It takes the offer of amnesty to get rich people to reveal their offshore bank accounts. Finally, after years of neglect, the IRS has actually bothered to look into all this. But they had to assure the oligarchs that they wouldn’t be prosecuted for tax evasion, of course.
More than 12,000 American taxpayers have voluntarily revealed their secret offshore bank accounts to the Internal Revenue Service as part of the government’s latest tax amnesty program, agency officials said on Thursday. The move will allow the United States Treasury to collect at least half a billion dollars in unpaid taxes.
The voluntary disclosure program, which was in effect from February until last week, is part of an initiative to deter tax evasion via offshore bank accounts. Since the I.R.S. began its previous amnesty program in 2009, more than 30,000 taxpayers have reported their secret overseas accounts, and the federal government has collected $2.7 billion in taxes and penalties.
I mean, this is fine. It’s better than simply allowing offshoring to continue unchecked. At the same time, $2.7 billion is a pittance compared to the total lost revenue from tax evasion, and 30,000 tax evaders probably a small percentage of the total. And this setup where you can receive amnesty by declaring your offshore account is really distasteful. There are somewhat legitimate penalties on the financial side, however. Those who declare offshore accounts have to repay up to eight years in back taxes, and a penalty totaling 25% of the highest balance in the account.
With the amnesty program done, wouldn’t it proceed that those who have yet to declare offshore accounts now face stringent prosecution? Apparently a lot of the hidden assets just moved away from Switzerland to Asia. This is always going to be a game of whack-a-mole. But I believe the US has a modicum of global power, and given the budget hysteria in Washington, this seems like an excellent way to use it. I haven’t seen a better idea for deficit reduction than “collect the taxes actually owed.”
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