The Politics of Tax Policy

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David Cay Johnston writes today in the New York Times that a federal grand jury in Manhattan is investigating the sale of tax shelters by KPMG, the big accounting firm, to corporations and wealthy individuals who used them to escape at least $1.4 billion in federal taxes.
I sent this email to letters@nytimes.com today:
Good Morning:
I am writing in response to your periodic coverage of “abusive” tax shelters.
http://www.nytimes.com/2004/02/20/business/20kpmg.html
I believe articles such as this would better serve your readers if they included references to the mess that is the US Tax Code (David Cay Johnston’s book includes many useful references). The code is ripe for all sorts of strategies and tactics, many that I’m sure remain to be discovered and exploited.
One of the worst examples, I believe, is the deductibility of vehicles over 6000lbs – which has lead many independent and small business owners who formerly drove sedans to purchase very large, gas guzzling vehicles, simply for tax reasons. What has this policy cost the treasury?
This Edmunds article mentions $17billion over 10 years.
How about ethanol?
Yet another example:
Prior to a 1986 Tax Law change, real estate partnerships (among other examples) were created for the purpose of generating tax losses. Partnerships were created for the sole purpose of selling tax losses.
I find the political grandstanding on this issue absurd. Does Senator Levin disapprove of the massive SUV tax subsidies?
Why has this issue been attractive to some politicians, vs other tax matters? Is there another agenda? Who benefits if the accounting firms are largely taken out of the tax shelter game? Do law firms and investment banks continue to do their deals?
Best wishes –
Jim Zellmer
You can watch, and view transcripts of the Senate Committee on Governmental Affairs November, 2003 hearings on this matter here [Day 1 | Day 2]

Open Records & Email

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An assistant state attorney general advised public officials Wednesday not to use e-mails to communicate back and forth with their fellow members on local government bodies because they could be violating Wisconsin’s open meetings law.
The use of e-mail is “a thorny issue,” Assistant Attorney General Bruce Olsen told an audience of about 100 local government and school board officials, law enforcement officers, attorneys and journalists at a seminar organized by the state Department of Justice.
“Sometimes it looks like a letter and sometimes it looks like a conversation,” Olsen said of e-mail correspondence. AMY RINARD – Journal-Sentinel

AFSCME TV Ad

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The Wisconsin AFSCME chapter ran TV ads during tonight’s UW-Illinois Men’s Basketball game (The Badgers lost in Champaign).
Rather than spending money on TV (expensive and fewer viewers every day), why don’t they tell their story online via weblog(s), email lists and search engine placements?
UPDATE: Toyota announced an exclusive auto sponsorship deal with Ebay. There are many marketing/pr and community opportunities on the internet.

Cooks Illustrated

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In 1979, Christopher Kimball was a gangly 28-year-old getting ready to launch a food magazine out of the garage of his Weston, Conn., home. He didn’t have much experience at publishing; he didn’t have much training as a cook. What he did have was $110,000 raised from investors, a stubborn dedication to home cooking and a shrewd business sense that his ideas would eventually pay off.
Twenty five years later, they have. Kimball, who at 53 is still gangly and stubborn, heads up a publishing empire that racked up $25 million in sales last year, thanks to its flagship, advertising-free, magazine Cook’s Illustrated, a bimonthly that has turned obsessive recipe testing into a gold mine. In the past five years, the magazine has expanded its success with a spinoff public television show, “America’s Test Kitchen,” plus two subscription Web sites (cooksillustrated.com and americastestkitchen.com), and a steady flow of cookbooks. Washington Post