I'm not highlighting today because YOU NEED to READ EACH and EVERY WORD of THIS ROBBERY!!!!
"Bailouts spur calls to end tax dodges; At the same time some massive companies are relying on taxpayers for help, they have been finding ways to avoid paying taxes." by Farah Stockman, Globe Staff | October 21, 2008
WASHINGTON - Some of the financial giants that are turning to US taxpayers for unprecedented assistance have used disputed practices over the years to avoid the payment of billions of dollars in taxes for themselves and their clients, according to tax specialists, court records, and a Senate investigation committee.
American International Group, the insurance giant the US Treasury rescued last month with a cash lifeline that could reach $123 billion, promoted an abusive tax shelter that, when used by AIG and other companies, resulted in an initial loss of at least $3.7 billion in federal tax revenues, according to the Internal Revenue Service.
Bear Stearns Cos., a recipient of $35 billion worth of taxpayer backing this spring, sold a tax-avoidance plan to corporate clients involving real estate trusts that would have resulted in tens of billions in lost tax revenue had the IRS not discovered it and shut it down in 1997. And the biggest client to sign up for it was Freddie Mac, the mortgage giant taken over by the government last month.
"I think it is ironic that they need to be bailed out by the very same taxes that they didn't pay," said Reuven S. Avi-Yonah, director of the international tax program at the University of Michigan Law School.
Many tax specialists argue that large corporations should be expected to devise new ways to avoid taxes, just as the IRS is expected to find new ways to close tax loopholes. But in this new climate of economic crisis, as teetering firms rely on billion-dollar government lifelines, some members of Congress argue that the government should use its new leverage to get the companies to promise to give up some of their tax-avoidance practices.
"The public can't accept, and the country can't afford, financial institutions that pocket taxpayer dollars while peddling tax dodges," said Senator Carl Levin, a Michigan Democrat who chairs a Senate committee that investigates questionable tax-avoidance practices.
Nor can it tolerate politicians who advance that very agenda (provide the gasoline) who then show up AFTER the FACT AGAIN (arriving as the fireman, as it were).
Last month, Levin's committee released a 77-page report that accused top Wall Street firms of helping offshore clients to avoid paying millions in taxes on US stock dividends using a series of complex offshore equity transactions.
One such product enables a foreign investor, often an offshore hedge fund, to avoid taxes by "loaning" its stock to another foreign entity. When the stock pays a dividend, the foreign entity that "borrowed" the stock will pay the investor a "substitute dividend," which they claim is not subject to US tax.
The list of companies that sold these financial products reads like a Who's Who of Wall Street firms that are eligible to seek assistance through the new bailout package, which gives the Treasury wide latitude to buy the troubled assets of financial firms.
Merrill Lynch, which is selling itself to Bank of America, estimated that its stock loan program resulted in a loss to the US treasury of between $20 million and $50 million a year during the two years that it operated, according to the committee report.
Citigroup engaged in similar transactions, but later voluntarily paid the IRS $24 million in back taxes for those trades, according to the report.
The Treasury Department plans to invest $25 billion each in Citigroup and Bank of America. A spokesman for Citigroup declined to comment.
Lehman Brothers Holdings Inc., which collapsed last month, estimated its clients avoided paying as much as $115 million in dividend taxes in 2004 alone, using similar offshore financial products, the report said.
Mark Herr, a spokesman for Merrill Lynch, said, "We believe we acted in good faith when we advised our clients and believe we acted appropriately under existing tax law." Lehman could not be reached for comment.
You see? The LOOTERS are only acting in GOOD FAITH!! You know, like the lies about Iraq, Muslims, this looting job, etc, etc, etc. All done in GOOD FAITH!!!
Levin's committee estimates the total loss to the US treasury from all offshore tax-avoidance plans at $100 billion a year. Levin said those who seek the US government's help should end the equity swap transactions.
"Financial firms planning to ask Uncle Sam to buy their troubled assets and dig them out of a hole need to stop helping offshore clients stiff Uncle Sam on the very taxes needed to pay for the $700 billion rescue plan," he said.
Levin voted in favor of the bailout package, despite the fact it did not include a measure to curb equity swaps. A congressional aide said it was not possible to work the measure into the bill.
Oh, Levin voted IN FAVOR of the BAILOUT, huh? AmeriKa, I say to you today, your LAST CHANCE is to DITCH EVERY SINGLE INCUMBENT (including ones you like such as Paul and Kucinich). If they DON'T GET the MESSAGE, then OFF with their HEADS!!!!!!!!!
Some observers of Wall Street say the government should not balk at helping companies that have sought to avoid taxes, because government assistance is aimed at rescuing the economy itself, and because companies have a duty to their shareholders to cut costs.
"Every single company does their very best to avoid paying taxes," said David Schiff, an independent insurance analyst who writes Schiff's Insurance Observer. "People are always going to be a step ahead of the government."
The guy is sating the obvious truth: GOVERNMENT WORKS for BANKS and CORPORATIONS, not you, American people!!!!!!
But others say the culture of aggressive tax avoidance has grown too rampant, and that now is a perfect time to cut it back.
"When this tax-avoidance culture started in the early 1990s, it was new," said Avi-Yonah. Prior to those years, he said, "most big American corporations perceived tax as a [necessary] cost rather than a way of making a profit."
As globalization opened up the world to more competition - and to the possibility of operating in no-tax jurisdictions - companies began to develop more aggressive ways to save on taxes.
And THE SAME GUYS are NOW in CHARGE of "FIXING IT!" How's that butt feeling, 'murka, and what is that smelly substance your face is lathered with? Smells like shi.....
Between 1997 and 1999, corporations reported paying an average tax rate of 34 percent - just below the 35 percent corporate income tax rate, according to a study by Martin Sullivan, an economist with Tax Analysts, a Virginia-based nonprofit publisher of tax information. But from 2004 to 2006, corporations paid taxes at a rate of 30 percent, he said.
In recent years, a long list of firms have been in the headlines for aggressive tax avoidance.
In 1997, Bear Stearns made news for pioneering so-called fast pay preferred-stock deals, which created real estate investment trusts to give corporate borrowers tax advantages. Freddie Mac invested $4 billion in such a deal with Bear Stearns before the IRS shut down the loophole, saying it posed significant losses for the US Treasury.
Calls to the executive office of JPMorgan Chase, which purchased Bear Stearns after the Treasury provided $35 billion in loan guarantees, were not returned.
Sharon McHale, a spokeswoman for Freddie Mac, declined to comment, but noted the company is now under different management.
In 2007, the US Court of Federal Claims ruled against two brothers who purchased an abusive tax shelter known as "Son of Boss" from AIG in 1999. The shelter, which was similar to a previously outlawed shelter called Bond and Option Sales Strategy, or BOSS, earned AIG $1 million in fees for that deal alone, and helped the brothers create an artificial loss of $40 million that improperly lowered their taxes.
AIG was not a defendant, but documents in the trial describe how the insurance giant marketed and sold the scheme, which became one of the most widely used abusive tax shelters. IRS officials have collected at least $3.7 billion in back taxes paid by 1,200 individuals who used Son of Boss, but hundreds of others have not paid.
A spokesman for AIG declined to comment.
Although experts say the rescue package passed by Congress does little to stop firms from sidestepping taxes, many also believe the coming months will be filled with talk of tightening tax laws, as the Treasury runs low and the government racks up debt.
Oh, the "RESCUE" package did NOTHING to LIMIT ANYTHING and did not do a DAMN THING for any MORTGAGE-BASED PROBLEM (the ostensible idea behind needing this looting law)?!!!!
See this OUTRAGE and THIS OUTRAGE, and then read this: America Never Had a Chance
HELLOOOOOOO, AmeriKa, are you THERE?!!!!!!!
"We're talking next year potentially about a deficit approaching one trillion dollars," Sullivan said. "We are going to be very short on cash in January, and the easiest place to look is loopholes. Every loophole will be on the table." --more--"
Why would they want to close loopholes they created? Duh?
