Perfectly Legal : The Secret Campaign to Rig Our Tax System to Benefit the Super-Rich and Cheat Everybody Elsem
One of the country's top investigative reporters reveals how the richest 1 percent of the country has rigged the tax code and other laws in its favorSince the mid-1970s, there has been a dramatic shift in America's socioeconomic system, one that has gone virtually unnoticed by the general public. Tax policies and their enforcement have become a disaster, and thanks to discreet lobbying by a segment of the top 1 percent, Washington is reluctant or unable to fix them. The corporate income tax, the estate tax, and the gift tax have been largely ignored by the media. But the cumulative results are remarkable: today someone who earns a yearly salary of $60,000 pays a larger percentage of his income in taxes than the four hundred richest Americans.
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May 09, 2004
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Excerpt from Perfectly Legal by David Cay Johnston
Jonathan Blattmachr walked swiftly toward the Park Avenue curb, eager to find his driver so he could be whisked away from Manhattan to a waiting plane. A small man with the gait of a military officer and a reassuring voice, Blattmachr counsels tax avoidance to people who hold more wealth than anyone else in America. On this sunny morning in July 2002, a grateful client had put his personal jet at Blattmachr's disposal, making it possible for him to visit rich clients in eight cities over three days. Then Blattmachr would head to Alaska for some fishing with his brother Douglas, owner of the Alaska Trust Company, which, because of laws that Blattmachr wrote, offers the wealthy new ways to escape taxes today and forever, shifting the burden of supporting government onto everyone else.
Blattmachr is a partner at Milbank, Tweed, Hadley & McCloy, the New York City law firm that drafted the will of Jacqueline Kennedy Onassis, represents oil companies in Washington and Riyadh and has long had intimate ties to the Central Intelligence Agency. While many tax lawyers are expert at their craft, only one other practicing attorney, Carlyn S. McCaffrey of Weil, Gotshal and Manges in New York, is in Blattmachr's league as a prolific creator of perfectly legal ways for wealthy Americans to escape taxes on their fortunes.
Few Americans have heard of Blattmachr (pronounced BLOT-machur). But among the 16,000 other lawyers in America who specialize in trusts and estates, which is to say in the passing of wealth from one generation to the next, he enjoys the status of some Hollywood stars -- his first name alone prompts recognition.
The likes of Bill Gates, the Gettys and the Rockefellers seek Blattmachr's counsel on how to make taxes shrink -- and sometimes even vanish. His roster of clients reads like the Forbes 400 list, supplemented by the names of people whose vast wealth is little known because they avoid controlling interests in companies whose shares trade on Wall Street.
Men (and a few women) of great wealth confide in Blattmachr. Because his specialty is maintaining wealth across time, he needs to know more than just the size and shape of his clients' fortunes. Happy families are easy to work with. But each unhappy family is unhappy in its own way, requiring custom tailoring of tax plans depending on whether a marriage is an enduring bond of love or a commercial relationship, on whether heirs can be trusted with fortunes or only allowed a stream of income to support their idleness. He knows of prodigal sons and promising granddaughters, of executives at family-owned businesses who will not learn for years that the brass ring is never going to be theirs. Sometimes men of great wealth whisper secrets they would never share with their wives, like how much a mistress costs or whether, if health fails, they trust their spouse with the power to pull the plug.
What makes Blattmachr invaluable to the super rich, however, is not so much his attentive ear or his sound counsel on familial relations. What the wealthy pay him for are the secret routes he has charted through the maze of the tax code. Over the years Blattmachr has found dozens of ways to navigate huge sums of money around government's many levies. He knows how to make a man who appears as a Midas before his bankers look like a pauper to the taxman.