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Today would have been the 95th birthday of Milton Friedman. |
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Today would have been the 95th birthday of Milton Friedman. |
In Tax Law yesterday, we discussed tax shelters, and how law firms have been coming up with complicated schemes to help their clients avoid paying income tax by engaging in sham transactions that move money around on paper and take advantage of ambiguities in the tax code. We watched a 60 Minutes piece and part of a Frontline special, and the professor pointed us to the transcript of Senator Grassley's October 2003 hearings on tax shelters if we wanted more. I pulled the transcript up on Lexis; this does not help give tax lawyers a very good name. Interesting stuff I just thought I'd share. From a lawyer and tax specialist at KPMG:
Any purported business purpose or economic substance is just a facade. It's economic substance that's engineered in by the tax shelter promoters, not the financial advisers...The tax shelter promoters were pretty brazen about this stuff. Some of the quotes that I included in my statement: "It's like stealing candy from a baby," "You'll never pay tax again," "Our clients do not pay federal income tax," "Paying federal income tax is optional" -- these were comments that promoters made.
Don't we all try to avoid taxes as much as possible? At bottom, most Americans behave as though taxes are some sort of illegitimate taking of their wealth, and seldom fail to note every exemption and deduction they can get. Of course, there is a legal difference between keeping money that the law dictates should go to the government and keeping money that the law permits one to keep, but I'm not sure there's an ethical one.
Posted by: PG at March 20, 2004 04:07 PMTwo words: flat tax. That, or no other tax except for a national sales tax on everything. The 4th branch is out of control. Then again, all of the tax lawyers would be unemployed. Serves 'em right, they should have studied Securities Law. :p
Posted by: Brian at March 20, 2004 04:18 PMIf I were back teaching a tax course in a graduate tax program, on the subject of tax shelters I would recommend that the students read "Perfectly Legal" by NYTimes business writer David Cay Johnston published earlier this year. First the CPAs and then the tax lawyers started stretching the Code to the breaking point, picking up huge fees and keeping their fingers crossed that the IRS tax lottery would not expose their gullible and greeding wealthy clients and the questionable shelters they were sold by these tax professionals.
Posted by: Shag from Brookline at March 21, 2004 02:08 PM