
I.R.S. Tax Fraud Cases Plummet After Budget Cuts - tysone
https://www.nytimes.com/2018/10/01/business/economy/irs-tax-fraud-audit.html
======
emodendroket
Wow, it's so great that everyone stopped committing tax fraud voluntarily
after they cut the budget to the IRS!

~~~
flattone
Ha. That was my first take also. At least it isn't: "Tax Fraud Rates Plummet
After Budget Cuts"

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mncharity
Corruption Gutted South Africa’s Tax Agency. Now the Nation Is Paying the
Price. [https://www.nytimes.com/2018/06/10/world/africa/south-
africa...](https://www.nytimes.com/2018/06/10/world/africa/south-africa-
corruption-taxes.html) \-- A nice article I stumbled upon recently.

~~~
rectang
That raises an interesting question: Can unlimited political money post-
Citizens-United buy not just tax cuts, but outright national fiscal suicide in
the form of abandoning tax collection?

~~~
TimJRobinson
Many near future cyberpunk shows/novels feature a corporate congress that
began after the government collapsed from debt overload and corporations
decided to "help out" by taking over their role. Every year this seems to
become more and more inevitable, it's just a natural progression of how things
are going.

~~~
gdubs
“Robocop” and its Delta Corporation is one of the best 1980s satires of
exactly this outcome.

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therein
I remember reading a while ago that every $1 that goes into IRS to fund tax
fraud cases yielded $1.2 in return. When that's the case, it seems like a no-
brainer that it should be well-funded.

~~~
SamReidHughes
That doesn't follow, because there's a cost to the citizenry of being
investigated. Also there's the increased ability of the IRS to abuse its power
when you give it a bigger budget.

~~~
therein
You're right, it certainly doesn't scale to infinity. For instance shifting
the entire military spending onto IRS would be unwise. Unless we are okay with
living in an IRS police state. :)

~~~
SamReidHughes
Well, there's also nonfinancial reasons to spend more, like the inherent
goodness of bringing people to justice.

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kiernanmcgowan
I've always wondered if decreasing the budget of the IRS enables political
money laundering. Since there is less auditing of suspicious accounts, there
is more room for nefarious activity.

~~~
munk-a
US election laws are pretty much swiss cheese already when it comes to the
various ways dark money can be funneled and redirected, it may make it easier
but you need to try really hard to actually get arrested for campaign
donations... and if you do you might just get pardoned anyways.

~~~
emodendroket
True, although you might have more money to donate, thanks to the tax fraud,
which you can then direct towards politicians who pledge to further cut the
IRS' budget.

~~~
munk-a
I think that's absolutely a thing, especially at the top levels of wealth. A
favorable rewriting of the tax code that saves you a few hundred million could
be repaid with a portion of that going to fund the politicians who helped push
it through, it's like a win/win!... except that you're pushing all those costs
off onto other people.

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gammarator
"What people don't understand about my job is that chances are you are not the
person I'm examining. I examine doctors who expense three Cadillacs, insurance
brokers who claim jet skis for business use only, and real estate agents who
haven't paid taxes in eight years. The public doesn't realize that tax
auditors are the only people between a balanced effective tax rate among all
social classes and the bourgeoisie stealing what isn't bolted down. Don't kid
yourself; these people are stealing from you. This money helps pay for
schools, roads and with any luck can keep mortgage interest deduction alive
for a few more years. I read a report on NPR that Italy has 40% of its
population evading taxes. Imagine our debt crisis if we had the same problem.
(Our tax evasion rate is estimated between 8-18%).

So if you're one of those "Joe the Plumber" people who take time out of work
to throw teabags at me on my way into the office in the morning: You are the
middle class! I'm helping you!"

[https://www.theatlantic.com/business/archive/2011/09/what-
pe...](https://www.theatlantic.com/business/archive/2011/09/what-people-dont-
get-about-my-job-from-a-rmy-soldier-to-z-ookeeper/244231/?single_page=true)

~~~
hueving
Attempting to frame it as class warfare is a perfect way to lose support from
a significant portion of the US population.

"I'm Robin hood stealing from rich people" doesn't work for the people on the
right who are more likely to complain more about the irs in the first place.

Joe the plumber who runs his own plumbing business and doesn't pay taxes is
going to get audited as well and he's (rightfully) going to lose despite his
position in the middle class.

This isn't "the bourgeois" stealing, it's anyone who deducts significant
amounts of money, which is a broader/simpler message everyone can get behind.
Every small business/individual contractor has the means to illegitimately
write off tens of thousands of dollars.

~~~
Ar-Curunir
It literally _is_ class warfare; what else should it be portrayed as?

~~~
LanceH
The quote frames it as class warfare, then points out that 40% of Italy is
evading taxes. So...40% of Italy is upper class? Sounds like something we
should move to so we can have 40 times more people than the current 1%.

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bliblah
I find it crazy that the IRS is so underfunded and every year for some reason
elected officials / citizens keep pushing this narrative of "The IRS is
evil!". How is keeping department continuously underfunded going to lead to
any sort of improvement? Imagine if roads are full of potholes; are you just
going to cut the budget of the Department of Transportation to fix the
problem?

The only ones who benefit from this state of affairs seem to be people who
have no intentions of filing taxes or can afford to hire other people to do
it. Meanwhile the average Joe has to deal with hour long wait times, online
services that do not work, month long correspondence chains that lead nowhere.
Obviously business like Quicken, HR Block, etc make a lot of money off this
inefficiency since they can offer a service charge to save you the headache.

It is a shame because in my experience as an accountant some local/state
department of revenues are really well run and super convenient.

It is also a shame because a lot of talented people work in the IRS forensics
department which in my opinion is one of the coolest jobs out there.

~~~
craftyguy
> How is keeping department continuously underfunded going to lead to any sort
> of improvement?

It doesn't, and they know that. A classic tactic is to underfund a thing you
don't like, then point to it failing as an excuse for killing it outright.

~~~
gred
> A classic tactic is to underfund a thing you don't like, then point to it
> failing as an excuse for killing it outright.

I've seen this assertion made online a few times, but have never seen any
actual examples. Are there examples that you're aware of at the federal level?
Or maybe a couple at the state level? Just curious...

~~~
_jal
There is a currently-running attempt to do just this with the ACA. Various
politicians keep ranting about how it is failing, and have made various
changes attempting to speed that alleged failure along, and yet it stubbornly
keeps working, more or less, and increasing in popularity.

~~~
geggam
A poor choice is better than no choice.

------
salawat
Seems to me this is more a metrology problem than economic.

They've decreased the sampling rate of the measuring instrument, and cut down
on the resolution by cutting a necessary input, (operating funds).

So it is a fairly foregone conclusion that a task which is heavily throttled
by manpower and outdated infrastructure will lose efficacy, thereby generating
lower metrics.

I can see a couple different ways to handle it. Some incredibly controversial.

A) Increase budget until we start seeing the point of diminishing returns
getting out of hand.

B) Say screw it, make returns public record, open access to everyone, and
either crowd-source or deputize people on a voluntary basis to help sift
through the data to root out the worst offenders for further scrutiny by the
what few meager resources remain.

Something has to give, and it is fairly obvious to me at least that the non-
institutional taxpayer is getting handed the short-end of the stick.

Plus, it'll give companies a taste of what having their "personal data" all
agglomerated in one place in front of God and everyone is like for your piece
of mind.

No matter what happens, however, I'm not expecting much political will to
actually remedy the problem due to a reticence to bit the hand that feeds that
is industry donors.

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realandreskytt
Estonian tax and customs board has reduced its size by 30% over the last ten
years all the while having cost of euro collected and percentage of euros
collected figures trending up to the point of being in top three globally in
both terms. Smart use of tech and a rock solid identity scheme help.

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bbrian
I just signed up for the IRS website and their password requirements are:

> Password Rules:

> 1) At least 8 characters long.

> 2) Must contain at least one numeric and one special character (!@#$%&).
> (and asterisks, which is ruining formatting here)

> 3) At least one uppercase and at least one lowercase letter.

My standard password pattern* has a different special character in it, so now
I'm locked out for 24 hours because I can't remember what
substitution/alteration I made! It kills me when "password requirements"
purportedly for security are more restrictive on one site than the majority of
others. I also infer the sites are rarely updated.

*I'm implementing Dashlane at work. To date, having a unique password for every site/service has felt secure.

~~~
zavi
Many banks also have these arbitrary password limitations which make it less
convenient and less secure at the same time.

~~~
maimeowmeow
I just keep a google docs with username/password/recovery question, with
website abbreviation as header.

As long as my google 2fa isn't compromised, I think this is safe.

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galaxyLogic
It's not only about them being unable to assess if you reported all your
lawful income. It may be more about whether they can assess whether you have
no lawful income yet seem to be filthy rich. Remember Al Capone. He would have
never got caught if it was not for being caught for tax-evasion.

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NTDF9
When people ask what happens when govt debt and deficits skyrocket?

This. There will be more crime. Or at least, laws will be enforced
disproportionately on vulnerable because its the vulnerable who don't have the
resources to fight them.

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anticensor
I see. Due to budget cuts, tax office ran out of tax enforcers.

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tome
Why is no one here talking about Georgist land taxation? Has that HN meme
completely burnt out? I rather liked it.

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jachee
That's a funny way of saying "Tax Evasion Skyrockets After I.R.S. Budget
Cuts".

~~~
gjm11
That's not the same, is it?

Suppose the number of people cheating on their taxes remains _perfectly
constant_ , but that the IRS gets less money to pursue them. Then there will
be fewer tax fraud cases, but the exact same amount of tax fraud.

~~~
losteric
If the public knows the IRS has less funding to enforce the law, wouldn't more
rich people gamble on tax evasion?

~~~
kevin_b_er
Yes. This was the real point of cutting IRS investigation funding: it enables
more cheating by the rich.

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datavirtue
So boot the whole problem by swapping from pull to push. Sales tax instead of
income tax. Oh that's right, the banking industry relies on income tax to
drive everyone into the arms of debt so we can fuel a constant swell of the
aggregate money supply. Nevermind, the government is an out of control addict
snorting the substance of easy money to prop up a debt ceiling that no longer
exists.

~~~
emodendroket
Sales taxes are extremely regressive. Funding the government entirely through
them would be a social disaster and they'd have to be wildly high to
compensate for all the income that is being saved rather than spent.

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liftbigweights
You mean the IRS pays for wars.

"The roots of IRS go back to the Civil War when President Lincoln and
Congress, in 1862, created the position of commissioner of Internal Revenue
and enacted an income tax to pay war expenses."

[https://www.irs.gov/about-irs/brief-history-of-
irs](https://www.irs.gov/about-irs/brief-history-of-irs)

> You are the middle class! I'm helping you!"

What do you expect someone working for the IRS to say? They are
unconstitutionally robbing the middle class blind?

~~~
Aloha
There was specifically an amendment to the constitution to allow for the
collection of income tax.

[https://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_Uni...](https://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_United_States_Constitution)

Though part of me wonders if we would not have a more equitable system by
apportioning the federal tax burden out to the states to collect for it. It'd
certainly simply the lives for a bunch of Americans.

~~~
jcranmer
Fun fact: the Sixteenth Amendment does not give Congress the right to tax
income; Congress already had that right. The sole purpose of the Sixteenth
Amendment is to override the Supreme Court's Pollock decision, which held that
a tax on rental income was effectively a tax on property, and as a property
tax, it needed to be apportioned to the states in accordance with population.

So the Sixteenth Amendment isn't "we can collect income tax", it's "we can do
whatever we want with collected income tax." Which makes the tax protestors'
arguments that the Sixteenth Amendment wasn't actually properly passed utterly
hilarious.

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yason
It would be wise to let IRS fund its investigations with the recovered taxes,
and not on a budget.

~~~
e40
That's the last thing the ruling class of rich white folk in this country
would allow.

~~~
hueving
How do you know? Are you privy to the minutes of the secret rich white people
meetings where they decide priorities?

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creaghpatr
Kind of strange they had a whole article about decreasing fraud cases, and
don't mention the IRS had to apologize for aggressive targeting of
conservative groups in October 2017. Maybe that's why their budget got cut?

[https://www.npr.org/2017/10/27/560308997/irs-apologizes-
for-...](https://www.npr.org/2017/10/27/560308997/irs-apologizes-for-
aggressive-scrutiny-of-conservative-groups)

~~~
tacomonstrous
From the Wikipedia article:

"In October 2015, the Justice Department notified Congress that there would be
no charges against the former IRS official Lois Lerner or against anyone else
in the IRS. The investigation found no evidence of illegal activity or the
partisan targeting of political groups and found that no IRS official
attempted to obstruct justice”

~~~
ams6110
Funny then that they apologized for what were totally legal and non-partisan
actions?

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maxxxxx
There is a certain logic to it. If we cut more then the number if cases will
drop even more.

Or maybe the tax cuts made people more honest since their burden got reduced?

Reminds me of the stock market. You can assign whatever causality you like to
changing prices.

~~~
jonathankoren
IRS enforcement budget seems to always be cut under Republican
administrations. Which when you think about it, is kind of a like backdoor tax
cut. Go ahead, skimp on your taxes. We're not looking.

~~~
maxxxxx
This reminds me of the bailouts. If you play by the rules you are a sucker.

