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The IRS is a perennial budgeting football for Congress, even though it's one of the few agencies for whom increasing their budget creates positive net revenue for the federal government; its enforcement arm is down 30% in staffing since 2010, with predictably dismal results.

As an anecdotal comparison, I had a fairly long-running issue years ago with the IRS over a minor problem (some expenditures got posted to one fiscal year for the IRS, the following fiscal year for the SSA, which created an imbalance in their systems), and I was able to promptly get helpful folks on the phone and via scheduled in-person visits. Now even my CPA can't get anyone to pick up the phone there. It's a disaster.

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I had friends and relatives who worked for the US IRS in the 80s, they all would say the IRS was the one place that budgets will never be cut, so the felt far more secure than I did in Tech.

Little did they know the top 1% would get with one specific US Political Party to cut the IRS budget so thy can all cheat on their taxes. It is cheaper for them to hire lawyers than to pay their "fair share".

It's a narrative that's easy to believe in because audit rates are going down. But when you think about it... why should be they going up?

In the 1980s and before, the IRS literally had no way of knowing if you're telling the truth without auditing you. Everything was done on paper, cash was king. So the audits were indiscriminate and invasive, and needed a large army of employees to orchestrate.

Now, the IRS knows almost everything about your finances. They get electronic data from your employers, your bank, your brokerage. Most of commerce is settled electronically. Paypal and Venmo send them your info if you receive more than $500 in a year. There is nothing to be gained by randomly auditing the average family if the numbers on their report match what the IRS knows. The IRS can zero in on specific activities, such as people claiming unusual business deductions. But they no longer need to routinely audit most of us, and they don't need funding to that effect.

> Now, the IRS knows almost everything about your finances. They get electronic data from your employers, your bank, your brokerage. Most of commerce is settled electronically. Paypal and Venmo send them your info if you receive more than $500 in a year. There is nothing to be gained by randomly auditing the average family if the numbers on their report match what the IRS knows. The IRS can zero in on specific activities, such as people claiming unusual business deductions. But they no longer need to routinely audit most of us, and they don't need funding to that effect.

I think that this is a solid argument for why the government should be reducing filing burdens. If they already have the vast bulk of what is needed, and they're able to rely on that to audit people in case of discrepancies, they also should allow people to file more easily (or not file at all) using that information. Many other countries, including the UK where I currently live have a system wherein the most common kinds of employment don't require filing at all. The US could become one of them if it really wanted to.

Yeah. If you have at least somewhat complicated taxes, you have at least somewhat complicated taxes. But a lot of people don't. If someone only has a W-2 and maybe a 1099, they're probably covered. Even mortgage deductions are less common these days.

They're making progress there, they ran a trial with a limited number of states for a few years now and I believe this year or next year they're opening up direct e-filing with the IRS.

> Now, the IRS knows almost everything about your finances. They get electronic data from your employers, your bank, your brokerage. Most of commerce is settled electronically.

Afaik, this is both true and not.

The IRS gets very specific data points, that institutions are required by law to give them.

That's largely a complete picture of your income, at least from sources that are required to report.

What they have no idea about is your expenses or classification thereof.

If we decided to move to a progressive (more money = higher rates) and no exemption/deduction system, then the IRS would have everything needed.

But in fact we have a spaghetti of deductions, because it's far easier to sneak a special interest deduction into the tax code.

The difference is that they used to not get that info.

When I started filing taxes way back in the olden days, I had to mail a copy of my W2 to the IRS. I could alter it, not include it, whatever. So audits would verify all that.

Now w2s are sent electronically along with 1099s and everything else.

So it’s not perfect, but it’s much easier on the IRS now, than it used to be.

For most people, there are no expenses. You could lie about kids but you need socials. You could lie about tax or mortgage deductions but those data are sent to the IRS by institutions. You could lie about charities, but again that’s sent electronically.

There are some edge things, but they are really edge because most filers don’t have any deductions that are easy to lie about without detection.

Your W2 is sent to the irs from your employer, so them not matching would cause a giant red flag

> You could lie about charities, but again that’s sent electronically.

I do not think this is the case. Taxpayers have to have records to substantiate in an audit, but I don’t believe that information is filed with the IRS by the charity. (I’ve never been asked for, nor provided, my SSN when making donations over the decades.)

I am under the impression the majority of 1%ers vote for the party we don’t envision them being part of.

Things have flipped over the last decade. The populist and 1%er parties have flipped.

Factually that's correct.

We can just say it as it is here, frankly. The 1% are overwhelmingly Democrats. They live in cities like NYC, LA, San Francisco, Seattle, Boston. Nearly all relevant US cities are extremely to the left in terms of wealth and voters. The Forbes 400 is overwhelmingly Democrat voting and donating these days. The very richest in the US are overwhelmingly Democrats.

From Zuckerberg to Bezos to Buffett to Gates, the elite of the Forbes 400 are not far right wingers or Trumpers or Conservatives. They vote center-left and they donate center-left. They champion left causes almost exclusively. You won't catch them backing Trump.

The Democrats used to have the south as a voting block, until the late 1990s / early 2000s. Those people are the foundation of the right vote today. The left abandoned them and largely gave up on domestic blue-collar labor.

If the IRS budget since the 80s hasn't decreased on a per-capita, inflation-adjusted basis, then something has gone horribly wrong. Why the heck would we want tax collection to get more inefficient every year?

This one of the most misguided narratives I see from people of the other "specific US political party" to the one you're referring to.

As another commenter pointed out, if the transition away from cash and self-reporting to automatic data collection on hundreds of millions of Americans hasn't produced any productivity gains, then everything the the "evil 1%ers" have been saying about the ills of government are in fact true.

> Why the heck would we want tax collection to get more inefficient every year?

There is a subset of Republicans who believe that taxes should be painful. They should be constantly front-of-mind for every American. It keeps people from forgetting about income taxes and having them fade from public discourse.

> There is a subset of Republicans who believe that taxes should be painful

Can you cite this?

Look up Grover Norquist and his lasting influence on even modern Republican policy.

> he is the primary promoter of the Taxpayer Protection Pledge, a pledge signed by lawmakers who agree to oppose increases in marginal income tax rates for individuals and businesses, and net reductions or eliminations of deductions and credits without a matching reduced tax rate

This guy?

https://en.wikipedia.org/wiki/Lucky_duckies

https://www.politico.com/agenda/story/2018/07/18/tax-filing-...

Scroll down to the section that mentions Americans for Tax Reform and links to the presentation: Doing taxes keeps citizens aware of the tax burden imposed upon them by the government. A Return-Free scheme would allow the government to raise revenues invisibly

In case you're not aware of Norquist, https://gop-waysandmeans.house.gov/wp-content/uploads/2023/1...: The paradox for taxpayers is that visible, painful taxes are the taxpayer's best protection against runaway government spending and taxes.

1) It has.

2) Tax enforcement is a cat and mouse game, efficiency from automatic data collection could be offset by any number of things like changes to the tax code or more advanced methods for tax evasion.

3) Efficiency relative to the 1980s is way less important than the efficiency of each marginal dollar. Refusing to fund the IRS over its efficiency is like skipping work because you need to find a faster route to the office first. Finding a faster route isn't a bad idea but it shouldn't take priority over the point of the whole endeavor.

I know big company/government types often (incorrectly) conflate "size of budget" with "amount of work being done."

But this disincentivizes productivity and is a sign of a broken system of endlessly expanding do-nothing bureaucracy.

The budget for [insert government agency] should never being growing steadily with population growth + inflation, assuming similar scope of work. This would mean government is wholly incapable of productivity, which would be a terrible outcome for the citizens who fund it.

What evidence do you have that the amount of tax evasion on a per capita basis is more prevalent today than it was in the past? All numbers I've seen for Americans is that tax evasion has been reduced dramatically. Americans can't even hold money abroad anymore without it being automatically reported by every single bank in the world due to FATCA.

Not saying that opportunities for large-scale tax evasion don't exist--and you may disagree with policies at both the individual and corporate level that enable tax-avoidance--but the opportunities for people who are properly classified as the the 1%s or at least the top few percenters mostly don't exist without really going outside the law.

> the top 1% would get with one specific US Political Party

This is where people get it wrong, and VERY wrong. The IRS's budget had even significantly fallen between 2010 and 2014[0,1]. But it also increased from 2000 to 2004, then decreased, and increased from 2007 to 2010. Democrats only held congressional control (house and senate) in that second increase[2], but in some of those times the entire government was Republican controlled (granted, very narrow).

I'm not trying to say the Republicans are the "good guys." Actually I'm saying the opposite. I'm just saying that the defunding of the IRS isn't a partisan issue. It's just one is much more vocal about it.

This isn't an issue we can solve if we simply blame one side. Just remember, you can hold those that you side with accountable. So if you're a Democrat, it's important to be critical of Democrats or if you're a Republican, to be critical of Republicans. If you give your side a pass and just blame the other side, you bet people are going to take advantage of that. And they have.

[0] https://www.cbpp.org/research/federal-tax/the-need-to-rebuil...

[1] https://www.taxpolicycenter.org/taxvox/war-irs

[2] https://en.wikipedia.org/wiki/Party_divisions_of_United_Stat...

This cannot be stated clearly enough. The Republican Party at the federal level has made it their policy position to defund the IRS to make it easier for the wealthy to cheat on their taxes.

It's a common destructive strategy: don't outlaw the thing, outlaw or defund the thing's infrastructure. Can't outlaw abortion? Outlaw abortion pills. Can't outlaw education? Defund public school. Congress won't outlaw the IRS (for now), but they can bury budget cuts deep within omnibus spending bills.

The government could fix this issue. The problem is, the people who care about this (regular taxpayers) don’t matter. Or rather, people who care about getting this fixed haven’t shown themselves to be a significant voting block.

I recommend anyone who calls their representatives to get their situation sorted out include “propose or vote for legislation to fix this or I will not vote for you” as an ultimatum. If you’re going to vote for them either way (or not vote for them either way) then it makes no difference if they fix the problem or not.

Is increasing the enforcement arm going to help with these questions?

Also, they are increasing the inforcement arm substantially, to the point it should be above the 2010 levels.

I'm sure cutting 20 BILLION in funding from them in the IRA isn't going to fuck over any of their internal processes or hiring

The IRA started out adding $80b to IRS funding, and Republicans negotiated it down to $60b.

As I recall the Republicans tried to add an ammendment that the $60b would only be used to target >$400k income but the democrats rejected it.

Is there a source, or is this made up?

A good rule of thumb is that if they didn’t include a source there likely isn’t one.

https://thehill.com/policy/3594879-gop-rails-against-irs-fun...

No need to be so cynical.

https://thehill.com/policy/3594879-gop-rails-against-irs-fun...

>During the extended voting session of the Senate that lasted well into Sunday, Crapo unsuccessfully filed an amendment to the bill to explicitly prevent the IRS from using the additional enforcement funding on taxpayers who earn less than $400,000 per year.

>While the amendment was shot down by Democrats in the Senate,

how do you know this number but not understand the IRA increased IRS funding

Certain political cultists are desperate to have their priors confirmed, while simultaneously believing that the only people desperate to have their priors confirmed are members of the opposing political cult.

(this is a bipartisan phenomenon, FWIW)

My understanding is part of the problem is that they have not been well-funded enough to even think about going after the top earners, who can easily afford to outnumber them with lawyers and CPAs. So, they give the people at the very top a pass because even if they are tax-dodgers, it's too expensive to prove it. Which leaves them going after middle class people who exaggerated their charitable deduction a little or hid a $100 eBay sale. They're easy marks and won't be able to resist with an army lawyers.

The reason they don't go after the top is because the top use expert tax lawyers to file. Anything they do that is shady is ambiguous in the law and thus had a theoretical basis. The IRS isn't taking on those people because if they lose in court, they lose the people who were paying extra by not exploiting the loophole in good faith.

Also, they say they are focusing on entities making over $400k/yr. I'm sure there are exceptions and trust issues on that statement. We'll see.

I don't really have anything substantive to say; really just stacking onto this. My tax payments are not "regular enough" for the IRS. I generally end up owing $15k at the end of the year. It's an inconvenience for me, but I'm happy to pay it since, you know, taxes pay for things to be done. These folks have the gall to charge me money for that now, with threatening letters to boot, suggesting that I should supplement my W2 tax contributions that my employer makes quarterly. Portland, the city I live in, mimicked this system entirely and now demands the same for smaller amounts. I'm left feeling that we gave these folks billions to make things better and the people they went after weren't billionaires; they're instead nickel and diming high income earners. I don't claim anything on my taxes, I don't have much (if any) business income, and I'm not married. I have the simplest taxes in the world and these folks can't advise my company on the correct amount they should deduct for taxes and I'm the one that gets a bunch of legalese in the mail.

This to say, the billionaires running the system are certainly something but so are the people at the IRS who had an opportunity to actually do something with all that money. I look at them less with the lens of victims of partisanship and look at them more as part of the problem.

In my case they know exactly how much money I've made quarter to quarter and could provide better advice to the company I work for. They also could have a system to notify me ahead of time so I have a chance to pay the bill they're expecting. They did none of these, but instead shook the couch for change.

One of the major parties is deliberately sabotaging it (along with USPS, FDA, and NOAA) so they can point out how useless it is and it should just be shut down.

Don't forget the USCIS. It takes a lot of time, patience, and skill to navigate the phone tree in a way that doesn't either end the call immediately, or tell you to visit the website and then end the call. I had a paper and pencil marking my choices so I'd remember what I'd tried, and it was nearly full by the end.

You forgot the EPA.

A better strategy would be to do away with income tax altogether and replace with something easier to comply with and enforce like a Federal sales tax. States that run on sales tax alone need only to collect revenue from businesses, which shrinks their staffing requirements. And since it's a straightforward % of sales, it's easier to audit as well.

All fine and dandy until somebody can’t stand that somebody makes more than them and wants to point out that because you make more and maybe even spend less that your overall tax to income rate is smaller than somebody else.

Taxes are not just about revenue. It’s a political tool first. As the US government could just print money and dilute the value of the dollar as the tax.

Recent moves that show it is political. Trump administration changed rules on how income is reported that affected blue states with high house prices and income tax without affecting red states with sales tax and low house prices much, by way of limiting the deduction of interest paid and state income tax on your federal tax bill. Meanwhile the current administration often says how bad trumps “tax cuts” where without even trying to undo the increased taxes on blue states.

I have no issue with billionaires, and don't resent their cash. But if you drop all income tax, and do only sales tax you'd miss a lot of their income.

Same for the moderately wealthy too.

I suspect you'd need 100% or even 200% sales tax to capture what you so now.

That's going to lead to black markets, reduced economic output, etc too.

What? 100% sales tax? No. 20-30% would do just fine. People have already run the numbers on this. Black markets already exist for under-the-table labor (tens of millions of illegal immigrants don't pay income tax). It's actually much harder to run a black market retail establishment as it requires public collusion and cash-based sales.

The economic output would increase as compliance costs would be reduced. Furthermore, you could roll forward investments without needing to pay income tax, so that would lead to a compounding effect on economic output.

I'd need to see the numbers on something like this. Just saying "Someone said it would work" isn't good enough for me.

In my life I've seen so many cases of that, and then, lo and behold, the reality isn't even remotely accurate. An example being UBI, for which there is literally no way to pay. Or ridiculous assertions of "just tax billionaires!" to pay for it, which won't even cover one year of UBI.

So when someone says "just change to a flat tax", without some raw data I balk.

For example, "compliance costs"?! Just what compliance costs are these? Are you planning to get rid of social security, and medicare taxes on pay cheques too? Fine, but I once pondered that many government jobs are little more than paid welfare.

Just what do you do with all those people that really cannot work well outside of a government, structured, coddled job? My point being, that "compliance costs" are no where near as much of a cost as you might think, as typically every penny paid comes back in income and other taxes, and also gets spent domestically on everything from groceries to car repairs. Those jobs aren't free, but they are not even 1/2 the price they appear to be.

You want to talk about a "compounding effect", that's what government workers are.

But regardless, the feds raised 4T this year, and 42% was income tax, and another 22% for social taxes, eg medicare, social and what not. If you're going to move those taxes from the "pay cheque taxed and income tax cycle" to "consumption tax at the till", then you'll need to replace 65% of existing taxes, which are >4T. Might as well say $3.5T at the federal level alone.

Here:

https://www.statista.com/statistics/249137/us-state-and-loca...

Says total revenue at the state AND county level is $700M.

Here:

https://en.wikipedia.org/wiki/Sales_taxes_in_the_United_Stat...

Shows an interesting graph, with some of the larger economic states, hovering at the top. I'm going to spitball and say 8% average. (The top 10 US states population wise, have more than 50% of the population, and that's why I'm going to poke it at 8%).

So $700M at 8%, is 3.2T at 24%. That's surprisingly close.

You are going to have to watch the black market though. Yes, it already exists.. so what? It will exist more. Especially with shipping stuff in from Canada, you're going to have to have to have "duty" of "federal state tax", otherwise everything will flow, shipped from Mexico and Canada.

These are not 1:1 replaceable. Income tax is progressively structured where higher earners pay a larger percentage in income that falls into higher income brackets. Sales tax is a flat percentage which varies based on item category, not the cost of the item.

And if you need evidence to see that this statement is true, look at states where there is no income tax. It isn't just blue skies in those states. But you might need to look into the details to see that more clearly. There's no free lunch

Of course they are. 7 states in the union operate just fine without income tax including Washington, Texas, Florida, and Tennessee. People are net migrating to states without income tax. Income tax brackets are an excessive complication that are completely unnecessary for running government. You can simply make essentials like groceries and tuition tax free, and keep everything else a flat %. It works fine.

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