Mastodawn

Ben Zipperer Jun 14, 2023

IRS audits of high earners are incredibly effective at raising tax revenue and reducing deficits.

New research shows that for each $1 spent on an audit of a high income individuals, the audit recovers $2 in tax revenue immediately, and then another $10 over the next 14 years as audited individuals voluntarily pay more in taxes due to deterrence effects

https://policyimpacts.org/research/67/a-welfare-analysis-of-tax-audits-across-the-income-distribution

A Welfare Analysis of Tax Audits Across the Income Distribution

Will Boning, Nathaniel Hendren, Ben Sprung-Keyser, and Ellen Stuart

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Ian Channing 🦈Jun 15, 2023

@benzipperer the figure of $12 over 14 years doesn't seem so impressive compared to $6 for the poorest. Is there really so much tax they can squeeze out of the poorest?

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John Mark Ockerbloom

@ianchanning @benzipperer Haven't read the full paper yet, but I'm guessing the bump there is due to EITC audits, which I've read elsewhere make up a large number of the IRS's audits, and target a credit used by low-income taxpayers. I'd imagine that, while no one audit of that type recovers a lot, they're relatively easy and cheap for the IRS to do, especially when the targets of the audits are in less of a position to put up a fight than rich taxpayers.