This week I argue that a vague "pay more attention to the tax returns of the rich" mandate falls short -- we need real, quantifiable performance metrics.
Previously the IRS committed to auditing 8% of returns with over $10m in income. They abandoned that in favor of a general focus on higher income individuals and corporations.
I argue for 100% audit coverage of the top 1% of returns by income.
"Achieving 100% audit coverage for the top 1% would entail auditing more than 1.5 million returns. In 2023, the IRS closed 582,944 audits in total—resulting in $31.9 billion in adjustments, for an average of a bit more than $54,000 per audit.
By comparison, for tax years 2016 through 2021, audits of individual taxpayers with $10 million in income or more averaged $124,389 per return.”
@andrew Right, so you'd triple the work they would have to do which means they wouldn't be able to spend as much time unraveling the webs of the ultra-rich.
To be in the "top 1%", you have to make roughly $600K a year. That's a lot, but it's not Swiss bank account money.
I think it’s hand wavy to just give them a pass on doing a slipshod job because they're given a broader mandate. They've not been unraveling the webs of the ultra-rich to this point -- what is the excuse there?
We don't do ourselves any favors asking for the bare minimum and accepting even less.
@andrew I never said we should give them a pass. I just think the plan you've laid out would make the problem worse, not better.
Welp agree to disagree. I generally think demanding thresholds be met w/r/t audits, keyed to income, will lead to more audits. But maybe maintaining the status quo will result in outcomes different from what we've seen to this point?
@andrew I'm not entirely opposed to that. My main concern is that you've set your thresholds far too low.
Why not have such quotas, but keep the target above $10M a year? Why do the quotas have to come with a massive increase in quantity of targets?
I disagree that simply *auditing* the returns of the top 1% is an unreasonable ask. It’s 1.5 million returns. They're already auditing ~580k.
You don't get major changes by asking for crumbs. Asking the IRS to audit 3x the number of returns per year they have, when they've been notoriously understaffed and gutted for decades, is modest.
@andrew Wait, what? I'm really struggling to wrap my brain around that argument.
You think piling triple the work on an already overworked staff will make things better?
They just received ~$60b in part to rectify these issues, a reflection of how clear their understaffing has been to this point.
So, yes, I think taking the audit count from the skeleton crew as the best you can ask for, when this is ostensibly supposed to be ameliorating that issue, is bananas.
Use that funding to hire more people, automate processes where you can. It isn't our job to account for unforced errors when laying out what policies should be pursued.
@andrew Wait, has that money not kicked in yet? I thought they got it a year or two ago?
