LILO: Little in, lot out

"[Wachovia reported] four billion of profits and paid no taxes."

The beauty of modern corrupt accounting is not the really, really big schemes—like ENRON—which have a tendency to collapse in a messy pile. Everybody then sees a big scandal, though our clever political class has a way of mopping it up quick enough so that they avoid damage to themselves.

No, the truly sweet schemes are big, but not so big that anyone ever notices. Take a look over at a recent post called Tax Shelters on BOP 2004. This post discusses the "Lease In, Lease Out" (LILO) tax shelter scheme so insidious that many major corporations can't help themselves but use it. Wachovia, a Carolina-based bank is a major proponent.

Now take a look at your own tax bill and witness the strain in budget for all sorts of public services. After you read that post, you'll know where the money that is supposed to fund those things goes, probably to the tune of 15% of your total tax bill.

The Hedrick Smith Frontline program (first aired in February 2004) mentioned in the post is superb and very disturbing. Also take a look at some testimony before the Senate Finance Committee from October 2003. I never would have believed financial testimony could keep me awake until I heard the contents of this transcript broadcast on CSPAN. "Mr. Janet" spoke through bizarre distortion to protect his identity (report and small audio clip in FSRN for October 22, 2003):

Good morning Senators. This morning I will describe a massive scandal that has allowed major U.S. companies to receive huge tax deductions by pretending to lease the infrastructure of foreign countries, such as dams, bridges, and subways, and then pretending to lease that infrastructure back to the country or municipality that own the infrastructure. This scheme is so pervasive that much of the old and new infrastructure throughout Europe has been leased to, and leased back from, American corporations. The sole purpose of this scheme is to generate a tax shelter for U.S. corporations that invest in these schemes.

 Just stunning...