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White House
istock_S. Greg Panosian

A tax shutdown, impeachment and amnesty

16th Jan 2019
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Having spent most of the last two weeks in the United States, it came as something of a surprise to learn that a stream of tax issues was prominent in the news and beyond.

It was also good to have a rest from the incessant bombast surrounding Britain and Europe, which barely rated a mention. Instead, the US equivalent to our increasingly tedious farce was the government shutdown. What is presented as a battle between President Trump and Leader of Representatives Nancy Pelosi might seem bizarre even by our own standards.

The President wants to spend $5.6bn on a wall to keep out immigrants, while the newly powerful Democrats can find better uses for the money.

In any event, due to stubbornness on both sides, employees of the government have not been paid for a record-breaking period that is now getting close to a month, either taking what is called furlough i.e. holiday without pay or working for nothing.

That is the source of one of three major tax stories since the categories of federal employee that are currently suffering include those working for the Internal Revenue Service (IRS).

In British terms, this is equivalent to (say) a one month strike by every employee of HMRC. Can you imagine how long it will take for the US tax services to get back to normal? You also have to wonder whether some taxes will never be collected as a direct consequence.

In addition, there has to be every possibility that some of those employees who are currently facing hardship might cut their losses and leave the service, which is hardly likely to improve efficiency in the longer term.

The second story has been running for much longer. When he stood for election, the future President promised to make his tax returns public. Over two years later, the public is still waiting to see what many believe to be quite inventive interpretations of tax law.

Given that the 'I-word' (impeachment) is rearing its ugly head on a regular basis in TV discussions, tax might just be what takes the country’s leader over the edge. The cynical might even ponder on whether the president is only too happy to keep tax offices shut, since this might prevent officers from investigating his own affairs.

It seems that the Muller investigation into all kinds of wrongdoing including Russian involvement in the election might already have possession of the tax papers. If so, it is hinted that they might launch the kind of in-depth investigation that could eventually lead to damning revelations. Who knows?

Finally, there were regular TV adverts for a New Jersey tax amnesty, the deadline for which closed yesterday. This writer has long been advocating a real tax amnesty the United Kingdom, as the simplest and most effective way to bring in billions of unpaid tax from those involved in abusive avoidance, evasion and, more simply, failures to account correctly.

It would be fascinating to learn how much money the New Jersey plan brings in and what tactics the authorities in that state use to follow-up those who fail to take advantage.

As of this moment, it is impossible to know what is going to happen in the United Kingdom over the next week, let alone months and years. However, our own tax system is likely to need a significant overhaul in the very near future, whatever the outcome of the exit negotiations. Even so, not one of a shutdown, impeachment or amnesty seems likely to figure on the agenda.

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