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Join the Discussion: What do you think about the abusive tax shelter problem? Is broad reform necessary or is a case-by-case approach enough?

Dear FRONTLINE,

I watched and watched, waiting for some DETAIL as to what these tax shelters were really doing, but you chose not to provide the detail, simply saying they were all very complex. I think you should have had that guy at the blackboard on camera, and give it a go for us - maybe we could have understood what you could not.

My specific question re Leases: If the lease generates a large amount of depreciation up front, doesn't that mean there will be still be income and a corresponding lessening of depreciation in the future? So, isn't this simply generating early losses to be matched with later gains? Isn't this more properly described as "tax shifting" rather than "tax avoidance"?

Topeka, Kansas

FRONTLINE's editors respond:

The answer to your questions about leases boils down to the following: The pay out and pay back of money is not equal because of the value of time. The depreciated value of current dollars is much less in the future. Some of the leases extend for as long as 99 years.

Dear FRONTLINE,

Hurray for Frontline! Frontline is to be applauded for excellence in journalism in exposing corporate tax cheats.

I am enraged by the practices of self serving corporate tax cheats, such as First Union. These, along with their accountants, should be severely penalized. Money is obviously the only thing they understand. Their god is the bottom line; with the ends justifying the means. Obviously these practices hurt us and our nationbut what the hell do they care? So long as they make more money.

Perhaps when their cheating becomes unprofitable their behavior will changeat least until they feel they can figure out another way to cheat without getting caught. Do we need a simpler tax code that exposes cheaters for what they really are?

Were you troubled by the lobbyists? These guys are well paid for supporting corporate cheats. I dont need to look far to find parallels on the streets. I am more concerned though for the lawmakers that lend them an ear.

Anyway, this cheating has been going on for a long time; so where is congress, the IRS, or the executive branch? I am calling my representatives. These activities must be stopped now!

Victor Robertson
Springville, Utah

Dear FRONTLINE,

I don't condone crimal acts, lying, cheating or stealing. I also don't believe the premise that government is good and business is bad. I don't think that it is better for goverment to take the money and give it to individuals, that produce nothing, than it is for business to keep its money and hire people to work.

A sham equal to the tax shelter you supposedly exposed is to produce a documentary that pretends that businesses and the rich do nothing but consume money and that they don't pay their fair share.

The travesty is not that a business or individual wants to keep its money but that too many individuals somehow believe that it is better for a bloated, wasteful, corrupt bureacracy to have it.

Scott Campbell
Pocatello, Idaho

Dear FRONTLINE,

Many thanks to the work of Public Television and specifically to Hedrick Smith for being a great Sherlock Holmes. Looks like we need to get banks to go back to being just banks. The great depression prompted the Glass-Steagall act which attempted to address the problem caused when banks get into high finance. It's on the books - time to enforce it. International banking is a different animal however. Each of us needs to practice a bit of Caveat Emptor (buyer beware). Finally - the business schools of this country might try a bit more emphasis on business ethics!!

Gayland Hokanson
Raleigh, NC

Dear FRONTLINE,

Thank your for your great report. But, aren't we all missing the point here - showing that generally we've accepted for far too long the principle, the status quo, that big money can escape taxes the rest of us have to pay.

No one even questions what a company is doing in the Cayman Islands when we know and have always known AND ACCEPTED that it's there to escape paying taxes.

Judith Logue
St. Cloud, MN

Dear FRONTLINE,

Thank you for your your excellent program, 'Tax Me if You Can'. It has long infuriated me to I pay more taxes than many corporations, even though I am a young person making well below an average yearly income in this country. It is only fair that corporations that enjoy the benefits of citizenship provided by their status as legal entities also bear the responsibility of paying taxes like the rest of the citizens of this nation.

While it is encouraging to hear that politicians like Mr. Doggett, Mr. Grassley, and even my own Governor, Rod Blagojevich are proposing reforms to the tax laws to correct this problem, I am still left with a nagging question:

"Why is it that companies can keep two seperate sets of books for Wall Street and the IRS?"

Even after hearing it mentioned on your program, I wonder why few people question this. Many of these tax evasion problems stem from the fact there are indeed two sets of books. Why not make it a requirement that only ONE set of books be kept that would be presented to both Wall Street and the IRS. Perhaps this is a radical suggestion, but I feel it would do much to actually inject some honesty for both shareholders and taxpayers alike.

Dirk Tiede
Chicago, IL

Dear FRONTLINE,

I was surprised to hear Mr. Smith say that large accounting companies were in business to keep the tax system honest.

They are in business to make a profit.

Corporations need to pay their fair share of taxes. As for the average american losing income in their retirement accounts, I say too bad.

We are supporting Germany cities make ends meet when Topeka, KS is cutting out fire stations to meet the budget. As a small business owner I have no health insurance nor a retirement account. I KNOW there is no retirement in my furture. I can only hope to drop dead on the job and not become a cash cow for the drug companies.

Yes super size that value meal.

Thank You for allowing me to vent some steam.

Pete Rutske
topeka, Kansas

Dear FRONTLINE,

You have given the proof that this complicated system of taxation does not work at any level. Isn't it ironic that the politicians who are responsible for wasting billions are outraged by tax shelters. The higher tax rates go the more lucrative it becomes for people to find ways to avoid paying.

The only way to clean up this mess is to scrap the present system and go to some kind of national sales tax.

Bill Rogers
Dallas, Texas

Dear FRONTLINE,

I would like Ms. Barkulis (see letter below), who appears to be a barely adequate apologist for corporate criminality, to consider having/(or demanding) her 401k or pension be invested in an honest instrument run by honest individuals with honest motives.

The fact that some corporation such as Wachovia or Enron will have it's share price reduced due to being compelled to "play by the rules" should not be reason enough to allow this travesty continue to be perpetrated.

People such as Ms. Barkulis are precisely why this situation exists.... we have become a nation (or at least a Congress) of appeasers and therein lies our shame.

Douglas Roach
Miami, Fl

Dear FRONTLINE,

It is past time for new and simplified tax codes and fair and just punishment for those who steal, yet live to prey on the system with impunity.

It is time to bring down the corporate "welfare queens" and demand better representation from those that have sworn to protect and to work in our behalf. If we can look around the world and spot corruption and spend money and lives to correct the problem, then why can't we see what is happening right here on our doorstep and correct the problems? To take the right actions at home might give us more credibility around the world, but more importantly, we can begin to trust and believe in our system of governing.

James Davidson
Louisville, KY

Dear FRONTLINE,

I am very concerned to learn that First Union/Wachovia Bank has reduced its taxes significantly from what sounds like illegal tax shelters, as this is my bank. I am wondering, if the IRS ever catches up with it, if fines could be severe and if it would affect the monies of customers like me held by this bank's "CAP accounts". Especially as Wachovia does "sweeps" of our cash funds which as I understand it, involves daily investing its customers cash accounts, and we receive interest...

Virginia Lamarche
Wall, NJ

Dear FRONTLINE,

God bless Frontline! The Tax show is exactly what I expect from

Frontline, and you did it again! Congratulations!

The white collar crime in corporate America is the worst problem our society must confront. Don't these educated people know the history of the fall of the Roman Empire? I often think that this period of crime on the part of the educated is the first sign of the corruption that preceded Rome's fall.

Frontline is my favorite show on PBS.

Eileen Dunne
Medford, MA

Dear FRONTLINE,

This is a brilliant program. Visual dynamite. Hard to imagine a tougher subject to handle well dramatically -- but that is exactly what Young and Smith did.

TAX ME IF YOU CAN is powerful, tough, and deeply illuminating. The mix of European leaders, befuddled by our strange and absurd tax schemes, renegade truthtellers, and a "lifestyles of the rich and ridiculous" vividness -- ending up with Smith in a foreign sewer sold as a tax dodge to us -- were all terrific.

It also illuminated part of America that is very hard to humanize -- senior leaders at the IRS who we need to do great work, and struggle to with an administration and Congress that has hamstrung them. I also liked the clarity of public action that leaders called for -- simple congressional fiats against this kind of absurd activity which will dump deep debt on young people such as those now serving in Iraq for the enrichment of the already outrageously rich. Extremely well done.

I only wish PBS could do a road show with TAX ME IF YOU CAN at leading business schools -- as a warning of what can go wrong, and has gone wrong and needs to be righted. Bravo.

Don Wilson
Washington, DC

Dear FRONTLINE,

Has anyone given serious consideration to eliminating corporate taxes?

The billions spent avoiding taxes and the various tax shelters would go away. Corporate taxes are just another regressive tax on the people who use corporate services or purchase their products. Who is really paying?

I wonder if the only truly workable solution is to restructure and simplify the tax code to tax only individuals (allowing for only the most basic deductions and absolutely no loopholes).

Paul Schlieben
Peterborough, NH

Dear FRONTLINE,

The chutzpah of Senator Levin on this program. Like Claude Raines in Casablanca, Mr. Levin is shocked to see these government coffer-draining tax dodges committed; dodges made legal (or close enough) by the very laws he and other senators enact!!! Then he expects the White House to come to the rescue an clean up the Congress-created mess. Unbelieveable.

Vince Shahayda
Virginia Beach, Virginia

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posted february 19, 2004

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