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[Thomas Beckett <thomas AT tbeckett.com>]

The New York Times magazine has an interesting article, "The Loophole 
Artist", about a tax lawyer who serves the nation's super-wealthy.  It 
contains some rather stunning assertions about the tax code.  He 
essentially verifies the stuff we suspected all along.  Anyhow, pass 
this link along to everyone you know and make them read it.  It is 
thoroughly appalling how the wealthy basically have their own 
tailor-made tax code.

http://www.nytimes.com/2003/12/21/magazine/21ENCOUNTER.html?ex=1387342800&en=21e3450ac9e31ab3&ei=5007&partner=USERLAND
(That's a permalink, btw.)

"Blattmachr's practice exists because America has two tax systems, 
separate and unequal. One is for wage earners, and most of us know 
firsthand that that system works effectively. The other is for the 
wealthy, who control much of what the I.R.S. knows about their finances 
and who in recent years have paid a shrinking share of their incomes to 
sustain the civilization that makes their riches possible. Few of us 
also know that this means that the 400 Americans who reported the 
biggest incomes in 2000 paid just 22.3 cents out of each dollar in 
federal income taxes. That is about the rate paid by a single person 
making $125,000."
. . . .
"Blattmachr's genius is in seeing the whole and these holes in the 
whole. He then sells this genius to his clients. One of his early 
insights was that it is entirely and legally possible for the superrich 
to reap unlimited stock profits without paying a cent of capital gains 
tax. The rich can do this by manipulating charitable trusts. These 
trusts are a common enough device used by generous people who own an 
asset, usually stock, that has appreciated in value. Instead of selling 
the stock, paying capital gains taxes, and then investing the after-tax 
proceeds, a person can instead donate the stock to a charitable trust 
that he controls. The trust can sell the assets tax-free and invest the 
untaxed proceeds. The income from that investment -- typically 6 percent 
annually -- is paid to the donor for life. When the donor dies, what 
remains in the trust goes to charity.

"Blattmachr took this clever gimmick and supersized it. He figured out a 
way to turn that nice little 6 percent annual income stream into a 
torrent -- 80 percent returns a year for two years. So on stock gains of 
$100 million, the owners would get back at least $96 million, as opposed 
to the mere $72 million they would have gotten if they had sold the 
stock outright and paid capital gains taxes. Then the trust would fold, 
and some charity would get the remaining $4 million. The government 
would get less than nothing since the gift to the charitable trust would 
create an income tax deduction."
. . . .
"Blattmachr is always on the hunt, and Congress often makes his job 
easier. In 1997, Congress passed what its sponsors promoted as a tax cut 
for the middle class and especially for families with children. Buried 
in that law were many tax breaks for the rich, some subtle and some 
huge, notably a sharp reduction in the tax rate on long-term capital 
gains, the source of more than two-thirds of the incomes of the 400 
richest Americans."