Continuing a bad trend, Congress is poised to boost the budget, staffing, and power of the IRS in order to further pester investors and entrepreneurs. Improving tax compliance is the excuse for this move, but it will further diminish job creation and investment. If politicians were serious about wanting to improve compliance, they would lower tax rates and reform the tax system. Reuters reports:
A new Internal Revenue Service unit set up to catch rich tax cheats hiding their wealth in complex business entities is rapidly taking shape with the hiring of hundreds of employees. …Another IRS official told Reuters “hundreds” of people have already been hired to staff the new unit, including some from within the agency. …Tax authorities in Japan, Germany and the UK have also created similar units. The U.S. House of Representatives on Thursday approved a $387 million boost for the IRS for the fiscal year that started October 1, in part to fund the high-wealth unit. …The IRS has also begun initial steps to join forces with other governments to scrutinize corporate tax filings to prevent “tax arbitrage” by companies seeking the best regime. …Some tax practitioners expressed worry about such coordination. “With any new thing, you never want to be the guinea pig,” Mary Lou Fahey, general counsel for the Tax Executive Institute, comprised of business executives, said.