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Republican Party is very accommodating to rich tax avoiders

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By ROBYN E. BLUMNER

© St. Petersburg Times
published December 1, 2002


When Leona Helmsley famously said "only the little people pay taxes," she wasn't kidding. The snooty remark may have helped bring down the hotel queen in 1989 but the attitude still pervades corporate boardrooms and country clubs. Taxes are among the top things rich people try to avoid -- along with paternity suits and having it publicly disclosed that their executive compensation includes a lifetime supply of peeled grapes.

Leagues of high-priced lawyers, accountants, and lobbyists spend every working moment thinking of ways the rich can avoid their responsibilities to fund our government. Those of us who live off a paycheck don't have much opportunity to move money around in order to exploit tax benefits -- into trusts or "family farms" or offshore tax havens -- we're too busy moving it to our mortgage bank, the supermarket and the doctor's office. But the rich can, and do, and Washington has rarely been friendlier to their cause.

The 2002 election was a juicy delight to two kinds of people: those who want to shift more of the tax burden from the investor class to wage earners; and those who want to further starve the Internal Revenue Service of the resources needed to catch tax cheats. It is no secret that Republican leaders serve those who seek an end taxes on capital gains, corporate profits and investment income. The party's motto should be: The tax man cometh, but only for those subject to withholding.

President Bush has made clear that one of his priorities next year will be to work with the 108th Congress to make his mammoth tax cuts permanent, including the elimination of the estate tax.

Deficit shmeficit.

Do you make $350,000 or more a year? No? Then don't bother counting your savings from the tax cuts, they're not for you. According to Citizens for Tax Justice, when the Bush tax cuts are fully effective, 52 percent of the cuts will go to this country's richest 1 percent. And even if by some miracle of responsible governance they are not made permanent after 10 years, the total amount of tax cuts already going to the richest 1 percent will total $477-billion -- each taxpayer in that rarified category receiving an average of $342,000 worth of cuts.

With one hand the administration will release the rich from their tax obligations, with the other it will choke off enforcement, allowing hidden funds to remain so.

As Charles Rossotti stepped down as the respected IRS commissioner last month, he warned that the niggardly budget for compliance has made complex cheating schemes relatively risk-free. According to the IRS, as many as 2-million Americans use offshore tax havens to evade taxes, but the agency doesn't have the resources to go after them. We collect tens of dollars for every dollar invested in tax compliance, but the administration has shown little interest in Rossotti's plea -- beyond ordering him not to testify before Congress on his concerns.

And these are just individual taxpayers. You want to see creative, just take a gander at the tax shirking techniques of American corporations. Enron was king on this score. The now-bankrupt energy trading company established 900 subsidiaries overseas to avoid taxes. Between 1996 and 2000 it paid taxes only one year and qualified for hundreds of millions of dollars in refunds from the government. The company's achievement was mirrored by at least 24 of the Fortune 500 companies that paid no taxes in 1998.

During the Clinton administration, the loopholes allowing this type of finagling were under assault, but since Bush took office, not so much.

We should also thank the Republicans in the House for protecting the interests of all those turncoat companies that have relocated to Bermuda or Barbados with little more than a post office box, to avoid U.S. taxes. The maneuver costs our treasury $70-billion annually. For all the grumbling this summer from both sides of the aisle over how unpatriotic these expatriate firms are to abandon their responsibilities as we fight against terrorism, Republicans slipped a provision into the Homeland Security Act that gives deserter companies the right to compete for government contracts in the new department.

The lesson of this inexplicable act?

In politics, the term "loyalty" means to the party through campaign contributions, not to our nation.

Keep this in mind as Treasury Secretary Paul O'Neill investigates an overhaul of our nation's tax code, as he has already started to do. Every possible scenario that would eliminate our progressive income tax structure -- from a flat-tax to a value-added sales tax -- would stick it to the little guy further.

Helmsley knew what she was talking about. Her words are a roadmap for the government we just elected.

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