[Old Man G Funk]

http://www.washingtonpost.com/wp-dyn/content/article/2006/07/31/AR2006073101097.html

A Senate committee today plans to criticize multimillion-dollar tax-avoidance schemes used by four prominent individuals, to highlight what it concludes is a more than $40 billion-a-year drain on federal coffers by offshore tax scams.

The panel is scheduled to release a 370-page report, which it provided to The Washington Post, that details how these wealthy, politically connected people ducked hundreds of millions of dollars in tax payments by using secretive corporations and trusts on the Isle of Man. The billionaires who took advantage of this tax haven included Robert Wood Johnson IV, owner of the New York Jets football team; Sam Wyly and Charles J. Wyly Jr., longtime Republican donors and backers of President Bush; and Haim Saban, a Democratic Party fundraiser who made his first fortune promoting Mighty Morphin Power Rangers.

Hopefully they fix the loopholes that these people have been using for years to evade paying taxes like ordinary citizens do.

 

[rooftest]

There really aren't any "loopholes" here. These arrangements created fake "losses" to offset gains - therefore negating the tax due. Looks pretty dumb to me.

 

[Old Man G Funk]

There really aren't any "loopholes" here. These arrangements created fake "losses" to offset gains - therefore negating the tax due. Looks pretty dumb to me.

What "looks pretty dumb" to you?

 

[rooftest]

... These arrangements ....

.....

 

[Old Man G Funk]

Yet, they probably would have gotten away with it if not for Enron.

The inquiry is a follow-up to work that helped uncover hundreds of overseas shell corporations used by Enron Corp.

Further, there is a question about whether this is really illegal or not:

Quellos Group said in a statement that the "transactions were appropriate tax deferral strategies carefully reviewed and approved by some of the most prestigious law firms in the country." It added that the company "fundamentally disagree with the report, which presents a one-sided view and ignores all information that is inconsistent with its conclusion."

...

William A. Brewer III, a lawyer for the Wylys, said in an e-mail that the Wylys "continue to believe that their actions were entirely proper under law" and "believe they have paid all taxes due." He added that the Wylys acted on the advice of "qualified professionals."

Also, this:

Levin said he hopes that the committee's study will instigate changes in the law that will make it harder for tax sheltering to proliferate. He said he wants to allow the IRS to presume that income from trusts or corporations in tax havens is taxable and make taxpayers prove that it is not. He also proposes to force financial institutions to report to the IRS when the beneficiary of foreign companies is an American.

The above makes it sound as if there's some question to the legality of this issue and the law should be changed to remove that question. What's stupid is the federal government allowing its richest citizens to skip out on tax payments so that the poorer citizens can bear the brunt of funding the infrastructure that keeps that government going. Further, it is stupid for the government to run such huge debts, all the while allowing this to go on.

 

[reflux]

There really aren't any "loopholes" here. These arrangements created fake "losses" to offset gains - therefore negating the tax due. Looks pretty dumb to me.

Creating book losses (not real, nothing at-risk) is merely one type of tax shelter. There are numerous others that work differently, but use various entities and complicated transactions to bypass certain parts of the revenue code.

What it boils down to, is that the elite of the country have the money and resources to cheat the system without getting caught. To avoid paying $200+ million in taxes, one of the "victims" in the study paid a group of accountants, lawyers, and bankers $54 million for a tax shelter plan.

And better yet, there remains a big push to eliminate the estate tax in this country. Once everyone pays their fair share, and I will stop b1tching.

 

[MudGrrl]

Yet, they probably would have gotten away with it if not for Enron.

sounds like Scooby Doo

 

[Tenchiro]

Too bad that after the elections this will not be mentioned until the next election cycle.

 

[JerseyDave]

AIG was caught doing something similar a few years ago. The investigators refused to continue their work when AIG hired private investigators to tail the fed. employees and "Muck Rake" their personal lives and the lives of their families.
What they did was a little different. Insurance complanies need to show a certain net worth to write policies. So they created a flase company off shore, they cycled money thru it and back to themselves and showed the payments to AIG from Coral Sea (I think was the name) as revenue. This allowed them to continue to write policies beyond what the Gov. said was responsible and legal. Another example of the laws of this land being bypassed by the ruling class.