The rich will pay if pressured. So let’s make tax collection great again | Torsten Bell

What do we want? More tax auditors. When do we want them? Ideally a few years ago, but that’s enough for now. Maybe not the most exciting protest song, but for me it’s the right thing.

My first job at the Treasury was for a very sexy team called Revenue Service Delivery, which fights tax evasion and avoidance by hunting down those who hide money in Swiss bank accounts or pretend to be self-employed.

For the rest of you this is probably less convincing, but I hope I can get you started on this niche march by mentioning that tax liabilities to HMRC are double what they were before the pandemic. Even more compelling are new US studies that also show us where our compliance efforts deliver the best value for money. The authors use data from the Internal Revenue Service (the U.S. tax agency) to show that every dollar spent on personal tax audits (that is, checking whether someone paid the correct amount) returned a total of $2.17.

Doubling your money isn’t bad, but there’s more. First, who you audit is important. The rich have more complicated (i.e. more expensive audits) tax affairs, but that is far outweighed by the fact that they are. . . richer.

It might cost three times as much to audit the top 0.1% as the bottom 50%, but for every dollar spent, you get six times as much. Secondly, it only concerns the original revenue generated – ignoring the strong deterrent effect of an audit (those examined typically pay more taxes for up to 14 years). Taking that into account, the authors conclude that an additional dollar spent studying the top 10% returns a whopping $12. An absolute bargain, underpinning the Treasury’s recent decision to allow HMRC to employ 5,000 additional compliance staff. It’s time to make tax auditors great again.