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Wrapup of "Perfectly Legal"
May. 23rd, 2005 03:41 pmI've already written about a few aspects of "Perfectly Legal: the covert campaign to rig our tax system to benefit the rich - and cheat everyone else". I'll wrap up by listing a number of topics that I haven't written about at length. I'll be skipping the details of these topics. Rest assured that if you want the details, they're in the book.
Probably you've heard that US CEOs are overpaid. You may or may not agree. It's pretty clear that they're paid proportionally more than CEOs in other countries. They're also not delivering results that justify their high salaries. Worse, their compensation is often concealed from the public and stockholders by a variety of accounting tricks. For example, the cost to executives of using corporate jets for personal use is far less than the real cost. The reason? The tax code has been set up that way. Who pays the costs the executive don't? Shareholders and US taxpayers. What the executive don't pay is deducted from the corporate tax return (and thus not payed to shareholders and isn't taxed). Taxes not paid by companies are paid by the rest of us.
Remember the estate tax? That's what the Republicans like to call the "death tax". They've pretended their opposition to it is all about saving family farms and small businesses. A well known Iowa State University economist has searched for three decades for a farm lost to the estate tax. He hasn't found one. President Bush has claimed to have talked with people whom the "death tax" had forced to sell their farms. The White House has not responded to requests for the names of those people. Do such people really exist? If they did, why wouldn't they show up in a campaign ad?
US companies are turning themselves into phony internationals by establishing offshore subsidiaries in Bermuda and other Caribean locations. When president Bush was a director of Harken Energy, it set up a Cayman Islands subsidiary to avoid taxes. As things worked out, no taxes were avoided because there was no old found and thus no profits. The intent of such arrangements is to avoid taxes. The book details how Stanley Works was shamed into remaining in this country. It wasn't just a matter of public pressure though. There was a blatantly rigged vote at the company's annual meeting and the Connecticut attorney general had to get involved. The offshore scam failed in this case, but it's been done successfully many times.
Even genuine multinationals do sneaky things to avoid taxation. Since companies get a one to one deduction for foreign taxes, paying taxes in a foreign county, such as Indonesia, where there are stealth tax kickbacks and other hidden benefits can be advantageous. Companies also move intellectual property offshore at ridiculously low prices to avoid taxation.
What we need, it appears, is more enforcement. The book also details how the IRS has been hobbled in its ability to pursue both corporate and individual tax cheats.
In conclusion, one major lesson from Perfectly Legal is that details matter. No law or regulation will notify you outright that you're the one about to be robbed. Ask questions, check the answers, and don't trust any one organization to hold your interests above their own.
Want to read more about what I've said about Perfectly Legal? Here's a link to the previous entry:
http://www.livejournal.com/~petardier/38756.html
Probably you've heard that US CEOs are overpaid. You may or may not agree. It's pretty clear that they're paid proportionally more than CEOs in other countries. They're also not delivering results that justify their high salaries. Worse, their compensation is often concealed from the public and stockholders by a variety of accounting tricks. For example, the cost to executives of using corporate jets for personal use is far less than the real cost. The reason? The tax code has been set up that way. Who pays the costs the executive don't? Shareholders and US taxpayers. What the executive don't pay is deducted from the corporate tax return (and thus not payed to shareholders and isn't taxed). Taxes not paid by companies are paid by the rest of us.
Remember the estate tax? That's what the Republicans like to call the "death tax". They've pretended their opposition to it is all about saving family farms and small businesses. A well known Iowa State University economist has searched for three decades for a farm lost to the estate tax. He hasn't found one. President Bush has claimed to have talked with people whom the "death tax" had forced to sell their farms. The White House has not responded to requests for the names of those people. Do such people really exist? If they did, why wouldn't they show up in a campaign ad?
US companies are turning themselves into phony internationals by establishing offshore subsidiaries in Bermuda and other Caribean locations. When president Bush was a director of Harken Energy, it set up a Cayman Islands subsidiary to avoid taxes. As things worked out, no taxes were avoided because there was no old found and thus no profits. The intent of such arrangements is to avoid taxes. The book details how Stanley Works was shamed into remaining in this country. It wasn't just a matter of public pressure though. There was a blatantly rigged vote at the company's annual meeting and the Connecticut attorney general had to get involved. The offshore scam failed in this case, but it's been done successfully many times.
Even genuine multinationals do sneaky things to avoid taxation. Since companies get a one to one deduction for foreign taxes, paying taxes in a foreign county, such as Indonesia, where there are stealth tax kickbacks and other hidden benefits can be advantageous. Companies also move intellectual property offshore at ridiculously low prices to avoid taxation.
What we need, it appears, is more enforcement. The book also details how the IRS has been hobbled in its ability to pursue both corporate and individual tax cheats.
In conclusion, one major lesson from Perfectly Legal is that details matter. No law or regulation will notify you outright that you're the one about to be robbed. Ask questions, check the answers, and don't trust any one organization to hold your interests above their own.
Want to read more about what I've said about Perfectly Legal? Here's a link to the previous entry:
http://www.livejournal.com/~petardier/38756.html
