A key point is that there are large indirect costs that scale up rapidly that are not accounted for in these direct costs. These costs show up on the balance sheet somewhere else in the government, which makes the ROI for the auditors look much better than it actually is.

This is well-understood by the Federal government. When they set their targets they fully account for the growth of indirect costs created by the audit activity that don’t show up in the ratio.

Good point, and kind of interesting in that as we keep cutting funding to the IRS, this ratio will probably get wider (which looks good, but is actually bad for what it implies).