It is very naïve to think adding staff won’t help. Just look at what the IRS did before staff was cut; they investigated Microsoft aggressively and announced $29 billion in back taxes for 2004 to 2013, plus penalties and interest.
$29B over ten years is an annual amount of less than 1% of Microsoft's current annual revenue. Meanwhile the company is appealing it so the government hasn't actually won anything yet (but is incurring additional costs), and on top of that it means there is now going to be a court decision about how this works, which benefits the companies wanting to do it by clarifying the law so that even if they lose the courts will have told them what they need to do differently next time in order to win. Of course, if they win then it's even better for them because then they can just keep doing what they were doing before.
The actual problem is that "transfer pricing" is inherently ambiguous and subject to manipulation but it would take structural legislative changes to the tax code (e.g. tax corporations using something other than corporate income tax) to take it out of play.
> You're saying auditing megacorps is hard, but somehow more staff won't help? I don't buy it.
It's not so much that it's hard, it's that it has a lower return on investment, because the IRS gets money from finding mistakes or intentional fraud. Megacorps have entire legal teams dedicated to preventing those things from happening, while lowering their taxes by finding lawful ways of reducing their taxes to almost nothing by pouring over the unfathomable complexity of the tax code to find obscure credits or chain together the right sequence of things so their profits end up in a jurisdiction where they're not taxed.
If you audit them you spend an enormous amount of resources because their accounts are so complicated and then only get money if they screwed up, which they're less likely to have done than someone with fewer lawyers, and even then it will typically be something like you found a credit they weren't allowed to take and they owe $50,000 but the thing where they have a hundred billion in revenue and 0.2% of that in taxable profit was all by the book.
Meanwhile smaller entities are far more likely to have screwed up because they have fewer resources to navigate the complexity of the tax code, and their accounts are less complicated, which makes it easier for the IRS to find mistakes and therefore get money. So if you give the IRS more resources and tell them to do audits to maximize recovery, those are the people they audit.
But that also involves auditing a ton of individuals and small businesses who didn't do anything wrong in order to find the ones that did, and they rightfully hate that because nobody is paying them for the actual costs of the audit where the IRS found nothing, which is why they keep lobbying to stop the IRS from getting more resources to do that to them. And if the IRS had to pay the taxpayer's side of the audit costs then their "recovery efficiency rate" would go way down.
Of course it won’t help. If you have an audit target to meet you want target meta?
This exactly why ICE agents tends to target illegal immigrants that actually get a job and contribute to the society instead of criminals. Because the former are easy targets.
Also fundamentally the tax law in the US are intrinsically favor capital owners, especially large corporations, adding more IRS agents only cost more tax payer’s money and give regular people more headaches.
kccqzy|7 days ago
AnthonyMouse|7 days ago
The actual problem is that "transfer pricing" is inherently ambiguous and subject to manipulation but it would take structural legislative changes to the tax code (e.g. tax corporations using something other than corporate income tax) to take it out of play.
loeg|7 days ago
You're saying auditing megacorps is hard, but somehow more staff won't help? I don't buy it.
AnthonyMouse|7 days ago
It's not so much that it's hard, it's that it has a lower return on investment, because the IRS gets money from finding mistakes or intentional fraud. Megacorps have entire legal teams dedicated to preventing those things from happening, while lowering their taxes by finding lawful ways of reducing their taxes to almost nothing by pouring over the unfathomable complexity of the tax code to find obscure credits or chain together the right sequence of things so their profits end up in a jurisdiction where they're not taxed.
If you audit them you spend an enormous amount of resources because their accounts are so complicated and then only get money if they screwed up, which they're less likely to have done than someone with fewer lawyers, and even then it will typically be something like you found a credit they weren't allowed to take and they owe $50,000 but the thing where they have a hundred billion in revenue and 0.2% of that in taxable profit was all by the book.
Meanwhile smaller entities are far more likely to have screwed up because they have fewer resources to navigate the complexity of the tax code, and their accounts are less complicated, which makes it easier for the IRS to find mistakes and therefore get money. So if you give the IRS more resources and tell them to do audits to maximize recovery, those are the people they audit.
But that also involves auditing a ton of individuals and small businesses who didn't do anything wrong in order to find the ones that did, and they rightfully hate that because nobody is paying them for the actual costs of the audit where the IRS found nothing, which is why they keep lobbying to stop the IRS from getting more resources to do that to them. And if the IRS had to pay the taxpayer's side of the audit costs then their "recovery efficiency rate" would go way down.
up2isomorphism|7 days ago
This exactly why ICE agents tends to target illegal immigrants that actually get a job and contribute to the society instead of criminals. Because the former are easy targets.
Also fundamentally the tax law in the US are intrinsically favor capital owners, especially large corporations, adding more IRS agents only cost more tax payer’s money and give regular people more headaches.
pimlottc|7 days ago