By that logic, if they just pay their taxes it won't affect their lifestyle either, so their incentive to cheat is also lower.
> the payoff for a billionaire successfully cheating on their taxes is much higher than for a non-billionaire
In absolute terms, sure. And in absolute terms the penalties are much bigger too.
> the IRS prosecutes a lot more low-income people than high-income people (by percentage as well as by absolute numbers) so a billionaire has much better odds of not getting caught
Your conclusion doesn't follow from your evidence. It's possible that low income people are cheating taxes at a higher rate than billionaires. I really don't have a lot of trouble believing this; small tax fraud is widespread, even accepted by a lot of people.
> billionaires have access to better layers, accountants, publicists and politicians to give them negotiating leverage if they do get caught
I don't see any evidence that this guy got a better deal than he should have.
The point of tax enforcement is not to punish billionaires for being billionaires. The point of tax enforcement is to ensure taxes are collected. If you think taxes are too low, or just want to punish billionaires more harshly because they're billionaires, then Congress is the place that has to be changed.
Source: https://www.propublica.org/article/irs-sorry-but-its-just-ea...
There is evidence he worked out a deal with the removal of deductions regarding his charity... why did they remove those deductions? If he’s entitled to them... clearly it was done as a negotiating piece.
How many average Joe’s have 180 million in deductions to negotiate with?
yes, it is 3-pronged
a) easy to identify
b) liquidity, easy to use for payment
c) kickback and relax, emphasis on kickback
c might sound annoying, but the revenue service has the primary goal of revenue. replenishing the treasury so it can make its own interest payments. you might say, "well take that and still jail the people". okay, I guess. it could have happened here.
all parties in this case acknowledge that a court case would not have any guaranteed results, specifically because of your second sentence:
> Not only is the magnitude of their crime bigger, but their is less justification for it.
The justification is actually broader. Like, sure if the billionaire lacks a justification for paying yes, but the reality is that the government doesn't know WHICH justification the billionaire is using. That's the game. They can be totally blindsided. And then there's the jury, yeah sure a jury with populist sentiment against billionaires combined with a jury judging a black man, doesn't sound great for the defendant but that overlooks everything that was attempted. The man tried to use the amnesty program that the US government set up, and the government denied him! The man already snitched for the government on his first investor who set him up for life! The man tried filing amended tax returns. The jury might actually take a dim view on the state for that, I could totally see a hung jury. And then his lawyers can totally drop some legal opinions they made years ago that showed a justification the government didn't expect at all, shifting liability away from the defendant.
Not quite.
You need to think about when they have the money. It is “capitalism” after all, not “moneyism.” If you build/invest-in something using $10mil that should have been tax, with a decent ROI you might make that money back in 5-10 years. Now you have the original money, plus own something that continues to make money. Income++, but your “back taxes” are still the same for the earlier fraudulent period.
(assuming the IRS doesn’t take stuff like this into account when dealing with collecting “back taxes”)
This is the weird part to me. I don't think the marginal payoff is higher for a billionaire, other than in ego or ideological or other less-rational terms.
Someone making 50K who scams an extra 2K out of their taxes has gotten themselves a pretty big boost to their disposable income. While a billionaire already has millions to play with...
I would support higher and harsher penalties for larger absolute amounts of tax fraud, though, because you're depriving your fellow citizens of more if you're keeping larger $$ amounts.
For a poor person, the same situation is likely life-altering in either case.
Either a billion dollars is a lot, or it is not.
But using in the same sentence as both, depending on the point you're trying to prove, is a little dishonest.
As MrPatan pointed out in a sibling comment, the sentence is about the same person.
1 billion dollars to someone who has 0 dollars is a lot.
So if expected value of tax cheating in vacuum is - lets imagine - 20% of the amount of taxes cheated, billionaire should cheat on taxes in every situation, as they simply gain 20% on average. Smaller player shouldn't, as even though their expected value is the same, their utility value can be completely different as they might take a risk of ruining their business and losing future income and hugely lowering their quality of life.
edit: and also for small amounts the way down is much harsher on the utility value, so being a favorite to gain 10k might not be worth it, if the possible -15k means your lifestyle suffers.
If you're little and scamming a few $k here and there, the ROI (Return on Investigation) for the IRS to go after you is tiny. It's probably not worth assigning an investigator.
If you're HUGE and scamming billions, the ROI is there but you also have the capabilities to defend yourself, obfuscate things, etc so it's unlikely they can destroy you. Therefore, it's not one investigator but a team with forensic accountants, potentially informants, etc.
For everyone else, the danger is in the middle. Where you have enough that you can lose a life-destroying amount but you don't have the means to protect yourself. That is a great target for investigators.
In short, as you gain more, be careful and have a good accountant who follows the rules to the best of their ability.. until you can make the rules.
Oh crap.
another way to think of this is in the difference of relationship to money between a billionaire and a in comparison poor person. give 2K to the avg Joe/Jane they'll circulate it back into the market by purchasing while the billionaire sees themself as a "steward of their fortune" and who would keep in their accounts. (also the reason why trickle-down Reaganomics doesn't work).
Also to a billionaire there is a high chance justifying tax-avoidance (and evasion) is easier since they anyway do it using multinational corporations. And obvs. it's more work to go after big cases where the fight is about proofing overstepping the line between avoidance/evasion while with poor people the case is usually about just evasion.
I'll continue to recommend this here whenever the topic comes up: https://en.wikipedia.org/wiki/Treasure_Islands:_Tax_Havens_a...
It is higher in a very real and measurable way: it's way more money.
Doesn't have to higher as a "marginal payoff". (Besides that would imply that if the billionaire didn't get any real benefit or pleasure from the non-taxed money, they should face no penalty).
I'm not sure how this is relevant. As of October 2020, there were 614 billionaires in the US[1]. Of those 614 people, only a few of them are likely breaking any sort of tax law (billionaires have a lot of money to make sure they take advantage of loopholes, without breaking the law). So there isn't some big list of billionaires that the IRS could be going after but is choosing not to.
So the question is, are there known billionaire tax evaders that aren't getting prosecuted? That should be the only question that matters. Using statistics in this case would likely lead to more injustice than less, as the only way you could get billionaire vs non-billionaire prosecutions rates to align is by prosecuting billionaires that aren't breaking the law. (edit: unless there are many billionaire tax evaders that are just getting away with it, of course. I don't know if that's the case or not)
[1]: https://en.wikipedia.org/wiki/List_of_Americans_by_net_worth
[1] the US today is one of the biggest tax-havens in the world (source: "Treasure Island") and the OECD crackdown on the usual suspects (Cayman, Channel Islands, ...) never hurt anyone since the US really just wanted a slice of the off-shore pie (which anyway exists whether with or without the US as a tax-haven).
That assumes they cheat at the same rate.
That's a common perception, but is not based on reality. May I suggest:
Most of my perception is based on billionaires I know in real life. It's anecdata but it's enough to persuade me. I choose not to talk to one after he became rich because he became such a horrible human being. The others roughly follow the same trend. All of them are rich or became rich by shitty means.
As it was written, though, no basis was provided. The opinion was congruent with that of people who believe economics is zero-sum, which is what I inferred you meant from "shitty means".
As for me, although I've personally met Steve Ballmer, Bill Gates, and Paul Allen, I hardly know them. I have read their biographies, and the biographies of many American billionaires, and would not agree that any of them came by their wealth through "shitty means".
The term "shitty means" isn't exactly an economic term, and I'd be curious what you mean more specifically. I'll start by saying an ethical way to become a billionaire is by providing a product or service that people are happy to pay for. Gates, Ballmer, Allen, Jobs, Bezos, Musk, etc., all fit into that category.
I'll close by apologizing to you.
I've been having a bad day and you caught me at a bad time. That's my fault and I need to take a break from the internet. Have a good night.
'IRS estimates that between 21 percent to 26 percent of EITC claims are paid in error. Some of the errors are unintentional caused by the complexity of the law, but some of the claims are intentional disregard of the law'
Income Range/Percent Examined 2015
1-$25,0000/.66
…
$10,000,000+/8.16
"The typical audits for higher-income taxpayers involve at least three different tax years, often include related entities, and routinely take years to resolve. The highest income taxpayers face the most significant chance of an examination, and they face the most highly trained and experienced IRS agents and teams utilizing our most sophisticated tools and techniques."
https://www.irs.gov/about-irs/irs-audit-rates-significantly-...
I'm significantly poorer than the billionaires, but the only thing I know about taxes is what forms I need to gather and mail to my tax guy.