Income Tax Corruption
US offshore tax amnesty costs $56 million, recovers less than $1 million
Besides being immoral, the income tax is hopelessly expensive to collect and subject to corruption and avoidance. Here are portions of a Financial Times article showing more government blunders.
by Joshua ChaffinThe US Treasury's success at cracking down on offshore tax shelters was called into question on Tuesday after it was revealed that a much-touted amnesty programme had so far recovered less than $1m in unpaid tax.
The programme, which the Internal Revenue Service hoped would bring in $100m, has an estimated cost of $56m.
The Treasury and the IRS have recently taken "aggressive steps" against tax shelters, suing law and accounting firms to force them to disclose the names of customers to whom they sold dubious tax avoidance strategies. The amnesty scheme, known as the Offshore Voluntary Compliance Initiative, was launched in January as a softer approach. Individuals who reported income they had illegally hidden overseas and then repaid the government would face reduced penalties.
Bob Wenzel, acting head of the IRS, claimed a "strong response" in May, saying more than 1,200 people had come forward. As of June 30, however, the IRS had collected just $744,546, according to an initial review by the Treasury's inspector-general for tax administration.
The study was cited in a letter sent on July 29 by Senator Charles Grassley, chairman of the Senate finance committee, and Max Baucus, senior Democrat on the committee, to John Snow, Treasury secretary, urging him to take a "more vigorous approach" against tax cheats.
Concerned citizens had questioned whether OVCI would be effective because many of the tax dodges were criminal frauds. "This was like asking people who robbed a bank to come in and return the money," said Howard Abrams of law firm Steptoe & Johnson.
For a collection of ridiculous tax quirks, visit the Museum of Tax Oddities
For a simpler, fairer alternative to complex uneven taxes, see Fred Foldvary's editorial The Rent, the Whole Rent, and Nothing but the Rent
For how long would you spend $56 to collect less than $1? Tell your views to The Progress Report:
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