More on the Tax System Mess

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Carrie Johnson writes a well done article on a variety of 1990’s tax shelter schemes that reduced or eliminated capital gains taxes. The interesting thing, in all of this, is the transparency these activites give to the mess that is our tax system. Johnson takes a look at many points of view, not just the IRS’s:

Many of the KPMG partners denied they had engaged in a conspiracy to break the law, arguing instead that they had exploited long-standing loopholes in the arcane tax code. Lawyers and tax experts analyze shelters to determine whether they will pass IRS review on a “more likely than not” basis — a standard that amounts to a slightly more than 50 percent chance.
There are ongoing questions about whether the shelters themselves were lawful. A civil case filed in San Francisco by an investment firm that devised one of the structures is challenging the IRS interpretation that the tax shelter lacks economic justification.
Separately, individual taxpayers who used some of the structures have been able to settle their claims with the IRS through an amnesty program.
Moreover, many of the shelters were vetted by lawyers and other tax advisers, giving former KPMG officials another possible defense if they can show they relied on those professional experts and thus lacked the intent to break the law.

(more…)

Peter Drucker

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On Point:

5-year-old Peter Drucker is one of the world’s most respected thinkers. For six decades, he’s helped shape many of today’s great corporations and made the study of management theory a respected discipline. As a journalist, teacher, consultant, and author of more than 35 books, Drucker’s expertise reaches far beyond the confines of the Fortune 500.

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DHS: RFID Cards for US Visitors

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Bruce Schneier:

According to the DHS:

The technology will be tested at a simulated port this spring. By July 31, 2005, the testing will begin at the ports of Nogales East and Nogales West in Arizona; Alexandria Bay in New York; and, Pacific Highway and Peace Arch in Washington. The testing or “proof of concept” phase is expected to continue through the spring of 2006.

I know nothing about the details of this program or about the security of the cards. Even so, the long-term implications of this kind of thing are very chilling.

Pocan Bill Proposes Paper Trail for Electronic Voting

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Anita Weier:

Legislators from both political parties have authored a bill that would require that electronic voting machines in Wisconsin produce a paper ballot that could be reviewed by the voter and that would be kept in case a recount is needed.
Rep. Mark Pocan, D-Madison, Rep. Steve Freese, R-Dodgeville, and Sen. Jeff Plale, D-South Milwaukee, are circulating the bill among fellow legislators in the hope of obtaining co-sponsors.

Madison City Budget: Lisa Does the Math

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Lisa S takes a look at the local Police Department’s budget communications vis a vis a 3% reduction (is this an actual reducation or a reducation in the increase?):

Personnel salaries and related expenses make up about 89% of the police department’s operating budget. The remaining 11% of the operating budget consists of minor objects and capital assets. Apparently, Chief Wray was either unable or unwilling to find any significant cuts within this other 11% of the budget.

Another interesting item in the 2005 budget is $1.6 million worth of overtime pay. When asked about the possibility of cutting overtime, one alderperson explained that this expense is hard to change because it is part of the negotiated union contracts. Chief Wray shares this sentiment

Atkins Goes Belly-Up

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Michael Noer:

Atkins Nutritionals, the New York company founded in 1989 by the late Dr. Robert Atkins to cash in on his low-carb diet, filed for Chapter 11 bankruptcy protection yesterday. The company cited weakening demand for its products. Ironically, the Atkins diet–affectionately known by some as the “cheeseburger-hold-the-bun” diet–had been blamed in recent years for earnings shortfalls in companies ranging from Krispy Kreme Doughnuts (nyse: KKD – news – people ) to Kraft Foods (nyse: KFT – news – people ) to Interstate Bakeries (the maker of Wonder Bread and Twinkies).

A New Kind of Middleman

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Roark Johnson:

But Noone’s outlook couldn’t be more global. He spends a typical weekend watching Chinese-language movies and listening to Chinese-language tapes. At least once a week he makes sure to eat with chopsticks. “You’ve got to show people you’re interested in their culture,” he says.

Noone is interested, all right. The 54-year-old entrepreneur is founder and CEO of Capacitor Industries, which imports low-cost electronic components from China and sells them to motor makers and other manufacturers in the U.S. and, increasingly, abroad. His stock-in-trade is capacitors: tiny devices that store charges, maintain electrical currents, keep motors running, and protect computers and communications equipment from surges. Every motor manufacturer needs a steady supply of them, which has helped send Noone’s annual sales to $5 million.

Privacy: Hacking the Hotel TV

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Joris Evers:

What’s more, by connecting his laptop to certain modern hotel TV systems, Laurie says he can spy on other guests. He can’t look into their rooms (yet), but depending on the system he can see what they are watching on their TV, look at their guest folios, change the minibar bill and follow along as they browse the Internet on the hotel television set.

To tease his fellow guests, he can also check them out of their room and set early wake-up calls via the TV.

Toyota’s Hybrid Hype

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Jeff Sabatini (finally) takes a look at the real mileage performance of Toyota’s latest hybrid: The $50K RX400h:

Certainly, it is the Prius’s above-average fuel economy that Toyota has to thank for its image as a green car company. Environmental advocates do not proclaim the righteousness of all things Toyota based on the 958,888 light trucks and S.U.V.’s that it sold in the United States last year, fully 47 percent of its total sales. By comparison, only 53,991 Priuses were sold in 2004, though the company has stated that it plans to double that number this year.
It is understandable that Toyota would like to transfer the Prius’s hybrid chic and green patina to other products. To this end, a hybrid version of the Toyota Highlander S.U.V. was also introduced this year, and the automaker has announced plans to add both a hybrid version of its Camry, the nation’s best-selling sedan, and a hybrid Lexus GS sport sedan next year. Whether these vehicles will be gas misers like the Prius or thirstier performance-oriented hybrids like the RX 400h remains to be seen.
My first seat time in the Lexus hybrid came over a weekend in which I drove the 200 miles from Chicago to Grand Rapids, Mich. I spent a lot of time on the freeway, but I also traveled some back roads and slogged through a couple of stop-and-go city stints. By the time I returned to Chicago, I had put 531 miles on the odometer and calculated my fuel economy at 20.9 m.p.g.