Taxes: Fair or not fair?

Complaints about whether something is fair or not usually doesn't hold much interest here. Fairness isn't in the constitution. Nothing has to be fair. Life isn't always fair. Politics isn't fair. Traffic tickets aren't always fair. Bullies aren't usually fair. That's just the way it is.

What really counts is what is legal and covered by a law that is enforced. Laws that are not enforced don't count for much. Laws that don't exist are irrelevant. Ethics is largely an empty concept in politics and many (but not all) businesses. What counts is what is legal, what isn't, how laws are passed, which laws are enforced and which aren't. That is what guides behavior for many, probably most, people with money and influence. For them, fairness is mostly irrelevant.

Iraq

Before the December 18, 2011 withdrawal

Occasional exceptions

But on occasion, something so amazingly unfair comes to light that it raises even Calmoderate's left eyebrow just a tiny bit. Often, the brief, subtle eyebrow quiver comes from amazing stories about U.S. tax laws. Lots of tax laws are ludicrous from an economic/social point of view and/or not enforced. Of course, there is a darn good reason for that. Enough people with enough money and power want it that way.

Pete Dominick (Sirius POTUS politics channel 124) aired an interview today with David Cay Johnston. Johnston is an investigative tax reporter with an amazing track record of revealing how profoundly corrupt U.S. tax law and congress really are. This fun little chat was no exception.

The tax cheat(s)

This tax cheat was a long-established practice that congress legalized years ago. Of course that made it perfectly legal tax avoidance, not tax evasion. Guess that makes it just an example of something that's not fair. Nonetheless, its a cheat and a darn good one. Johnston pointed out that the ~ 500 pages of tax return that Mitt Romney released showed that Romney used a loophole that allows executives (not others) of companies like Bain Capital to pass on a tax exempt cash flow to his kids.

Iraq - calibrating tank guns

May 2011

The fiction that corrupt congress passed and some inept president signed (presumably Clinton or Reagan) was that the owner of stock that pays dividends can be passed to others, e.g., the owner's kids or maybe his/her vindictive extramarital affair partner, the dividends but not the stock itself. According to Johnston*, Romney passed future dividends (not title to the stock itself) worth about $100 million as "carried interest" valued at $0 for gift tax purposes when the trust was set up. That zero value incurred zero taxes. 

* Johnston now works for Reuters and is someone trustworthy on tax issues.

Another issue Johnston mentioned in the Dominick interview was that Romney's company, Bain Capital, may have legally established "pass through" LLCs in its dealings with failing companies to avoid massive amounts of taxes in its operations. That may be unfair but not illegal. As pointed out here before, average Americans really don't have a good idea of how things work. I do not know the cost-benefit of what went on. More information is needed. Based on these facts, a fair and balanced guess would suggest that American taxpayers have been ripped off yet again. The benefit side of the balance sheet is really needed here to blow away the dense smoke that obscures the reality.

Of course, conservatives will defend it all. Liberals will condemn it. Good for them, but they are partisan spinners with no credibility. Getting at the truth of what really went on and what the cost-benefit analysis is will take some time. The usually feeble press is slow to get at things that offend powerful interests and advertisers. Maybe they can never get the job done.

Tan-Tan Morocco - M1A1 Abrams

U.S. marines do target practice 

with the Moroccan Air Force- May 2011

What wealthy special interests have paid for and bought from a failed, corrupt congress is something average Americans are going to pay for. In spades, for decades. Our standard of living is going to fall and there is nothing either political party has any idea of how to stop. They are co-opted and clueless, just like the mainstream press. If this view of reality, i..e, a corrupt, incompetent congress and press, is basically right, we are hosed. A really good economic recovery is about the only thing that can save us now. Congress can't and won't.