What federal investment will bring us a 150% return?

Fantine · Mar 26, 2023

The proposed increase in spending on the IRS’s enforcement activities would result in higher audit rates than those underlying CBO’s baseline budget projections. Between 2010 and 2018, the audit rate for higher-income taxpayers fell, while the audit rate for lower-income taxpayers remained fairly stable. In CBO’s baseline projections, the overall audit rate declines, resulting in lower audit rates for both higher-income and lower-income taxpayers. The proposal, by contrast, would return audit rates to the levels of about 10 years ago; the rate would rise for all taxpayers, but higher-income taxpayers would face the largest increase. In addition, the Administration’s policies would focus additional IRS resources on enforcement activity aimed at high-wealth taxpayers, large corporations, and partnerships. CBO estimates that if the proposals were enacted, tax compliance would be improved, and more households would meet their obligation under the law.

Yes, the $80 million invested in amping up the IRS (which is currently staffed at 1954 levels--when the U.S. population was half its current size) would result in $200 million more in taxes (both figures are calculated over 10 year periods.)

The Effects of Increased Funding for the IRS

CBO estimates that portions of the Administration’s proposal to increase funding for the IRS by $80 billion over the 2022–2031 period would increase revenues by approximately $200 billion over those 10 years.

www.cbo.gov

Say it aint so · Mar 26, 2023

Fantine said:
Yes, the $80 million invested in amping up the IRS (which is currently staffed at 1954 levels--when the U.S. population was half its current size) would result in $200 million more in taxes (both figures are calculated over 10 year periods.)

The Effects of Increased Funding for the IRS

CBO estimates that portions of the Administration’s proposal to increase funding for the IRS by $80 billion over the 2022–2031 period would increase revenues by approximately $200 billion over those 10 years.

www.cbo.gov

"I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” --Grover Norquist

When Obama wanted to close Cayman Island tax shelters, the GOP with all men on deck opposed that. They called that move, of all things, "a tax increase on corporations". It can't be mistaken this the current view of today's GOP. Reduce revenue, then point at the underfunded departments and say, "see, it's broken" and drown it in the bathtub. Just like they did with the IRS.

disciple Clint · Mar 27, 2023

Fantine said:
Yes, the $80 million invested in amping up the IRS (which is currently staffed at 1954 levels--when the U.S. population was half its current size) would result in $200 million more in taxes (both figures are calculated over 10 year periods.)

The Effects of Increased Funding for the IRS

CBO estimates that portions of the Administration’s proposal to increase funding for the IRS by $80 billion over the 2022–2031 period would increase revenues by approximately $200 billion over those 10 years.

www.cbo.gov

I have to think that we could accomplish more by simplifying the tax code, or going with a flat tax or a national sales tax or maybe a combination of these concepts instead of enlarging government.

Fantine · Mar 27, 2023

Wow! Imagine if taxes were 100% on the honor system. Our revenue might be non-existent.

The Republicans' dream.

rambot · Mar 27, 2023

disciple Clint said:
I have to think that we could accomplish more by simplifying the tax code, or going with a flat tax or a national sales tax or maybe a combination of these concepts instead of enlarging government.

Really? Why do you "have to" think that? I'm curious why you think the operation of governing the United States of America is as simple, diminutive, unassuming, and straight forward as that

iluvatar5150 · Mar 27, 2023

disciple Clint said:
I have to think that we could accomplish more by simplifying the tax code, or going with a flat tax or a national sales tax or maybe a combination of these concepts instead of enlarging government.

The supposed complications in the tax code are mostly for special interests (primarily businesses) who wanted them. Taxes can be pretty darn simple if you’re not concerned with maximizing your write offs.

Also, sales taxes are regressive. Flat taxes are more regressive than our current scheme. So hey, let’s tax the poor some more.

probinson · Mar 27, 2023

iluvatar5150 said:
The supposed complications in the tax code...

When you say "supposed complications", you undermine your credibility. There's no doubt that any tax code that is over 70,000 pages (in 2010!) is incredibly complex.

Source: How Many Words are in the Tax Code?

iluvatar5150 · Mar 27, 2023

probinson said:
When you say "supposed complications", you undermine your credibility. There's no doubt that any tax code that is over 70,000 pages (in 2010!) is incredibly complex.

View attachment 329464

Source: How Many Words are in the Tax Code?

I didn’t say it wasn’t complicated, but verbosity doesn’t necessarily indicate complexity.

Either way, the economy and the entities within it are complicated. I don’t know why we’d expect that a tax code intended to cover the whole thing wouldn’t, itself, also be complicated. But again, if you don’t like the complications, you can just ignore the deductions and treat all revenue as profit.

disciple Clint · Mar 27, 2023

Fantine said:
Wow! Imagine if taxes were 100% on the honor system. Our revenue might be non-existent.

The Republicans' dream.

Wow! Imagine if taxes were 100% the Dems would still not be happy

disciple Clint · Mar 27, 2023

rambot said:
Really? Why do you "have to" think that? I'm curious why you think the operation of governing the United States of America is as simple, diminutive, unassuming, and straight forward as that

Seems to work just fine for states, why do you think it would not work on our nation?

rambot · Mar 27, 2023

probinson said:
When you say "supposed complications", you undermine your credibility. There's no doubt that any tax code that is over 70,000 pages (in 2010!) is incredibly complex.

View attachment 329464

Source: How Many Words are in the Tax Code?

I'm curious how that applies across the board in terms of income levels? Are middle class taxes convoluted assuming basics like mortgage, registered retirement savings, 3 kids, 2 jobs, one house, sub 40K in investments?

probinson · Mar 27, 2023

rambot said:
I'm curious how that applies across the board in terms of income levels? Are middle class taxes convoluted assuming basics like mortgage, registered retirement savings, 3 kids, 2 jobs, one house, sub 40K in investments?

It depends on a myriad of factors, because the US tax code is quite complex.

rambot · Mar 27, 2023

probinson said:
It depends on a myriad of factors, because the US tax code is quite complex.

Outside of what I listed, what other things are considered?

probinson · Mar 27, 2023

iluvatar5150 said:
I didn’t say it wasn’t complicated, but verbosity doesn’t necessarily indicate complexity.

70,000 pages is complicated AND complex any way you slice it.

iluvatar5150 said:
Either way, the economy and the entities within it are complicated. I don’t know why we’d expect that a tax code intended to cover the whole thing wouldn’t, itself, also be complicated.

70,000 pages worth of complications?

iluvatar5150 said:
But again, if you don’t like the complications, you can just ignore the deductions and treat all revenue as profit.

My tax situation is quite simple. I take the standard deduction. It takes me all of about 10 minutes to do my federal taxes with Turbo Tax each year. I had everything filed by the last week of January this year.

That doesn't make the tax code any less complex. It's weird to think that there are people that think our insanely complex tax code is not only A-OK but that it is necessary because the economy is "complicated".

probinson · Mar 27, 2023

rambot said:
Outside of what I listed, what other things are considered?

I have no idea, because my tax situation is quite simple and I am not a tax accountant. As I said, I can do my taxes by myself with Turbo Tax in about 10 minutes.

But here are just a few of the things that can affect your tax burden.

Are you married? Divorced? Spouse deceased in the last year? Have dependent children over the age of 17? Kids under the age of 17? Investments? Did you make "green" energy purchases? Did you buy a car? Did you buy a home? Do you own a home? Do you have adult dependents? Did you get COVID stimulus payments? Did you have health insurance all year? Do you make child support payments? Do you have a Flexible Spending Account for healthcare? Do you have a 401K for retirement? Did you pay over the max allowable contribution into your 401K for the entire year? Did you make any charitable contributions? Did you have unexpected healthcare expenses? Did you win any money or prizes? Did you get any discretionary income from work that was not taxed? Do you pay childcare? Do you pay adult dependent care?

There are literally 70,000 pages of rules to filter through, and it grows and changes each year. It's why I pay $35/year to Turbo Tax to make my taxes easier since my tax situation is about as simple as it could be.

By contrast, the Commonwealth of Pennsylvania where I live has a flat income tax rate of 3.07%. It's pretty simple. Everyone pays 3.07% regardless of how much money they make. There are some exceptions and deductions that can apply, but nowhere near 70,000 pages worth. 2 minutes on their website and your annual income taxes are done.

Tax reform is long overdue.

iluvatar5150 · Mar 27, 2023

probinson said:
70,000 pages is complicated AND complex any way you slice it.

70,000 pages worth of complications?

My tax situation is quite simple. I take the standard deduction. It takes me all of about 10 minutes to do my federal taxes with Turbo Tax each year. I had everything filed by the last week of January this year.

That doesn't make the tax code any less complex. It's weird to think that there are people that think our insanely complex tax code is not only A-OK but that it is necessary because the economy is "complicated".

I didn’t say that it was or was not okay. As best as I can tell, the complaint from your side regarding the complexity is that it makes compliance burdensome and expensive. I imagine that’s true - I itemize my deductions, and I file a Schedule C with a bunch of business deductions, and it takes me a lot longer than 10 minutes to do mine. I imagine that for businesses or people with real money, it’s even more onerous. But as I tried to point out before, it’s only onerous if you want to use those deductions. IOW, there’s a payoff for doing so. You don’t have to claim those deductions. If you want to avoid the hassle, you can ignore them and just pay more taxes.

iluvatar5150 · Mar 27, 2023

probinson said:
I have no idea, because my tax situation is quite simple and I am not a tax accountant. As I said, I can do my taxes by myself with Turbo Tax in about 10 minutes.

But here are just a few of the things that can affect your tax burden.

Are you married? Divorced? Spouse deceased in the last year? Have dependent children over the age of 17? Kids under the age of 17? Investments? Did you make "green" energy purchases? Did you buy a car? Did you buy a home? Do you own a home? Do you have adult dependents? Did you get COVID stimulus payments? Did you have health insurance all year? Do you make child support payments? Do you have a Flexible Spending Account for healthcare? Do you have a 401K for retirement? Did you pay over the max allowable contribution into your 401K for the entire year? Did you make any charitable contributions? Did you have unexpected healthcare expenses? Did you win any money or prizes? Did you get any discretionary income from work that was not taxed? Do you pay childcare? Do you pay adult dependent care?

Like I said, most of those are deductions that you don’t have to claim.

By contrast, the Commonwealth of Pennsylvania where I live has a flat income tax rate of 3.07%. It's pretty simple. Everyone pays 3.07% regardless of how much money they make. There are some exceptions and deductions that can apply, but nowhere near 70,000 pages worth. 2 minutes on their website and your annual income taxes are done.

Tax reform is long overdue.

How long is the PA tax code?

probinson · Mar 27, 2023

iluvatar5150 said:
How long is the PA tax code?

That's a great question that I don't know the answer to.

iluvatar5150 · Mar 27, 2023

probinson said:
That's a great question that I don't know the answer to.

Then how do you know that it’s shorter and less complicated than the federal code?

probinson · Mar 27, 2023

iluvatar5150 said:
I didn’t say that it was or was not okay.

Fair enough. Do you think the US tax code is good the way it is, or could it benefit from some reform and simplification?

iluvatar5150 said:
As best as I can tell, the complaint from your side regarding the complexity is that it makes compliance burdensome and expensive.

There's an entire $14.4 BILLION industry dedicated to tax preparation.

What federal investment will bring us a 150% return?

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