Tuesday, August 01, 2006

When Really A Lot Just Isn't Enough

NYTimes (08.01.06), via Economist's View:
"So many superrich Americans evade taxes using offshore accounts that law enforcement cannot control the growing misconduct, according to a Senate report that provides the most detailed look ever at high-level tax schemes. Among the billionaires cited in the report are the owner of the New York Jets football team, Robert Wood Johnson IV; the producer of the 'Mighty Morphin Power Rangers' children’s show, Haim Saban; and two Texas businessmen, Charles and Sam Wyly, who the Center for Public Integrity found in 2000 were the ninth-largest contributors to President Bush." Tax Cheats Called Out of Control
Ahhh, yes. The Wyly boys. The Isle of Man. What a weekend that was, eh fellahs? "The Wyly brothers told the committee that they would invoke their Fifth Amendment right against self-incrimination and thus were not called to testify. The report characterizes them as active participants in tax schemes." No big deal? Ha! It's costing you plenty. "Cheating now equals about 7 cents out of each dollar paid by honest taxpayers, as much as $70 billion a year, the report estimated." Senator Carl Levin (D - MI) and his staff ran the investigation. They paid particular attention to an outfit called the Quellos Group, "a tax shelter boutique based in Seattle". The word "quellos", according to the company website, is "derived from an ancient word meaning 'the source from where things flow'". According to the report, the folks at Quellos "'concocted a tax shelter' using $9.6 billion 'worth of fake securities transactions that were used to generate billions of dollars of fake capital losses.'" When investigators first asked for trading records, Quellos told 'em "the trades were private, over-the-counter transactions." Whey they then asked "for trading tickets or other evidence of who owned the $9.6 billion worth of stock", Quellos told 'em "the stocks were never owned by the parties involved." Senator Carl cuts through the bullshit: "'They just wrote down numbers on paper and claimed losses. It was just like fantasy baseball, except the taxes not paid were for real.'" Quellos said they "'fundamentally disagree with the report, which presents a one-sided view.' It said the transactions, which the Senate committee describes as fabrications, were real and involved 'a significant possibility of economic gain and loss.'" Senator Carl's investigation may very well be connected to last Fall's the Federal investigation of KPMG. That was the one in which KPMG helped a bunch of rich guys "'skirt billions in federal taxes through 'unregistered and fraudulent tax shelters.'" Specfically, KPMG created and sold four shelters which the Feds estimated helped "more than 600 wealthy individuals to post $11.2 billion in phony tax losses, helping them avoid paying $2.5 billion in taxes." Our buddies at Quellos showed 'em how to do it, having "helped KPMG structure, market and implement its first tax shelter...". Didn't turn out too well for KPMG, which "avoided an indictment by agreeing to pay $456 million in penalties and accept an outside monitor. Concurrently, eight former KPMG partners and an outside lawyer were indicted for conspiracy to defraud the government." But oh well. Sometimes the bear just gets you, no matter what you do. Now about that damned estate tax. If we could get Congress to reduce it even more in a bill which also raises the minimum wage (for the first time in about ten years?), maybe no one will notice. And if that doesn't pan out, maybe we can talk George into cutting the staff of the IRS' estate tax lawyers and auditors by 45%. Maybe then the auditors who still have jobs will get the message, don't you think?


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