when the biggest offender is obviously the plastic industry.
Not surprisingly, back when marginal rates were so high, rich Hollywood actors also hired CPAs to avoid giving 90+ percent of their income to those in power. The previous discussion on this was here: https://news.ycombinator.com/item?id=19031135
Did they not pay because they had magic deductions or did they not pay because of sabbaticals and reduced income? Because the former means it was no better than today (and income differential stats around CEO vs line-level employer suggest this is not true), but the latter is by its very nature better than today. It's literally creating more opportunity for more people to earn money? If person A isn't doing the work and making the income, person B is. So inequality will be less!
That high tax rate disincentives a small set of super-high-earners from running ever-more parts of the world? Good!
That's not how things work in reality. Whatever work Jeff Bezos decides to not do as a salaried employee doesn't get distributed elsewhere, because he derives almost no income from his salary.
When someone says "simplify" the tax code - well firstly, this has never happened. A simplification is an amendment, and the tax code gets larger - they've never actually managed to shrink the size of the law there.
But then you get to decide: which exemptions and deductibles are you getting rid of? For who? Because if you want to simplify it, that's what's actually got to happen.
So if they want to make a real improvement, it cannot happen without a big update to their technology. More humans cannot fix the problem, and they cannot handle more information sources without improved technology.
How that is inaccurate is beyond me.
Paragraph 4: “ In particular, the agency’s siloed and antiquated I.T. ”
Paragraph 6: “ This is because they include, for example, modernizing outdated technological systems”
I'll eat my socks if the economy doesn't grow by 20% after eliminating taxes.
I foolishly tried to file my own taxes in 2018. Used the IRS's free online calculator. According to the letter I got recently, when I put $11k into some tax-advantaged retirement account, it resulted in me not counting that $11k as income, but I actually put it in the wrong account, so that $11k should have counted as income on which I owed taxes.
To put it lightly, I am _extremely unsympathetic_ to the IRS complaining about "unpaid taxes" when... i mean, literally everything about the system is broken.
There are 1000 things I'd rather spend the $80k/yr my wife and I have taken from me, under threats of violence, by the many agencies who think they have a right to our income.
I'm struggling to understand the arrogance that's just dripping through this entire piece.
People in America are struggling right now, it's been a difficult two years. The heads of the "revenue collection agencies", complaining about how their job is difficult?
Cry me a river.
And complaining about the system being broken because you make a mistake and it had consequences, and because you have to pay taxes on a large income in order to pay for the costs of operating a modern society, is just whining.
So, double checking everyone's taxes (a step you didn't pay for someone to do for yours) is a hard job. But without that work, the penalties would only be worse in the future. So maybe have a little gratitude for those taking care of you when you don't take care of yourself.
"It is difficult to get a man to understand something when his salary depends on his not understanding it."
Personally I care less about equality and more about fairness. Getting rid of complexity and giving everyone equal access to the benefits of and the burden to support society while reducing complexity and compliance costs sounds great to me. And it still sounds great if my tax burden doesn't change one iota when implemented.
If society feels that it's bad to have a handful of mega rich people, look at modifying the competition laws that let their empires get too big in the first place.
Er, no, it means assessing the marginal utility curve and taxing everyone an amount that represents the same share of the pre-tax utility of their income, if you believe that taxes should be flat when viewed through a utility rather than dollar lens.
That's very different than taxing or subsidizing to the same end value.
In fact, its just a progressive tax.
The taxable burden you'll impose on people for whom every dollar is the difference between essential services, versus the wealthy for whom every dollar is the difference between more investment in their offshore bank account (which they have no incentive not to keep using, because why pay any tax if you don't have to?)