Cato’s Dan Mitchell shines a light on a new effort at the IRS to increase revenue by taxing interest payments on foreign capital deposited and invested in the US. Congress passed a specific rule blocking that kind of taxation, but short-term thinking in the administration and at the IRS has the agency looking for any revenue it can find. The problem, as Mitchell points out for the Center for Freedom and Prosperity, is that the long-term effects would be disastrous for the American economy and could create a collapse in an industry we just finished bailing out:
PHILADELPHIA — An in-house accountant who raised a red flag about a tax lapse that his employer then ignored, leading him to tip off the IRS, has received $4.5 million in the first IRS whistleblower award.
The accountant’s tip netted the IRS $20 million in taxes and interest from the errant financial-services firm.
The award represents a 22 percent cut of the taxes recovered. The program, designed to encourage tips in large-scale cases, mandates awards of 15 to 30 percent of the amount recouped.