Saturday, July 26, 2008

Perfectly Legal-a book report

Perfectly Legal
By David Cay Johnston

This is the first book written by Mr. Johnston. His second entitled “Free Lunch” I read first. It was so powerful I just had to read this one as well. To tell you the truth, I am almost sorry I did. As much as the other book depressed me this one is even worse as far as exposing the myriad of giveaways authorized by our Federal Government. Both parties are responsible. He calls them the money parties since the money Congressmen receive from the rich is the life blood they need to continue in office.
Not all of the schemes used by the rich are authorized but they might as well be since for decades now the IRS has been crippled to where they do not have the resources to do their job allowing fabulous sums of money to escape taxation. Even those unfortunate to be caught are let off with a fine instead of jail time which they deserve. I will share a few of the most outrageous stories. He tells about a man named Nick Jesson. He founded a successful business in Southern California and became wealthy. A large portion of that wealth is due to his refusal to pay income tax for his company or his employees. He cites section 861 in the tax code which he claims that salaries paid by American owned companies are not taxable. Mr. Jesson was bold enough to taunt the IRS by publishing an article in The New York Times 11/19/2000 stating what he was doing and why. He even boasted that the IRS sent him a refund of $217,000 including interest for payments he had made for the years 1997 thru 1999, the years before he stopped paying altogether. Other business men are mentioned including Dick Celata who owns Kristi Tool Co. He boasts that since inception of his company in 1979 he has never paid income tax. In spite of the public announcement up to the time of publishing this book the IRS has quietly acquiesced to this charade.
Registering a company in the Cayman Islands, Bermuda or other Caribbean Islands has made it possible for billions of taxable income to not be collected. Tax shelter schemes are too numerous to list in this review but they exist and save their clients billions in taxes not paid. Companies have found ways to use the foreign tax credit to shift funds and assets around to minimize US taxes.
There are tax loopholes that allow executives to have their pensions guaranteed while the rank and file employees have seen theirs disappear. All of this legal because of laws passed by our elected officials.
Most of us don’t even know about the earned income credit provision in the tax code. It applies to those making less than the minimum wage. For a family with two children making between $11,550 and $13,350 the maximum credit is $4,140. Certain Congressional leaders were so concerned about these poor people cheating that they insisted the IRS audit as many as possible. In 2001 there were eight times as many audits of these families as compared to those making over $100,000.
The alternative minimum tax was enacted many years ago to force the very rich to have to pay at least some tax. This was accomplished by taking away personal and other deductions. The problem for many non rich families today is that it was not indexed to inflation so as each year goes by more and more are forced into this alternate tax system. In 1995 about 414,000 paid this tax. By the year 2000 it was 1.3 million. It is estimated that by 2010 about 17 million families will pay. The problem is that it brings in so much money that Congress doesn’t want to give it back. What it means to these families is that the Bush tax cuts are not available to them in spite of the rhetoric to the contrary.
Once again Mr. Johnston has exposed the hypocrisy of Congress and by naming names exposed those deeply involved with promoting processes that deprive our government of the money needed to support it. I know many of you will say whoopee and so do I with the wasteful easy ways they throw money around but the issue here is that those of us still honest and paying our taxes should not carry the burden while others escape tax free. This is a book all elected officials should read and then take the needed steps to correct.
I always feel the need to put my two cents into any discussion on topics such as this. Filing my income tax is fairly simple as it only consists of pension, social security, interest and withdrawals from my IRA plus small amounts of the like from my seven years working in Canada. Even so I resent the lengthy process of calculating how much social security should be taxed and I can’t help noting the many deductions that other people are able to make either legally or otherwise. My point is that there is far too much written into the tax code. While I lived in Canada their form if I remember correctly consisted of four pages. Deductions were limited to yourself and family. No home mortgages or interest, furthermore thru an agreement with their Federal Government no Province tax form was required. All it consisted of was a line where your Federal tax was multiplied by a decimal number which meant that that portion of your taxes paid would be paid to the Province. Assuming that is still the case there is not much chance of cheating in Canada.
Read the book and discuss with like minded friends.

Jack B. Walters
3961 N. Hillwood Circle
Tucson, AZ 85750
(520) 722-2958
July 26, 2008

My opposition letter to a sales tax for professional baseball

Dear Mr. Quinn,
I wrote the letter below the day that your Editor wrote promoting the sales tax to provide incentive to attract or keep Major League Baseball in Tucson. My response was quick and short as is required to be published. It was not published. Seeing your colorful and attention grabbing article in today's Star convinces me that the Star will continue to push until they convince voters to approve another increase in the sales tax to provide additional give aways to professional sports.
It should be obvious by now that Tucsonians do not support professional sports to any large degree. Just review the lists of bowl games cancelled, hockey, baseball and softball teams that could not attract enough fans to survive. We do support the U of A teams and revel in their successes and cry when they lose. Lute Olson is a household name, adored until recently with the still unexplained debacle of the last season. Regardless the 15,000 seats will be filled with shouting, excited fans as we always do.
If you are a serious reporter read Free Lunch by David Cay Johnston. If you don't want to read it all then just read the chapter on professional sports and how they play one community off against another, always insisting on the taxpayers providing the funds so that they can continue their reckless ways of making huge profits while paying outlandish salaries to the players. The rush of players to the major league teams is making a mockery of college sports with low graduation rates and continual rebuilding as the players leave so quickly.
The new Yankee stadium is a clear example. They took a park used by families and gave it to Steinbrenner. The Seattle basketball team moving to Oklahoma and Glendale luring one of our teams to the Phoenix area or the fact that L.A does not have a professional football team I assume because the city has resisted their outlandish demands or moving the team from Cleveland to Baltimore. I could go on and on.
The owners have no loyalty to the city or State. The same is true for the coaches and players but of course they demand that the fans cheer them on and give them their money.
In my own little way I will continue to resist the Star's promotion of the sales tax.
Thanks for reading.
Jack B. Walters

--- On Wed, 7/2/08, Jack Walters wrote:
From: Jack Walters
Subject: Letter to the editor
To: "Arizona Daily Star"
Date: Wednesday, July 2, 2008, 11:46 AM
Your editorial 7/2/08 was just plain wrong.
Professional sports have been tapping the tax payers at an ever increasing rate for the past 40 years. Sales tax, bed tax, concessions on property tax and proceeds from sale of concessions, gifts of land, transportation roads built at no cost and on and on. They always pit one State, county or city against another, always threatening to move if they don't receive all they demand. Public officials cave in place by place only to find that the prize they seek still may move on if better offers are put forth.
The fact that the Arizona Senate did not approve new taxes may not have been due to deep thinking into this subject but rather they were distracted by the kooky gay marriage subject which seems to be more important than practical issues which effect us all.
If these fabulously rich baseball clubs want upgrades let them pay for them or move on. I for one, could care less. What I do care about is making all of us pay for the privilege of them enjoying our pleasant winter, spring climate to practice.
Jack B. Walters
3961 N. Hillwood Circle
Tucson, AZ 85750
(520) 722-2958
July 2, 2008

Wednesday, July 2, 2008

FREE LUNCH-(book review)

By David Cay Johnston
(Pulitzer Prize- Winning Reporter)

First off I need to tell you how I came to read this book. Some of you reading this letter remember my good friend and neighbor, Charlie McCarty from Des Moines. He had found out about it and asked his wife Judy to purchase it for him last year. Typical Charlie, he never opened it before his death on St. Pat’s day this year. Judy called me a month ago stating that he had wanted to give it to me so she mailed it. I started reading as I prepared for my Alaska trip to visit my daughter and her family. I read it off and on during the visit and completed reading on the flight back to Tucson.
I have been reading and writing for a number of years now as I express my concern with the way our government muddles along seemingly helpless to affect positive steps to reverse the downward slide we are in. He includes the courts as well as all branches of government, Federal or State is his condemnation. Both political parties are to blame but the lion share after reading this book to confirm my own thoughts rests with the Republican Party of today which does not resemble the party I supported most of my adult life. I like most of my compatriots just wanted government out of the way so we could put our efforts towards our objective of making a quality product at a price the public would be willing to pay. We had plenty of competition with other companies doing the same and government only seemed interested in making it more difficult than it needed to be. In those years it was America vs. the world. We supported our employees, communities and did our patriotic duty for our country. That is all gone now. The only measure of success is the bottom line. The owners do all they can to find lower cost countries and ship jobs there without a second thought about the devastation left behind as a result of their decisions. Immediately some one of you will say that the owners are responsible to the stockholders and that their actions are not only justified but to do otherwise would be a dereliction of their responsibilities particularly now with international trade and internets making place of origin less important than before when America was king.
This is where this book opened my eyes to how our government particularly starting with Reagan gave a helping hand to the process by creating incentives to assist these new directions. He asked his famous question during the debate with Carter, “Are you better off now than you were four years ago”. With an overwhelming victory he started off to reconstruct the relationship between the government of the United States and its economic system. The solution was to get government out of the way- to let business operate largely free from oversight. As I write this I can still relate to the heady feeling we had during these years. I was na├»ve enough to think only how this could improve our ability to compete. Never did I think that everything we worked so hard to achieve would disintegrate without our even knowing it was happening.

Now let’s discuss the book.

This is an astounding book written with clarity. It was thoroughly researched. He gives names, dates and all relevant data to prove his contention that the rules have been skewed in favor of the rich to the detriment of the poor. The absolute greed is beyond comprehension. I am sure that most if not all of you who take my advice to read this book will have your eyes opened. Some of the issues like home alarm systems which cause law enforcement precious resources which should be put to better and more productive uses, or overly expensive title insurance which effects all home owners, I had never considered as issues.
He states,” For a nation whose leaders frequently invoke their belief in the Bible, curious indeed is how the political rhetoric ignores the overriding duty of the New Testament to care for the poor”.
There are 26 chapters in this book. While a number of issues are repeated, by and large each chapter covers a different aspect of the blatant give away programs and how the net affect has been so negative for most Americans. Major topics are the health care system, deregulation of utilities, unfair
“free” trade with China and other countries, huge giveaways to major league sports, also to large companies like Cabela and Wal-Mart, the fact that there are now over 35,000 lobbyists in the Washington area descending on Congress daily striving to get an advantage and paying tribute for receiving those handouts. Each chapter is short and concise. You can read one and put the book down while you absorb the information. The sum total is staggering in the cumulative affect of one abuse piled upon another.
The most dangerous of all is the unregulated Hedge Fund Industry where for as little as $i they can leverage $100. The large banks have bought into loaning them money in staggering amounts. A few years ago one fund failed. The Federal Reserve under Alan Greenspan bailed them out to save the banks. A failure of larger magnitude will surely bring this house of cards tumbling down affecting all of us.
Do you still recall Enron led by Ken Lay, President Bush’s good buddy. Enron’s manipulation of energy costs nearly bankrupted California and nearby States while compiling vast wealth for the few executives at the top.
Chapter 26 “Not Since Hoover” compares incomes of Americans since 1980. While gross national product has grown dramatically the distribution is heavily slanted towards the rich and very rich. The vast majority dipped from 1980 to 2005 when adjusted for inflation while income for the super rich has soared to astronomical levels. He believes that government policies put in place has created this disproportion more than mere chance. It is plain to me that neither party has the stomach to start whittling away at these disastrous policies. In my pessimism I can only see the downward spiral continuing until that fateful day not so far in the future when the ship sinks. On that day everyone will wonder how this great Democracy could destroy itself. Reading this book will at least educate you.
Perhaps change is possible, who knows, but not unless the issues are debated and decisions made to rectify the damage already done.

Jack B. Walters
3961 N. Hillwood Circle
Tucson, AZ 85750
(520) 722-2958
July 2, 2008