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Comment by davidw | Hacker News Reader

Increasing the IRS' enforcement budget to recoup some of this would be a win, financially.

I've heard, from someone who's privy to those calculations, that every added dollar of IRS budget brings in TEN dollars of tax collected that would otherwise be evaded/fraud/etc. I would certainly call that a win… and it's under our existing rules, not some hypothetical different tax rules.

The article seems to imply that, even if the extra enforcement is 100% effective, the ratio is more like getting $2 for every $1 spent on enforcement

The article is a little confusing in how it words it, but the actual "missing" tax revenue is $600B. The $160B figure is just for the top 1% of taxpayers. If $80B will bring in the rest of that $600B, it's more like $7.50 brought in for every $1 spent on enforcement. Still not $10:$1, but closer.

Thanks, I missed that

You don't have to be privy to the calculations; those numbers are widely reported.

And how much of the economy would your destroy with that much more collected, on a surprise basis, maybe spuriously?

It wouldn't be a surprise, it'd be known well in advance. And it doesn't destroy the economy if the government goes out and spends that dollar on operations. But if someone is hoarding massive wealth, that does damage the economy because their pile of treasure isn't circulating amongst the plebians who actually form the basis of a consumerist economy.

Likely none of the economy would be destroyed by that. $600B is not that significant when we're talking about the total size of the economy.

And it's not like that $600B will be pulled out of circulation; it'll be used to fund things that generate economic activity, or even used to pay down debt, and those creditors can put that money back into the economy.

If you think taxes are too high, by all means, work to reduce them. Simply having some people evade them, and others pay their share... that's wrong.

You're implying that everyone who is not paying what a government tax board thinks you should be paying is guilty before proven innocent.

But if you've dealt with tax agencies beyond being a plain employee, they can often be just plain wrong, and you have to go through a lot of time, money and effort to prove that they are wrong, with them potentially just confiscating your bank account until proven wrong. Or your accountant / payroll provider has screwed up and now you have to go through a lot of bullshit to fix that problem, because YOU are ultimately on the hook.

More cops on the road doesn't necessarily mean more 'crime' is solved, it also means there is more cases of police brutality. If you're a small business, you don't have nearly as much strength to defend yourself. The large and rich will always have that ability, as it has been shown for 1000s of years of human history.

If a society 'arrests' every perceived jaywalker (whether or not they were jaywalking), and then pressured into a guilty plea deal because fighting it is worse than the price of the plea deal, is that really good for society? This is what I meant by the double edged sword of increased budgets for tax agencies.

Sorry, what? How do taxes destroy the economy?

This is something that the MMT people have hit on that I actually agree with, to some extent—the federal government more or less spends what it feels justified in spending, regardless of tax receipts. Collecting fewer taxes means larger deficits, but nobody in government has cared about deficits for a while now so why bother ratcheting up tax enforcement? The way things run right now, a dollar removed through taxation might as well have been burned.

(Note that this is specifically about income taxes, not payroll taxes that fund entitlement programs)

If you take more money off the top of the economy and destroy it then you can inject more in the bottom via creation methods like UBI, without causing inflation.

You could also just start injecting more money at the bottom via a UBI designed to constantly grow to chase inflation, and watch the real purchasing value of the 1%’s piles of dollars start to decline precipitously as the dollar entered a hyperinflation spiral, but that would mean international trade would drop dollars for another currency that was more stable.

It's pretty econ 101, it's called deadweight loss: https://www.khanacademy.org/economics-finance-domain/microec...

What I was more talking about is the negative effects of spurious enforcement, much like how more cops means more police brutality, especially for the weak. This plays out more in small business.

I mean... let's say I buy chinese toothbrushes for $1, and sell them for $10 in usa... I get taxed on the $9 I earned, and I pay a lot of tax. Instead, my friend opens a company in TaxHeaven islands, and he buys the toothbrushes for $1 from the chinese manufacturer, and sells them to me for $9.90,... i get taxed on the $0.1 at a high rate, and he gets taxed on the $8.90 at a very low island rate.

In many cases this is perfectly legal, and many companies do just that (not directly with toothbrushes, but pay licence fees to offshore companies where taxes are low).

For another example, in slovenia, i can start a company, earn 100k (profit), and that profit gets taxed at 19% at the end of the year, and to take it out (pay it to me, the owner) aditional 25%. If I open the same company in bosnia, I can still to the same jobs with the bosnian company, but I only pay 10% on the money I take out (so, 100k->81k in slovenia, and to pay out, i get 60.75k... or i get 90k with a bosnian firm).

This is completely legal in slovenia in bosnia. Our "IRS" can't do anything about that.

So, first the laws have to change to make it fair, so facebook would pay taxes at the same rate a small local plumber would, and only than can IRS start their job.

That's not... how it works. You still get charged the 25% when you pay it to yourself, you only save the corporate tax. And that only works if you can say that the BiH company is managed there, not in SI. Otherwise you're getting taxed by SI standards and that means no savings.

Also, your toothbrush example is actually illegal and considered a tax evasion by EU and probably most Western countries.

Taxes are way more complicated than you're trying to show. Also, don't underestimate the IRS.

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