IRS collects milestone $1B in back taxes from high-wealth taxpayers
apnews.com
apnews.com
IRS’s actual expenditures were just over $16.1 billion for overall operations in Fiscal Year (FY) 2023. [2]
[1] https://www.irs.gov/statistics/soi-tax-stats-irs-data-book
- The US Defense Budget alone is $842 billion for 2024 [1] - The US has given over $90 billion to Israel and Ukraine in 2024 [2]
All funded by debt. $1 billion here is theater to make us feel good about "sticking it to the rich"
We talk about getting the rich to "pay their fair share" as if the whole tax system isn't designed to get that money into the hands of whoever is greasing our politicians' palms. Good ol' military industrial complex.x
[1] https://www.defense.gov/News/Releases/Release/Article/332687... [2] https://www.cfr.org/article/us-aid-israel-four-charts
Why does debt matter?
You could debate which part of the $6.4T was funded by debt, but it seems reasonable to say that foreign aid is not a mandatory expenditure. That also doesn't mean it's not worth borrowing for.
There is a helluva lot of fat to cut in the budget. Ukraine aid should not be the first port of call.
Foreign aid is about avoiding war. The hope is the belligerents will end things themselves, or at the very least delay the point where we have to ship soldiers.
What? Nobody debates this.
American excellency is a real thing. No country even comes close right now. I say this as an American expat.
“Removing the effects of announced student debt cancellation that the courts ruled illegal, the deficit totaled $2.0 trillion in FY 2023”
Is it reasonable to say though? How is staying on top of global power structures not mandatory for the US? It was in the last 80+ years or so the highest priority.
Google “BRICS” to see how nations are trying a new way to work cooperatively instead of imposing their will on each other
> Israel Is the Largest Cumulative Recipient of U.S. Aid Total aid from fiscal years 1946 to 2024
!!!
It's also worth noting that usually military aid numbers include the cost of the hardware we send over. It's a $300 aid package to Ukraine, but we are sending old M1 tanks and a small bit of the existing ATACMS inventory we've been stockpiling since the 80's.
Should have been:
https://www.defense.gov/News/News-Stories/Article/article/37...
https://www.treasurydirect.gov/government/public-debt-report...
The problem is the spending, not the collection.
The government is entirely capable of funding itself through printing money but as the PDF above describes - this will cause inflation. Taxes exist to reduce circulating currency and prevent run away inflation.
This is why the US as the reserve currency can sustain greater debt to finance itself before seeing inflationary pressures and the UK (and other countries) cannot.
That doesn't mean the government is entirely self funded and tax revenue is not used for programs.
Spending more than we tax will inflate the USD money supply.
Sort of. Modern monetary theory ignores any stocks of money or money-like instruments at the government, focussing instead on flows. Spending and paying debt is inflationary, taxing and issuing debt deflationary.
As an economic model it’s nice. As a policy framework in a democracy it’s nonsense. Practically nobody during the inflation scare proposed raising taxes to destroy cash.
They did though, they just don't call it that because it's implicit in the existing tax system and happens without any legislative action.
Capital gains tax includes a tax on inflation. If you own a $100 asset and its real value doesn't change but you have 10% inflation, its nominal value is now $110 and the next time you do a transaction the government will call this a $10 capital gain and collect tax on it, even though the real gain was $0.
Those gains also fuel wealth effects. Our tax take as a fraction of GDP has been flat since WWII [1].
An MMT anti-inflationary cash-destruction programme would involve hundreds of billions, perhaps trillions, of borrowing or tax increases (with no increase in spending). That didn't happen for obvious reasons.
The part that didn't happen is that the government then needs to not spend that extra money, or else it goes back into the economy and continues inflating prices.
Sure. From a real (really real relative) frame, taxes stayed constant [1] while spending blipped up [2]. From a nominal frame, taxes rose and spending ballooned with it.
We tend to adjust in the real frame, i.e. raise taxes or cut spending, because it’s simpler to specify the state’s needs in real terms (we want ten artillery rounds) than nominal (we want to spend $20,000 on however many rounds that might buy).
It's also implying that the government decides it needs ten artillery rounds and then allocates that amount of money, instead of determining how much money it can get away with spending/borrowing and then having various interest groups fight over who gets it. If it was the first one then there would be non-trivial periods when real government spending goes down because the need for some existing program declines and it gets reduced or removed without being replaced by anything, right?
To reduce inflation they'd have to throw it in a furnace or otherwise prevent it from going to anyone who would spend it.
Depends on what do you mean by “a lot”.
I don’t think that many people working at Lockheed spend their entire salary at Walmart every month.
which is fine, except that it's a huge administrative headache, as inflation is not constantly measured, and you will have to estimate it for periods where it's not known. Not to mention that it takes a lot more effort to do this.
Simply discounting capital gains tax is sufficient as a simplification.
The BLS publishes the inflation numbers monthly. Higher granularity than that is negligible and hardly even measurable; the main issue is when you hold something for many years and the rate of inflation is in the double or triple digits.
Also, this stuff is already being done by computers. The computer needs the dates to determine if it's a short-term or long-term capital gain so it can use them to calculate the inflation using the official numbers.
> Simply discounting capital gains tax is sufficient as a simplification.
The difference is enormous. If you hold something for 18 months and the inflation was 6%, you get the same discount as if you hold it for 50 years and the inflation was 600%.
Don't these pale in comparison on the flows created by Quantitative Easing?
Amount of what? QE/T changes the amount of money and government debt in circulation.
I personally would prefer if MMT didn't exist. Or rather, I don't know. I had a marxist/neo-marxist critique of MMT, but I'm post-marxist now (for the dumbest Canadian psychoanalyst fans: it isn't the same thing, even though your idol seems to think it is).
I am, but in a fun way.
> removing money supply (I.E paying back debt and raising taxes) is deflationary
Government paying debt is inflationary (in its own currency). Lender had a debt and not money. Now they have a money and not debt. More MMT ignores money stocks on the government side; we went from investor had paper asset to investor has money. The system has more money than before.
This, by the way, is how monetary policy works. The Fed buys bonds (and sells cash) when it wants to boost liquidity. It sells bonds (and buys cash) when it wants to drain it. The Fed has an infinite pool of notes, the Treasury of debt. MMT conceptually fuses these in an academically interesting and politically useless way.
there are income taxes
and then there are taxes on income, where income in this context is a category of earning types, which has subcategories passive income and earned income. but not to be confused with capital gains tax, which is under the umbrella of income taxes, after capital gains taxes have been computed.
it is very easy to reduce income taxes (are you still following) despite high passive or earned income. so yeah they should probably look into them
I’ve had 7 figures of earned income but had negative adjusted gross income, the President even sent me a stimulus check because my reported income was so low. I just blamed the White House and Congress for not differentiating and moved on.
I would argue the same though, and I was in my post. The observation when filing with my CPAs was that the IRS knows very little especially between entity types that have their own filings
Even the CPAs generally arent the same. The ones doing retirement dont know the non profit stuff, and vice versa, the ones doing partnership forms dont know the other sections. The IRS technically has everything but its in different departments
but I can see the disincentive for the IRS, even if they disagree with one layer of deductions, another takes its place and simply doesnt carry forward. So the IRS could still wind up with nothing.
Operating costs 2014-2023: https://www.irs.gov/statistics/irs-budget-and-workforce
Imagine you have a barn with mice and you get a cat to eat the mice. Most of the mice run away. If you measure only how many mice the cat eats per day, you might be underwhelmed, and might think the investment in the cat was not worth it. But you should care less about the cat's diet and more about the fact that there are fewer mice.
Isn't this the theory behind mandatory minimum sentences etc. in the War on Drugs? It doesn't seem to work.
And it's also misunderstanding where most of the problem is. It's not that so many people are committing tax fraud. They recovered a billion dollars? The federal budget is over 6 trillion dollars.
International corporations avoid taxes by structuring their activities in ways that minimize taxes. It's legal. The problem is the structure of the tax code, which tries to tax "profit" instead of sales or wages or something else that physically exists in a specific jurisdiction, and then the "profit" ends up in whatever country has the lowest taxes.
Over the last 100+ years, slowly, primary taxation has shifted from corporations and resources to individuals. One can see why this makes sense, as policy with respect to trade has shifted as well. We've become more global, as eluded to, and the least up to this century the goal has been on "reducing trade barriers". So tax has shifted to "consumption tax" (gas tax, sales tax, sin tax), and personal income tax, as it is harder for people to be in multiple tax jurisdictions.
At least, this is how I see it. Your citizens live here, own property (your municipality gets income), have to eat/do things locally (consumption tax), and can't claim they live elsewhere easily, for the "average Joe" is just going to have a simple tax structure, and it's known where he hangs his hat.
Corporations are just a legal fiction around some economic activity. If you're even tangentially involved in that activity, some of the money will end up coming from you. But since people don't want to hear that, the policy that passes is the one that obfuscates what's really happening enough that people can no longer understand what's really happening, and everyone who likes the status quo can point the finger at someone else and claim they're the villain.
Probably the best thing we could do in the US is take a bulldozer to the entire tax code and constellation of existing federal programs and replace them with something much simpler, like VAT as the only federal tax and made progressive through a UBI. No more tax avoidance, shell games, poverty traps, lobbyist corruption through the revolving door, massive federal bureaucracy, just the most basic system that causes lower income people to pay low or negative effective tax rates and higher income people to pay higher effective tax rates.
Given that the entirety of the IRS budget is 16B, that sounds unlikely.
$80bn through 2031, or about $8bn per year [1]. That is projected to buy us well over a trillion dollars of new revenue [2].
FTA: “In June, the Treasury proposed a rule and guidance that includes plans to essentially stop “partnership basis shifting” — a process by which a business or person can move assets among a series of related parties to avoid paying taxes. That could raise more than $50 billion in revenue over the next decade, Treasury said.”
> the smartest wealthiest people have the best accountants and moved/invested/capexd their money legally to begin with
Now do the dumbest wealthy.
Recently the costs have increased to $16 bn per annum as part of an expansion to collect more of the inferred unpaid (avoided) taxes.
Or am I missing something?
No.
> Or am I missing something?
Read the article and the CBO report [1].
$8bn produced this $1bn. It also produced other additional revenue. CBO projects $6.40 of new revenue for each dollar spent by the IRS.
Why more Americans Are not mad at the complete waste of our tax money is beyond me
For a billion dollars, other countries are successfully building entire transit systems, high speed rails, other infrastructure, or running massive welfare programs.
We should be getting so much more.
https://fred.stlouisfed.org/series/FYFRGDA188S
Basically stable since WWII, which is kind of nuts considering it's still only just below the level necessary for a World War, and on top of that real GDP per capita has increased, so this is a huge increase in taxation per capita over time even adjusted for inflation.
And yet with a much smaller budget the WPA and so on did more, which does quite imply that the problem is government efficiency rather than government revenue.
And to use your direct comparison, can you imagine what the data would look like if the US economy actually pivoted to a war footing with the existential urgency akin to that during WWII (which was vastly more expensive than WWI even)?
The federal highway budget is $60 billion. It probably isn't spending the money particularly efficiently, but it's also only 1% of the federal budget.
> Most government interaction is now possible online which requires expensive staff and infra to maintain, but is certainly an improvement over having to do everything in person.
Shouldn't this result in lower costs? You need a $100,000 system administrator instead of two dozen $40,000 clerks, but that doesn't sum to a larger number.
> And to use your direct comparison, can you imagine what the data would look like if the US economy actually pivoted to a war footing with the existential urgency akin to that during WWII (which was vastly more expensive than WWI even)?
It's not obvious that it would dramatically change, because the US already maintains an enormous standing army, and much of the other expenditures are in the nature of assistance for low income people, which would be displaced by those people getting drafted into the war, or obviated because they're meant to offset e.g. high rents, which would decline with local demand if 10% of the population left the continent to go fight in a foreign land.
This is the sort of rhetoric from pro-waste activists that just sends me over the edge.
Actually, no. The federal government today is less pleasant to interact with due to the online systems. However, the online systems are supposed to make it cheaper. If you're saying we're paying more for worse service, then we should axe the online systems. Duh.
The few times I've had to interact with the feds, I now just escalate direct to my house representative and get a person on the line who can actually fix something directly. Much more pleasant. And if that's cheaper, we should do that.
Exactly. Some have pegged me as a low-tax libertarian apparently, but I'm objectively not. I frequently vote for tax increases, because I think it's fine to support collective infrastructure.
What I don't like is being gaslit.
As an example, I voted in favor of the California High Speed Rail. To this day, I am desperate for a fast train between LA and San Francisco (despite no longer living in california, it would be mega useful for visits, since my company is in the bay and family in LA).
That was over ten years ago. At the time, the funding measure approved was supposed to fund the project.
The rail is still not built, and I recently read an article talking about a new ballot measure to 'fund high speed rail'. It's like... no... we were completely lied to. What happened to all that money? This is actually not okay. The citizens were completely misled as to how much that cost. Someone somewhere should be facing repercussions, yet if you so much as point this out, you'll be accused of being a member of the wrong party. God forbid
As it stands you can only lament the status quo, which appears to be a form of wrong-think at HN, a site for entrepreneurs and innovators...
Welfare is typically ment to mean policies to alleviate the hardships of poverty. These can be wealth transfers or socialized insurance policies to reduce the variability of outcomes.
Public goods are services like roads, courts, or firemen.
Compulsory and universal participation are the methods used to achieve this goal.
All this fake patriotism in America. Pay your fucking taxes and you won’t be threaten by IRS efficiency.
I imagine this wouldn't be so controversial if taxes were not so exorbitant, if the tax code was straightforward and if institutions were more inspiring of the public's confidence. Class warfare isn't an alternative to acknowledging these problems.
Certainly not exorbitant compared to what they were here in the US in, say, the period post-WWII. Y'know, one of the biggest boom times in our nation's history, when we had massive innovation and growth of the middle class.
Compare America to America rather than expecting that the US adhere to the relatively more collectivist norms of other nations.
The Gilded Age was an even more productive era in terms of growth and upward mobility, with no income taxes levied at the Federal level. It was the progressive era that brought an end to this prosperity and ushered in the IRS, the 3rd central bank and an increasing number of foreign conflicts. Further economic interventions brought about and prolonged the great depression.
After WWII, much of the world's industrial base had been destroyed. Militaries funded by taxes destroyed productive capacity. Attributing this period of relative prosperity to the income tax would be seriously misguided. Instead you might have asked how much more successful the post-war economy would have been with lower taxes and less central planning.
https://en.wikipedia.org/wiki/Revenue_Act_of_1913
> It also established a one percent tax on income above $3,000 per year; the tax affected approximately three percent of the population.
https://taxfoundation.org/blog/independence-day-taxes-then-a...
>Taxation in the United States in 1776 was incredibly different than what it is today. There were no income taxes, no corporate taxes, and no payroll taxes. Instead, the American Colonies (and to a larger extent, the British Crown) were primarily funded by tariffs and excise taxes.
https://www.mountvernon.org/george-washington/colonial-life-...
>The average tax rate in colonial America was between 1 and 1.5%
And for that much the colonists fought a war for independence. The "modern democracies" you reach for would most likely not exist as such if not for that precedent.
They make bad policy, to stay in power.
Political ideologues nowadays generally have no points to make. They believe in whatever will keep them in power. That’s how we end up with a nation full of ‘conservatives’ who routinely outspend ‘liberals’. And we have a nation full of ‘liberals’ who ‘believe’ in increasing the power of the state.