Comment by abeppu 7 days ago
IDK if that's right. Oddly, the current administration has gutted the IRS and seems pretty ambivalent about collecting taxes that are on the books. I wonder if there will be an inconsistent definition of who is a software engineer, based on how friendly the company is with the administration, whether the company still has someone with a DEI title, etc.
> the current administration… seems pretty ambivalent about collecting taxes that are on the books. I wonder if there will be an inconsistent definition of who is a software engineer, based on how friendly the company is with the administration, whether the company still has someone with a DEI title
So basically the same situation that we have with bullshit speed limits everywhere.
If we had specifically defunded highway patrol that was net-revenue-positive, yes.
Republican defunding of the IRS is literally insane: reform by cutting enforcement.
- It rewards people who cheat on their taxes.
- It costs the government more money that it saves, because IRS investment is net revenue positive.
But then, the modern Republican party seems more concerned with being the party of 'law(s I agree with) and order (for people who aren't me).'
People greatly overestimate the amount of material cheating that happens, especially among large companies and the wealthy. I used to work for a Federal audit organization and almost all of the recoveries had a root cause in sloppy compliance and record-keeping practices rather than intentional malfeasance. It is broadly recognized as optimal that the recovered money should be several-fold the direct costs spent to recover it because this activity incurs a lot of non-obvious indirect costs. It is a variation on the principle that the optimum amount of fraud is non-zero.
Most of the blatant tax fraud is much lower down the economic ladder because below a certain threshold recovery doesn’t justify the cost and people know this. The amount you can get away with is far below the threshold where it would be worth the risk for wealthy parties. The best ROI for auditors in many of these cases is to make regular object lessons at random to discourage it rather than systematically prosecute it.
AFAIK, the increased spending at the IRS did not lead to concomitant offsetting recoveries. This is a predictable outcome, the amount of enforcement activity has been pretty finely tuned for decades to optimize ROI. Most of the recoveries come from changing focuses on compliance to areas that haven’t seen much enforcement activity in many years. Fighting entropy basically.
If you assume that most large recoveries are from sloppiness rather than systematic tax fraud, it changes what is going to be an effective strategy.
>AFAIK, the increased spending at the IRS did not lead to concomitant offsetting recoveries. This is a predictable outcome, the amount of enforcement activity has been pretty finely tuned for decades to optimize ROI. Most of the recoveries come from changing focuses on compliance to areas that haven’t seen much enforcement activity in many years. Fighting entropy basically.
AFAIK, all the data shows exactly the opposite.
https://news.harvard.edu/gazette/story/2023/07/turns-out-irs...
https://www.irs.gov/pub/irs-pdf/p5901.pdf
(There are many more studies from various outside organizations, as well as other non-partisan government bodies outside the IRS concluding similarly)
> the amount of enforcement activity has been pretty finely tuned for decades to optimize ROI
And then cut by 20% by the current adminstration [0].
I'd phrase the question of auditing lower income filers vs higher income filers differently -- do you think people with higher incomes should feel safer about cheating on their taxes?
Because average recoveries do scale with income [1]; unsurprisingly, it seems wealthy people commit tax fraud too [2].
While catching the low-hanging fruit (and therefore better ROI) is one goal, it needs to be balanced with ensuring there are similar levels of compliance (or penalties where it's lacking) in higher income payers.
[0] https://taxpolicycenter.org/taxvox/cuts-spending-and-staff-d...
[1] https://www.nytimes.com/2025/06/05/upshot/tax-audits-wealthy...
[2] https://www.irs.gov/newsroom/irs-launches-new-effort-aimed-a... https://www.irs.gov/newsroom/irs-tops-1-billion-in-past-due-... https://www.foxbusiness.com/politics/yellen-touts-irs-enforc...
This comment (currently downvoted to hard-to-read grey-on-grey) is an excellent example why you should always enable "showdead" in your profile, use user CSS to make downvoted comments readable again (e.g., https://news.ycombinator.com/item?id=41514726), and browse https://news.ycombinator.com/active instead of the homepage once in a while.
What's really going on here is that this provision was part of the tax acts from the first Trump administration. Due to procedural rules in Congress, they had to make those cuts appear revenue neutral over a 10 year time period. This tax increase is part of that. Very likely nobody involved really had a reason or cared that SEs get categorized this way, it just let them pass the changes they really wanted at the time.
Judging by the Big Law shakedown, enforcement will be based on how much of your corporate cash is held in Taco’s shitcoin.