Comment by ethbr1

> The criticism the parent identified has almost nothing to do with these studies.

The criticism the parent identified is that the cost to the IRS is not the total cost to the public (i.e. innocent taxpayers being audited despite making only honest mistakes or having done nothing wrong at all), which is exactly a problem with these studies. To know where the equilibrium point is, you have to take into account these other costs, and the studies fail to do that.

> The IRS and others have been advocating for years for the resource to go after actual tax cheats of wealthy individuals and corporations, whose tax situations are (intentionally) so complex that it is a serious investment to audit.

What's really going on here is that those are the taxpayers it isn't as cost effective to audit because they have sophisticated lawyers, so they're much less likely to be violating the law. They're doing something which is complicated and then paying very little in taxes, but the complicated thing they were doing is legal so you can't get anything from auditing them. Meanwhile auditing them costs a lot because it's so complicated, so the ROI of doing it is pretty bad.

In particular it's worse than the ROI of auditing other taxpayers who can't afford such expensive lawyers and therefore are more likely to have made a mistake that allows the IRS to collect. But auditing those people makes the IRS much less sympathetic, because those people aren't the billionaires and the money the IRS collects is mostly a result of honest mistakes.

> Once you do audit them however, their tax dodging decreases for years into the future.

The assumption is that they were doing something unlawful to begin with, and then you're talking about the non-billionaires again.

Moreover, what really happens is that the people who made mistakes learn to hire tax lawyers. And then if you audit them again it comes up clean, but that doesn't mean they're paying more in taxes, because tax lawyers are pros at finding legal ways to avoid taxes, so what you've really done is encourage them to hire the people whose primary job it is to minimize tax revenue.

> The people that would spend time defending violators are otherwise fully employed doing the opposite... coming up with ways to get around the taxes their employers or customers are supposed to be paying. Instead of costing $2, that comes out as getting yet another $2 out of that audit by distracting a societal parasite.

It is definitely not the case that the number of tax lawyers and accountants employed is unrelated to the number of audits the IRS does. The more they do, the more business there is for those professions and the more people enter them. These are people who could have been doing something else and, moreover, people who consumed the resources that someone else could have used to do something better.

> Who pays taxes when it's well known that the IRS doesn't audit and follow up on tax cheats?

But they do. They always have. The question is, once they've done that, should then they proceed to audit an even larger number of mostly innocent people, because a small percentage of them did something wrong and finding that small percentage would cover the costs of the IRS, but not any of those other innocent people?

> Especially, if all it takes to further dissuade them is engineering complex wealth structures and keeping tax lawyers on retainer.

This is an entirely different problem. The ones with sophisticated lawyers aren't actually violating the tax code. The problem there is that the tax code is so complicated and poorly considered that fancy lawyers can find ways to avoid taxes without violating the law.

They already have that. The problem is, in order to find someone who is actually cheating, they have to audit a lot of innocent people, and who is covering the cost of those audits when they don't find anything?