Geez.  You have to wonder sometimes how these folks got elected.

The House just took back a bunch of money that was appropriated to the IRS to improve operations and effect proper tax audits.   And, these dorks claim the claw-back will help balance the budget.

Of course it will, because the millions that the IRS would collect from its audits will now never be available to lower the deficit.

Well, William Boning (Treasury), Nathanial Hendren (Harvard), Ben Sprung Keyser (Harvard), and Ellen Stuart (University of Sydney) just completed a full analysis of the value of tax audits.   And, it’s big.

First, we should know that the costs for auditing the lower echelon income levels runs some $ 5100, while an audit for the top 0.1% comes closer to $ 15000.  But, that’s only part of the story.

The IRS ends up collecting almost $ 5000 or so from the lower echelons, which makes the whole effort about breakeven.

But, when auditing the top earners, the IRS collects an average in excess of $ 90000, which is a 61 return on investment.   And, those numbers include the costs that the IRS may have to spend as the rich taxpayers appeal and protest the actions.

But even that is only part of the story.  Once audited, the taxpayer ends up paying way more in taxes voluntarily- for up to 14 or so years.    (That is why the IRS always publicizes the big tax fraud cases right before tax filing day- it’s called deterence.)

But, here’s the problem.  The GOP has been starving the IRS since 2010, so it has lacked sufficient funds and resources to go after the 0.1% and higher.  That’s exactly what that new appropriation was to counteract- to let the IRS audit those with more revenue.  The IRS still went after those with lower income levels, but audits for the more well to do fell by at least 40%

So, now it WILL be harder to balance the budget.

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