How the Super Rich Avoided Taxes; Despite Making Millions

[RamboLiberal]

Source: ABC News

Four current and former partners at Ernst & Young, one of the world's largest accounting firms, were indicted Wednesday for allegedly orchestrating a scheme to create illegal tax shelters for the firm's richest clients.

The scam catered to clients who earned more than $10 million to $20 million a year, finding them ways to reduce their taxes, according to an indictment handed up in the federal court for New York's Southern District.

Ernst & Young took in more than $115.7 million in fees for setting up these shelters, charging clients between 1.25 percent and 2 percent for every dollar of tax deductions created, according to the indictment. The firm assisted more than 400 wealthy clients in reducing their taxes through such shelters.

According to ABC News' calculations, that could mean that Ernst & Young helped its clients create more than $7.56 billion in tax deductions.

One of these complicated tax shelters involved converting clients' ordinary income into capital gains.

Read more: http://abcnews.go.com/Business/IndustryInfo/story?id=3226432&page=1

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Dems need to educate Joe Public how capital gains need to be taxed!

[pitohui]

1. both the sellers and users of the fraudulent shelters need to go to jail

otherwise the users, who knew damn well what they were buying from this company, will simply switch to some other seller of fraudulent tax sellers

[gravity]

4. I agree

That's the only way these people will learn

[Mind_your_head]

8. I agree too

[RUMMYisFROSTED]

18. Throw ABC in jail,too.

Just for the hell of it.

[htuttle]

2. You.. can be a millionaire.. and never pay taxes!

You say.. "Steve.. how can I be a millionaire.. and never pay taxes?" First.. get a million dollars. Now.. you say, "Steve.. what do I say to the tax man when he comes to my door and says, 'You.. have never paid taxes'?" Two simple words. Two simple words in the English language: "I forgot!"

[paparush]

13. That's a GREAT Steve Martin routine...I tell that joke about twice a year..

[JerseygirlCT]

22. Great minds....

Should have seen this first!

[Tandalayo_Scheisskopf]

3. OMG! Those poor people!

They need an emergency tax break, stat!

[AX10]

5. The tax laws need to be changed too.

How the hell can someone be allowed to convert regular income into capital gains? :wtf:

[dragonlady]

10. Not so much the laws but the enforcement

It seems as though these tax consultants figured out ways to make a situation look like something that is taxed at a lower rate. For example, capital gains that are taxed at 15 percent, versus the highest marginal rate of 35 percent for regular income. The tax laws are extremely complicated (the 1040 instruction booklet is just the tip of the iceberg). The more complicated, the more fertile is the ground for manipulation by creative people who can bear to immerse themselves in the details. Now they've been caught at it.

[louis-t]

14. That's the illegal part!

Duh!

[papau]

17. Pass the gain to an SPE and through a few countries and back again - it's easy n/t

n/t

[pokercat999]

6. I wonder if "EL RUSH BO" the lard ass was one of their

clients. Anyone know?

[antigop]

7. I would STRONGLY recommend "Perfectly Legal" by David Cay Johnston

http://www.amazon.com/Perfectly-Legal-Campaign-Rich-CheatEverybody/dp/B000CDG8N8/ref=pd_bbs_sr_1/002-1449839-6986429?ie=UTF8&s=books&qid=1180558962&sr=1-1

[FreeMeFromInsanity]

15. Also may I suggest

A Free film on google... America Freedom To Fascism.

[SpiralHawk]

9. "Smirk, smirk, smirk." - Corrupt Cabal of republicon Cronies

"Smirk, smirk, smirk."

- A certain Connecticut Preppy C-student Cheerleader Skull & Boner Deserter, pretend Texan.

[AlCzervik]

11. hah, i did an internship there back when it was Ernst & Whinney during the

"Greed is good" and "Poverty sucks" decade, this development really doesn't surprise me at all.

[MethuenProgressive]

12. "How the Super Rich Avoided Taxes; Despite Making Millions"? They elected Republicons.

God Ble$$ America!

[elehhhhna]

16. Clue to "investors" : When the advisor makes you sign a non-disclosure agreement

BEFORE he'll EXPLAIN how the vehicle WORKS, it is FRAUDULENT. Duh.

[OneBlueSky]

19. we definitely need a progressive income tax . . .

progressive taxation worked well for many years . . . the only reason it's been nibbled away to almost nothing is the influence peddling of the super rich and mega-corps . . .

those with the money -- the BIG money -- purchase "access" by contributing to election campaigns, underwriting "fact finding" trips and other junkets, sponsoring cocktail parties (attendance mandatory), and all other manner of income generating activities to help their friends in Congress get re-elected . . . Republican, Democrat, doesn't matter . . . it's all the same to them . . .

with the access (some call it influence) they purchased, these generous donors graciously offer up their most skilled numbers crunchers and tax attorneys to help Congress draft tax laws . . . each bill includes a little something more in the way of tax reductions for the rich -- "leveling the playing field" they call it -- and they think we're stupid enough to buy it (many, in fact, are) . . .

the results, after decades of work, are lowest ever tax rates for the wealthy and for corporations -- accompanied by enough loopholes to allow them to avoid paying even these modest amounts . . . they pay nothing, or next to nothing, and guess who has to make up the difference . . .

nice racket, huh? . . . get rich, and use your wealth to stay rich -- at everyone else's expense . . .

[blueworld]

20. How many armored humvees can you buy with that kind of cash?

Was it these guys or Arthur Anderson (of Enron fame) that were selling Paris sewers as tax shelters for rich American patriots? I saw it on 60 Minutes - it had something to do with assisting foreign municipal utilities...

[Ilsa]

25. It may have been Peat Marwick Main or whatever their names

are now. I remember that. And when (some of) the shelters fell apart with the IRS, these people got screwed by the IRS and the acctg firms dodged defending thier work, etc. After that, it became apparent that all of the big accounting/tax firms were crooks, looking to boost some income off of peoples' incomes.

Most of the super-wealthy don't move me, but some of the ones getting screwed were litle guys who had a big windfall from the sale of a company they started and worked all their PMM managed to get them completely into hock again with the IRS.

[JerseygirlCT]

21. "I forgot!"

Anyone remember the Steve Martin bit?

[Blue_Tires]

23. fuckin' kicked

been saying this for years, lol...

i'm always amused at the RW arguments that the rich pay too much, and there needs to be a 'fair tax' since the rich weasel out of just about every cent they owe (and corporations are much, much worse)

[Honeycombe8]

24. Disgusting. Now why wouldn't they want to pay their taxes? Really.

I'm serious. They've apparently benefited greatly from what this country has to offer. We all have to pay our share. There have been significant tax cuts given to them in the Bush administration. Why would these mega-rich guys then go into a mode of fraud to save even MORE money. Greed.

As for capital gains, maybe I misunderstand the original comment. But capital gains ARE taxed. They're taxed at 15%, I think.