“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Friday, February 07, 2003

Remora

Ah, for the time to make a long, leisurely post about the tax shelter shell game that was apparently played by Ernst and Young! To sing of how they roped in the greedy, incompetent CEO class (their pockets bulging with stock option money they evidently did nothing to earn, and that soon receded into the electronic ether from whence it came, paper wealth to paper loss, dust to dust, worldcom without end, amen)! I mean, is LI above smirking at such a relic of the nineties as this piece of news, from the NYT business section?


"Two firms being sued, Ernst & Young and KPMG, offered shelters that they said would make taxes on salaries, stock option profits and capital gains from the sale of a business either shrink to pennies on the dollar or disappear.

:The fees and savings on taxes can be enormous. Ernst & Young charged some clients $1 million just to hear a sales pitch, according to court papers. And the firms made millions from the sale of each shelter. The shelters allowed accounting firms, their clients and the law firms that blessed the deals to share money that otherwise would have gone to the government."

As Oscar Wilde once said about the death of Nell, it would take a heart of stone not to laugh at all of this. To our tender hearted president, however, this is no laughing matter. With the Great Giveaway, we can see a day coming when the rich will no longer be suckered into tax shelters like these -- the government itself will provide the ultimate tax shelter by abolishing their taxes, and hence wiping away the tears of such paragons of virtue as Sprint's former CEO, Ronald T. LeMay. NYT columnist
Floyd Norris reports
:

"Thanks to the clever Ernst tax strategy, it appears that Mr. LeMay may have paid no taxes on the $149 million in profits he recorded by exercising his stock options in 1999 and 2000. That meant he did not have to sell shares to pay the taxes, as it appears he did in prior years, when his profits were far smaller."

We imagine the reader in the White House, starting this story (Once upon a time, Mr. President, there was a valiant prince of the Spint Corporation, Ron LeMay, who for his various manly virtues earned himself $149 million dollars. That was his money, right Mr. President? Well, just think, there were some tailors that came along, Ernst and Young were their names, and they promised to weave Mr. LeMay a beautiful invisible suit, which they called a Tax Shelter. Isn't that sweet, Mr. President? But listen to what happened to our poor and noble knight!) will splutter with indignation at how it all turned out so badly. Mr. Norris explains where the $149 million came from:

"In his years at Sprint, Mr. LeMay was well paid, but his annual cash compensation never exceeded $2.7 million. It was stock options that offered him the opportunity to become really wealthy.

"It was emblematic of the times that Sprint's board was willing to award millions of options to Mr. LeMay in 2000, the same year he gained a paper profit of $127 million by exercising options. But he obviously wanted more, and he acted as if there was no chance that his tax strategy would fail or his Sprint shares would fall."

Ah, yes. It is for the victims of the stock crash like these that Bush is acting like Providence itself. Only problem is, his drunk driving of the national treasury isn't going to help with his buds in the end. It's a typical frathouse beer run -- Junior is going to get into trouble before it is all over.

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