Where the money is

American folklore has it that when a reporter asked 20th century bank robber Willie Sutton why he robbed banks, Sutton replied, “Because that’s where the money is.”

Although Sutton denied coming up with the pithy phrase, its point is well-taken: Put your effort where you are likely to get the biggest result.

The Internal Revenue Service doesn’t appear, however, to follow Sutton’s Law when it comes to audits. It is investing a disproportionate share of its investigative resources on those with the least amount of money.

According to a study cited recently in a report by the nonprofit news organization ProPublica, more than a third of all IRS audits are of individuals who receive the Earned Income Tax Credit, the welfare payment that the federal government gives to the working poor.

In fact, Mississippi’s Humphreys County — with a median household income of just $26,000 — gets the most scrutiny of any county in the nation for tax cheats. The chance of being audited there is 51 percent greater than it is in the richest county in America, Loudoun County in Virginia.

ProPublica says the reason for the disparity is because of pressure from Republicans in Congress to catch those who are dishonestly claiming the Earned Income Tax Credit.

Certainly, there is tax fraud by the poor. Cheating on income taxes crosses all class lines.

Strictly from a cost-benefit analysis, however, it makes little sense for the IRS to focus where there’s not much to be gotten. It’s like Willie Sutton robbing piggy banks instead of the real thing.

 

 

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