What’s a hedge fund manager to do? Bloomberg explains the dilemma. Starting in 2018, the IRS will begin taxing up to $100 billion in performance fees and other deferred compensation that’s been parked offshore.. So far, financial wizards have not come up with a way to avoid the federal tax. One solution for hard-pressed hedge fund managers: Dump the money in charitable lead annuity trusts that, in turn, purchase a life insurance policy. TPC’s Steve Rosenthal says hedge fund managers and their tax advisers will figure something out. “In this cat and mouse game, the advisers have the edge.”

What Donald Trump’s economic policy may mean for interest rates. Mark Zandi of Moody’s Analytics took a close look at the economic effects of Trump’s agenda. TPC’s Howard Gleckman focused on one key element of that analysis: interest rates. He reports that Zandi predicts rates would more than triple—to 8.6 percent—by 2018. The toxic combination of growing debt and rate hikes would combine to make interest costs the biggest single spending item in the federal budget by 2026.   

The European Union reaches agreement on how to crack down on tax avoidance. Member governments struck a compromise in Luxembourg last week. Governments will be able to tax profits that companies shift to lower-tax jurisdictions, as well as intellectual property and other assets developed in member countries but transferred to tax havens outside the EU.  

Today on the Hill. The House Small Business Committee holds a hearing entitled, “Audits and Attitudes: Is the IRS Helping or Hurting Small Businesses?” Witnesses include Pete Sepp of the National Taxpayers Union, Lee Davenport of the Electronic Tax Administration Advisory Committee, Roger Harris of Padgett Business Services, and Emily Peterson-Cassin representing Public Citizen.

Meanwhile, the House continues its efforts to restrict the IRS. Republicans offered amendments to the IRS spending bill to reduce the agency’s authority and eliminate or reduce the commissioner’s salary. Bipartisan amendments would require nonprofits to report Social Security numbers of donors and bar the IRS from seizing property in so-called structuring disputes. Overall, the bill would reduce IRS funding by $236 million.

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