Category: Politics

Our Tax Dollars at Work: Congress’s $3B TV Subsidy!

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Jennifer Kerr:

Lawmakers want to spend $3 billion to make sure millions of Americans won’t wake up to blank TV screens when the country makes the switch to all-digital broadcasts.

The subsidy was approved Thursday by the Senate Commerce Committee as part of legislation that would set April 7, 2009, as the firm date for television broadcasters to end their traditional analog transmissions and send their broadcasts via digital signals.

Meanwhile, we lag behind the world in deploying the future, broadband internet.

T.E. Lawrence’s Middle East Vision

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Deborah Amos:

One of the most popular books among American military officers serving in Iraq is Seven Pillars of Wisdom — the accounts of T. E. Lawrence, the British colonel who rallied Arab tribal leaders during World War I. Lawrence wrote about unconventional warfare and the people of the region.

A new exhibition at London’s Imperial War Museum features a long-lost map of the Middle East drafted by Lawrence and presented to the British cabinet in 1918. It provides an alternative to present-day borders in the region, taking into account local Arab sensibilities rather than the European colonial considerations that were dominant at the time.

Fascinating stuff, particularly his map. More photos later.

KPMG Tax Shelters: A Very Strange Indictment

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Robert Weisberg and David Mills:

The recent indictment of some KPMG partners makes for very interesting reading. In the months leading up to it (and the now-rumored indictment of other tax advisors on similar grounds), numerous news stories suggested the KPMG accountants had somehow knowingly participated in tax fraud by creating fake losses for wealthy clients. Whether or not this proves true, the indictment makes no such allegation. While the accountants and their clients may have done some bad things, the notion that their behavior is criminal, and even sufficiently criminal to threaten the very existence of this major firm and its thousands of jobs, casts doubt on the fairness and judgment with which the federal prosecutors have exercised their discretion.

Why did they do so in this case? Probably for the simple reason that they are — quite properly — offended by the proliferation of newfangled and economically questionable tax shelters, yet at the same time exasperated that Congress shows no interest in legislating these shelters out of existence or enacting a clear “business purpose” requirement, in spite of repeated requests from the Internal Revenue Service. The prosecutors seem to be venting their frustration over this failure to act by fashioning felony charges out of ethereal legal material.

Northern Opportunities

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Fascinating article on plans to open polar shipping routes. Reminds me of 15th century opportunism:

With major companies and nations large and small adopting similar logic, the Arctic is undergoing nothing less than a great rush for virgin territory and natural resources worth hundreds of billions of dollars. Even before the polar ice began shrinking more each summer, countries were pushing into the frigid Barents Sea, lured by undersea oil and gas fields and emboldened by advances in technology. But now, as thinning ice stands to simplify construction of drilling rigs, exploration is likely to move even farther north.

Wading Toward Home

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Michael Lewis (with his better half, Tabitha Soren riding shotgun taking pictures) visits post flood New Orleans:

Immediately he had a problem: a small generator that powered one tiny window air-conditioning unit. It cooled just one small room, his office. But the thing made such a racket that, as he put it, “they could have busted down the front door and be storming inside and I wouldn’t have heard them. There could have been 20 natives outside screaming, ‘I’m gonna burn your house down,’ and I’d a never heard it.” Fearing he might nod off and be taken in his sleep, he jammed a rack filled with insurance-industry magazines against the door. (Haywood sells life insurance.) In his little office, he sat all night – as far as he knew, the last white person left in New Orleans. He tried to sleep, he said, but “I kept dreaming all night long someone was coming through the door.” He didn’t leave his air-conditioned office until first light, when he crept out and squinted through his mail slot. In that moment, he was what Uptown New Orleans had become, even before the storm: a white man, alone, peering out through a slot in search of what might kill him. All he needed was the answer.

Konkel on Madison’s Open Government

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Brenda Konkel:

When you combine all of the above with other disturbing trends I’m seeing in City Hall of removing or threatening to remove people from committees if they don’t vote how the Mayor wants them to or even worse, the Mayor recently, in his own words, “holding a gun” to the TPC to get them to vote to increase the bus fares, one begins to wonder about how open and transparent our government is and if the public opinion matters.

Our Tax System’s “Wonderland”

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The Wall Street Journal:

Contrary to what has been reported in the media, however, the IRS does not “ban” tax shelters. Whether a shelter qualifies as a tax deduction is, like any other point of law, adjudicated in court. But BLIPS, FLIP, OPIS and the other tax shelters in this case have never been brought before a judge, so their legality and legitimacy has never been settled as a point of law.
Never. The way tax law has usually developed in this country is that the IRS issues its point of view on a shelter, putting taxpayers who use it on notice. If the IRS then takes the taxpayer to court over the shelter, he has the chance to respond before a judge, who makes a ruling and precedents are thus established. In this case, the IRS has called in the prosecutors first.
This in itself is striking. Despite some recent legal setbacks, the IRS has an excellent track record of obtaining favorable rulings on tax shelters it dislikes. Yet no taxpayer has been brought to court over these shelters, and no judge has ruled on whether they “work,” in the jargon of the tax-shelter business. In America, last we checked, the accused are innocent until proven guilty. That gives this KPMG trial an Alice-in-Wonderland quality; the accused are on trial for promoting a fraudulent tax shelter that has never been proved to be fraudulent in the first place.
This is not the first time the Justice Department has taken this route, and recent history suggests it may have a tough road ahead. Last November, Justice froze $500 million in assets at Xelan, a charitable trust set up for doctors in California, alleging that the trust was a vehicle for tax fraud. Six weeks later, the Federal Court for the Southern District of California threw out the case, noting, among other shortcomings, that the prosecutors could not show that any court had ever ruled that Xelan’s activities were illegal under the tax code.