alt Hacker NewsDefunding the IRS is nothing but an effort to reduce tax enforcement. People that have relatively straightforward finances can be trivially audited in a formulaic way with data that's on hand - a lack of human auditing resources tends to benefit those with more complex finances which also tend to be the people with a lot of money who can afford to lobby for less enforcement funding.
Also for reference, in 2024 the IRS had a rate of return of 415:1, they'll obviously target the lowest hanging fruit first but for every dollar of funding received they collected 415 dollars of tax revenue that would have been missed. This is an obscenely efficient organization.
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That “415:1” is misleading and manipulative. The target rate of recovery is ~10:1, which is roughly what the IRS actually achieves.
Audits are not an infinite money glitch. I used to work for a Federal audit agency that also recovered ~10:1. The reason we target 10:1 recovery on audits is because the return on funding additional audits beyond that falls off very sharply. Furthermore, more aggressive auditing greatly increases compliance costs which ultimately come back as costs to the Federal government, so the net recovered revenue is even less than the headline figure.
Audit recoveries tend to be about sloppy compliance, not people trying to cheat the system. People with more complex taxes are more likely to screw up the exponentially more complex compliance aspects. Auditors are mostly fighting entropy.
Is that 415:1 the rate of return of an audit, or the expense:revenue ratio of the IRS as a whole? I remember hearing some time ago that the expense ratio was 11% for the IRS? But 415:1 is way way less than 11%.
Well it's a retort on the 2022 IRA bill, which increased the IRS budget by 80 billion over 10 years, and paved the way to hire 87,000 people. There has been a lot of hiring recently so it's hard to tell one thing from another but this isn't so much of mass layoff as an attempt at returning to normal.
Implied in your statement - it benefits those who can create more complex financial situations. Often the complexity of the situation is largely synthetic.