How Republicans are undermining our institutions

[happyfunball 481]

IRS case study

Quote

How the IRS Was Gutted

Quote

In the summer of 2008, William Pfeil made a startling discovery: Hundreds of foreign companies that operated in the U.S. weren’t paying U.S. taxes, and his employer, the Internal Revenue Service, had no idea. Under U.S. law, companies that do business in the Gulf of Mexico owe the American government a piece of what they make drilling for oil there or helping those that do. But the vast majority of the foreign companies weren’t paying anything, and taxpaying American companies were upset, arguing that it unfairly allowed the foreign rivals to underbid for contracts.

Pfeil and the IRS started pursuing the non-U.S. entities. Ultimately, he figures he brought in more than $50 million in previously unpaid taxes over the course of about five years. It was an example of how the tax-collecting agency is supposed to work.

But then Congress began regularly reducing the IRS budget. After 43 years with the agency, Pfeil — who had hoped to reach his 50th anniversary — was angry about the “steady decrease in budget and resources” the agency had seen. He retired in 2013 at 68.

After Pfeil left, he heard that his program was being shut down. “I don’t blame the IRS,” Pfeil said. “I blame the Congress for not giving us the budget to do the job.”

Had the billions in budget reductions occurred all at once, with tens of thousands of auditors, collectors and customer service representatives streaming out of government buildings in a single day, the collapse of the IRS might have gotten more attention. But there have been no mass layoffs or dramatic announcements. Instead, it’s taken eight years to bring the agency that funds the government this low. Over time, the IRS has slowly transformed, one employee departure at a time.

The result is a bureaucracy on life support and tens of billions in lost government revenue. ProPublica estimates a toll of at least $18 billion every year, but the true cost could easily run tens of billions of dollars higher.

The cuts are depleting the staff members who help ensure that taxpayers pay what they owe. As of last year, the IRS had 9,510 auditors. That’s down a third from 2010. The last time the IRS had fewer than 10,000 revenue agents was 1953, when the economy was a seventh of its current size. And the IRS is still shrinking. Almost a third of its remaining employees will be eligible to retire in the next year, and with morale plummeting, many of them will.

The IRS conducted 675,000 fewer audits in 2017 than it did in 2010, a drop in the audit rate of 42 percent. But even those stark numbers don’t tell the whole story, say current and former IRS employees: Auditors are stretched thin, and they’re often forced to limit their investigations and move on to the next audit as quickly as they can.

Without enough staff, the IRS has slashed even basic functions. It has drastically pulled back from pursuing people who don’t bother filing their tax returns. New investigations of “nonfilers,” as they’re called, dropped from 2.4 million in 2011 to 362,000 last year. According to the inspector general for the IRS, the reduction results in at least $3 billion in lost revenue each year. Meanwhile, collections from people who do file but don’t pay have plummeted. Tax obligations expire after 10 years if the IRS doesn’t pursue them. Such expirations were relatively infrequent before the budget cuts began. In 2010, $482 million in tax debts lapsed. By 2017, according to internal IRS collection reports, that figure had risen to $8.3 billion, 17 times as much as in 2010. The IRS’ ability to investigate criminals has atrophied as well.

Corporations and the wealthy are the biggest beneficiaries of the IRS’ decay. Most Americans’ interaction with the IRS is largely automated. But it takes specialized, well-trained personnel to audit a business or a billionaire or to unravel a tax scheme — and those employees are leaving in droves and taking their expertise with them. For the country’s largest corporations, the danger of being hit with a billion-dollar tax bill has greatly diminished. For the rich, who research shows evade taxes the most, the IRS has become less and less of a force to be feared.

The story has been different for poor taxpayers. The IRS oversees one of the government’s largest anti-poverty programs, the earned income tax credit, which provides cash to the working poor. Under continued pressure from Republicans, the IRS has long made a priority of auditing people who receive that money, and as the IRS has shrunk, those audits have consumed even more resources, accounting for 36 percent of audits last year. The credit’s recipients — whose annual income is typically less than $20,000 — are now examined at rates similar to those who make $500,000 to $1 million a year. Only people with incomes above $1 million are examined much more frequently.

https://www.propublica.org/article/how-the-irs-was-gutted

[Guest Lobo]

I agree with a good portion of the article.  What is awfully telling though, is that you think of the Internal Revenue Service as an "American Institution."  

I can't have civil discourse with someone that believes the IRS has that type of stature and regard in our society.  

[Huckleberry 32830]

Yeah, it's definitely not an American institution unless it's performing a function explicitly authorized in the Constitution of the United States of America!

Wait.

[wildcat09 29327]

14 minutes ago, Lobo said:

I agree with a good portion of the article.  What is awfully telling though, is that you think of the Internal Revenue Service as an "American Institution."  

I can't have civil discourse with someone that believes the IRS has that type of stature and regard in our society.  

Concern troll is concerned.

[David Dennison 18828]

20 minutes ago, Lobo said:

I agree with a good portion of the article.  What is awfully telling though, is that you think of the Internal Revenue Service as an "American Institution."  

I can't have civil discourse with someone that believes the IRS has that type of stature and regard in our society.  

It has to have that type of stature if you want a functioning government. What the IRS does is vital to our national security.

Edited December 11, 2018 by David Dennison

[Incredulity 11631]

So its a good thing they don't have to enforce O'care penalties?

[High Plains Drifter 11018]

1 hour ago, Incredulity said:

So its a good thing they don't have to enforce O'care penalties?

They should enforce the tax laws. They should have a budget that is adequate to carry out their constitutionally mandated duties.

[SimonBolivar 10957]

Michael Lewis' new book goes into quite a bit of depth on this type of thing.

 

[tantric superman 4667]

1 hour ago, Lobo said:

I can't have civil discourse with someone that believes the IRS has that type of stature and regard in our society.  

Because you have some kind of learning or communications disability?

Edited December 11, 2018 by tantric superman

[TexArcher 37750]

It's funny how many rah-rah-Murica patriots love the military and hate the IRS.

[David Dennison 18828]

1 hour ago, Incredulity said:

So its a good thing they don't have to enforce O'care penalties?

Enforcing those penalties would save the government and taxpayers money, that's for sure.

Edited December 11, 2018 by David Dennison

[thrillhammer 683]

10 minutes ago, TexArcher said:

It's funny how many rah-rah-Murica patriots love the military and hate the IRS.

yes it is.  let's fund our boondoggles, but let's not support taxes or the organization responsible for collecting taxes.

[Francisco 2.0 32379]

50 minutes ago, TexArcher said:

It's funny how many rah-rah-Murica patriots love the military and hate the IRS.

It's because they don't want their money going to some damn brown-skinned person overseas, or who swam across the Rio.

You should hear my FIL.  He bitches about any and all taxation, yet feels that the country needs to eliminate SS, Medicare, etc and give all that money to the military.  Never mind his own mother is on SS and Medicare, and he's close to the age where he will start to draw.

[MaybeACoordinator 8349]

25 minutes ago, thrillhammer said:

yes it is.  let's fund our boondoggles, but let's not support taxes or the organization responsible for collecting taxes.

My grandfather was a rare born Texan Republican...Rare for his time, anyway -- he was born in 1924, I think. His dad was from Massachusetts and brought his Republicanism with him. 

He hated paying taxes. And he hated paying for anything, period, including maintenance on the beautiful old house he bought in Houston's Museum District. It was as old as he was and he bought it in the late '60s for about $75k and kept it until 2000. 

He never installed central air or heat so his bills were outrageous, especially because he would only buy shitty second-hand window units from a Fred Sanford-type dude in Third Ward. He never would call in an exterminator, so the roaches had a field day, especially because we used paper sacks for the garbage. There were rats, but that was why he would acquire rescue mutt terriers. The idea of preventative maintenance was foreign to him, so the wiring rotted and an electrical fire broke out in the attic bedroom. He didn't repair the roof, so the rain got in, seeped down through the attic bedroom, and collapsed the plaster ceilings in two bedrooms. (Luckily, nobody was in either at the time.) 

It wasn't that he didn't have the money. He just had the magical thinking of the typical Republican. I don't need to pay for anything, ever, except for the things I want to pay for. 

In 2000 when he sold that wreck of a house he probably got about half the price he could have if he'd kept it in good shape. I see it as a metaphor for our country. 

 

 

[Brisketexan 104958]

1 hour ago, MaybeACoordinator said:

My grandfather was a rare born Texan Republican...Rare for his time, anyway -- he was born in 1924, I think. His dad was from Massachusetts and brought his Republicanism with him. 

He hated paying taxes. And he hated paying for anything, period, including maintenance on the beautiful old house he bought in Houston's Museum District. It was as old as he was and he bought it in the late '60s for about $75k and kept it until 2000. 

He never installed central air or heat so his bills were outrageous, especially because he would only buy shitty second-hand window units from a Fred Sanford-type dude in Third Ward. He never would call in an exterminator, so the roaches had a field day, especially because we used paper sacks for the garbage. There were rats, but that was why he would acquire rescue mutt terriers. The idea of preventative maintenance was foreign to him, so the wiring rotted and an electrical fire broke out in the attic bedroom. He didn't repair the roof, so the rain got in, seeped down through the attic bedroom, and collapsed the plaster ceilings in two bedrooms. (Luckily, nobody was in either at the time.) 

It wasn't that he didn't have the money. He just had the magical thinking of the typical Republican. I don't need to pay for anything, ever, except for the things I want to pay for. 

In 2000 when he sold that wreck of a house he probably got about half the price he could have if he'd kept it in good shape. I see it as a metaphor for our country. 

 

 

oklahoma is the part with paper sacks of trash and roaches, right?

[staboner 4969]

2 hours ago, TexArcher said:

It's funny how many rah-rah-Murica patriots love the military and hate the IRS.

military takes other people's shit - good

IRS takes my shit - bad

pretty sure thats the logic

[Dutchrudder 11132]

54 minutes ago, staboner said:

military takes other people's shit - good

IRS takes my shit - bad

pretty sure thats the logic

I see the line "taxation is theft" spouted a lot among republicans and "libertarians" a lot. I think that's central to the thought that the IRS is bad, because there are a fair amount of people out there who think government is useless and shouldn't exist at all. The Ron Swanson types, or Ron Swannabes if you will. They will gladly take take take what is offered to them, and turn around to complain about programs that don't directly effect them. 

[Anastasis 23447]

The irs is pretty low on the list of American institutions to rally around. But we can start there if you wish. 

[MaybeACoordinator 8349]

2 hours ago, Brisketexan said:

oklahoma is the part with paper sacks of trash and roaches, right?

If only you could have seen that place. It is the stuff of legend. (Our house, not Oklahoma. Being raised by an older generation gives you an odd perspective.)

[happyfunball 481]

1 hour ago, Anastasis said:

The irs is pretty low on the list of American institutions to rally around. But we can start there if you wish. 

The IRS as a case study is interesting, because its funding should be apolitical. It demonstrates that Republican idealogy is effectively about dismantling our democracy and its institutions not whatever bs philosophical arguement that they are selling. 

[Anastasis 23447]

28 minutes ago, happyfunball said:

The IRS as a case study is interesting, because its funding should be apolitical. It demonstrates that Republican idealogy is effectively about dismantling our democracy and its institutions not whatever bs philosophical arguement that they are selling. 

I dont equate the IRS with our democracy, but ok cool hook em. 

[happyfunball 481]

3 minutes ago, Anastasis said:

I dont equate the IRS with our democracy, but ok cool hook em. 

So you lack a counter argument that taxing authority is fundamentally core part of government and that republicans are systemically undermining it. 

[Anastasis 23447]

7 minutes ago, happyfunball said:

So you lack a counter argument that taxing authority is fundamentally core part of government and that republicans are systemically undermining it. 

The IRS is not a fundamentally core component of democracy. 

[happyfunball 481]

7 minutes ago, Anastasis said:

The IRS is not a fundamentally core component of democracy. 

I said government in the quoted part. 

[Anastasis 23447]

53 minutes ago, happyfunball said:

The IRS as a case study is interesting, because its funding should be apolitical. It demonstrates that Republican idealogy is effectively about dismantling our democracy...

OK. 

[happyfunball 481]

Just now, Anastasis said:

OK. 

Let me spell it out. If you are undermining the core institutions of government and our government is based on democracy, then ultimately you are undermining our democracy. 

[Blotto 23478]

Just now, Anastasis said:

The IRS is not a fundamentally core component of democracy. 

To pay for our "democracy" we need revenues (taxes), and to ensure that American citizens and corporations pay the taxes they rightfully owe, we need enforcement. You can argue about the practices the IRS employs in its efforts at enforcing tax law, but I dont see how you can argue against the concept of an organization charged with enforcing the tax laws in this country. If you dont like your tax rate or your ability to claim certain deductions, talk to Congress.

You argue that tax collection is not a fundamentally core component of democracy, do you feel the same way about law enforcement and our judicial system? They all seem like necessary components of a system built to govern 300+ million people. If nobody follows our laws, and there is no enforcement I would argue that our democracy would be in grave danger.....but that appears to be the case anyway. 

[Anastasis 23447]

1 minute ago, happyfunball said:

Let me spell it out. If you are undermining the core institutions of government and our government is based on democracy, then ultimately you are undermining our democracy. 

This entire exchange is illogical and retarded. The IRS is not fundamental to our democracy. It is an enforcement and collections arm at threat of violence against citizens of this country. 

[David Dennison 18828]

1 minute ago, Anastasis said:

This entire exchange is illogical and retarded. The IRS is not fundamental to our democracy. It is an enforcement and collections arm at threat of violence against citizens of this country. 

And your suggestion for financing the state is?

[happyfunball 481]

2 minutes ago, Anastasis said:

This entire exchange is illogical and retarded. The IRS is not fundamental to our democracy. It is an enforcement and collections arm at threat of violence against citizens of this country. 

Go read a book

 

[Anastasis 23447]

1 minute ago, Blotto said:

To pay for our "democracy" we need revenues (taxes), and to ensure that American citizens and corporations pay the taxes they rightfully owe, we need enforcement. You can argue about the practices the IRS employs in its efforts at enforcing tax law, but I dont see how you can argue against the concept of an organization charged with enforcing the tax laws in this country. If you dont like your tax rate or your ability to claim certain deductions, talk to Congress.

 You argue that tax collection is not a fundamentally core component of democracy, do you feel the same way about law enforcement and our judicial system? They all seem like necessary components of a system built to govern 300+ million people. If nobody follows our laws, and there is no enforcement I would argue that our democracy would be in grave danger.....but that appears to be the case anyway. 

Our democracy operated for quite a while without the Internal Revenue Service. It is not a core component of our democracy. I am not opposed to taxes, per se. I am not opposed to a tax collection agency.  It just isn't a core and essential defining component of a democratic form of government. Nor is militarized domestic law enforcement.  I would agree however that a judiciary is a fundamental component to the American form of government. 

[David Dennison 18828]

19 minutes ago, Anastasis said:

Our democracy operated for quite a while without the Internal Revenue Service. It is not a core component of our democracy. I am not opposed to taxes, per se. I am not opposed to a tax collection agency.  It just isn't a core and essential defining component of a democratic form of government. Nor is militarized domestic law enforcement.  I would agree however that a judiciary is a fundamental component to the American form of government. 

Something like a federal revenue collecting service? In other words, an internal revenue service?

[Brisketexan 104958]

Something like a federal revenue collecting service? In other words, an internal revenue service?

Yeah...Anastasis’s “argument” above is some of the most semantic bullshit I’ve seen.

Any functional government (even if it’s just the judicial branch that he says is a good idea) requires some revenue. Which must be collected. By something.

We can argue about whether the agency we created to do that (the IRS) is doing a good or bad job, abuses its power, etc...but it’s a pretty core function of ALL governments.

[Anastasis 23447]

3 minutes ago, Brisketexan said:

Yeah...Anastasis’s “argument” above is some of the most semantic bullshit I’ve seen.

Any functional government (even if it’s just the judicial branch that he says is a good idea) requires some revenue. Which must be collected. By something.

We can argue about whether the agency we created to do that (the IRS) is doing a good or bad job, abuses its power, etc...but it’s a pretty core function of ALL governments.

The OP was specific to the IRS. It's in big bolded large font letters. Literally first thing you read on the thread. The IRS is not an essential component of democracy. Nor an essential component of American democracy or government. The semantic arguments are the ones walking it back from the IRS in particular to a general revenue collection function.

Edited December 12, 2018 by Anastasis

[David Dennison 18828]

11 minutes ago, Anastasis said:

The OP was specific to the IRS. It's in big bolded large font letters. Literally first thing you read on the thread. The IRS is not an essential component of democracy. Nor an essential component of American democracy or government. The semantic arguments are the ones walking it back from the IRS in particular to a general revenue collection function.

Is collecting revenue to finance the obligations of the state an essential component of democracy?

[Brisketexan 104958]

The OP was specific to the IRS. It's in big bolded large font letters. Literally first thing you read on the thread. The IRS is not an essential component of democracy. Nor an essential component of American democracy or government. The semantic arguments are the ones walking it back from the IRS in particular to a general revenue collection function.

So...you knew that you were just doubling down on semantic bullshit as you were writing this, right?

[DalTxHornFan 3097]

From the ProPublica article:  

"The cuts are depleting the staff members who help ensure that taxpayers pay what they owe. As of last year, the IRS had 9,510 auditors. That’s down a third from 2010. The last time the IRS had fewer than 10,000 revenue agents was 1953, when the economy was a seventh of its current size." 

What a bogus and meaningless statistic.  In 1953, the IRS had very little in the way of computers and automated methods of analyzing tax filings.  Today there are shit tons of tax information reporting filings covering everything from wages and salaries, a wide variety of payments reported by 1099's, sale transactions for stocks and real estate, etc., etc.  It doesn't take an auditor to run those matching programs (plus, since most returns are filed electronically, it doesn't even require any human interaction with the tax return data reported by the taxpayer, vs. back when armies of IRS tax drones had to manually enter return information received by mail, but I digress).

If a taxpayer fails to report income or other transactions included on the tax information returns, the IRS matching program spits out a matching notice assessing additional taxes and maybe penalties a high percentage of the time.  Back in 1953, a tax auditor would have to ferret out that discrepancy in the course of an examination.  Now, the selection of returns to be audited is largely based upon sophisticated analytical tools known as the Discriminant Inventory Function System that compares a given return to the overall averages to identify audit red flags.  Even with those selected, they sometimes do "letter audits" where they ask for explanations or support for a red flag or two vs. "field audits" where they want to examine multiple red flags.  Obviously a letter audit takes less manpower than a field audit.  The IRS usually has a pretty good idea that something is wrong before they devote time to a field audit. 

TLDR -- The IRS now has fewer auditors because there are more sophisticated ways of analyzing taxpayer compliance than just doing the old-fashioned field audits.

[Anastasis 23447]

4 minutes ago, Brisketexan said:

So...you knew that you were just doubling down on semantic bullshit as you were writing this, right?

"No semantics. No semantics. You're the semantics."

[Anastasis 23447]

5 minutes ago, DalTxHornFan said:

From the ProPublica article:  

"The cuts are depleting the staff members who help ensure that taxpayers pay what they owe. As of last year, the IRS had 9,510 auditors. That’s down a third from 2010. The last time the IRS had fewer than 10,000 revenue agents was 1953, when the economy was a seventh of its current size." 

 What a bogus and meaningless statistic.  In 1953, the IRS had very little in the way of computers and automated methods of analyzing tax filings.  Today there are shit tons of tax information reporting filings covering everything from wages and salaries, a wide variety of payments reported by 1099's, sale transactions for stocks and real estate, etc., etc.  It doesn't take an auditor to run those matching programs (plus, since most returns are filed electronically, it doesn't even require any human interaction with the tax return data reported by the taxpayer, vs. back when armies of IRS tax drones had to manually enter return information received by mail, but I digress).

 If a taxpayer fails to report income or other transactions included on the tax information returns, the IRS matching program spits out a matching notice assessing additional taxes and maybe penalties a high percentage of the time.  Back in 1953, a tax auditor would have to ferret out that discrepancy in the course of an examination.  Now, the selection of returns to be audited is largely based upon sophisticated analytical tools known as the Discriminant Inventory Function System that compares a given return to the overall averages to identify audit red flags.  Even with those selected, they sometimes do "letter audits" where they ask for explanations or support for a red flag or two vs. "field audits" where they want to examine multiple red flags.  Obviously a letter audit takes less manpower than a field audit.  The IRS usually has a pretty good idea that something is wrong before they devote time to a field audit. 

 TLDR -- The IRS now has fewer auditors because there are more sophisticated ways of analyzing taxpayer compliance than just doing the old-fashioned field audits.

How dare you question the relevancy of the head count bureaucracy at the IRS being essential to our form of democratic governance!

[Incredulity 11631]

1 hour ago, David Dennison said:

Is collecting revenue to finance the obligations of the state an essential component of democracy?

No

[Bookman 4637]

What, in your opinion, were they saying by the “1953” comment?

[Dutchrudder 11132]

16 hours ago, DalTxHornFan said:

From the ProPublica article:  

"The cuts are depleting the staff members who help ensure that taxpayers pay what they owe. As of last year, the IRS had 9,510 auditors. That’s down a third from 2010. The last time the IRS had fewer than 10,000 revenue agents was 1953, when the economy was a seventh of its current size." 

What a bogus and meaningless statistic.  In 1953, the IRS had very little in the way of computers and automated methods of analyzing tax filings.  Today there are shit tons of tax information reporting filings covering everything from wages and salaries, a wide variety of payments reported by 1099's, sale transactions for stocks and real estate, etc., etc.  It doesn't take an auditor to run those matching programs (plus, since most returns are filed electronically, it doesn't even require any human interaction with the tax return data reported by the taxpayer, vs. back when armies of IRS tax drones had to manually enter return information received by mail, but I digress).

If a taxpayer fails to report income or other transactions included on the tax information returns, the IRS matching program spits out a matching notice assessing additional taxes and maybe penalties a high percentage of the time.  Back in 1953, a tax auditor would have to ferret out that discrepancy in the course of an examination.  Now, the selection of returns to be audited is largely based upon sophisticated analytical tools known as the Discriminant Inventory Function System that compares a given return to the overall averages to identify audit red flags.  Even with those selected, they sometimes do "letter audits" where they ask for explanations or support for a red flag or two vs. "field audits" where they want to examine multiple red flags.  Obviously a letter audit takes less manpower than a field audit.  The IRS usually has a pretty good idea that something is wrong before they devote time to a field audit. 

TLDR -- The IRS now has fewer auditors because there are more sophisticated ways of analyzing taxpayer compliance than just doing the old-fashioned field audits.

Ok, but that's not the only metrics. How many taxpayers are there now compared to 1953? Can we trend that number over the years? How many corporations and individuals? Has the process become more complex and more difficult since then?  What was the average time to conduct an audit in 1953 vs 2018?

Do you think the number of auditors in 2010 of about ~12,500 being reduced to 9500 in 2018 is a significant decrease?  Do you think the improvements in the auditing process through software and communication improvements would result in a 30% decrease in work?  

Just asking questions...

Edited December 12, 2018 by Dutchrudder

[David Dennison 18828]

15 hours ago, Incredulity said:

No

I wonder what the Pentagon thinks.

[High Plains Drifter 11018]

15 hours ago, Incredulity said:

No

Yes

[David Dennison 18828]

I guess funding the $700 billion defense budget isn't an essential component of democracy.

Who knew?

[thrillhammer 683]

26 minutes ago, David Dennison said:

I guess funding the $700 billion defense budget isn't an essential component of democracy.

Who knew?

Rightwing mantra = "Support our troops! Support our troops!"   "Down with taxes! Down with taxes!"

[thrillhammer 683]

and they wonder why people don't take them seriously.

[WhatTheBuck 28764]

18 hours ago, David Dennison said:

And your suggestion for financing the state is?

 

18 hours ago, David Dennison said:

Is collecting revenue to finance the obligations of the state an essential component of democracy?

I can't help but notice that Anastasis has left these questions conspicuously unanswered. 

[Chad Fuck 17640]

20 hours ago, MaybeACoordinator said:

If only you could have seen that place. It is the stuff of legend. (Our house, not Oklahoma. Being raised by an older generation gives you an odd perspective.)

This sounds pretty standard for a child of the Depression.  

[hayden_horn 11362]

Ain't nobody like the tax man.