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30 review for Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich--and Cheat Everybody Else

  1. 5 out of 5

    Thomas Ray

    The best tax policies money can buy. 2003 book. Many of the worst don't-tax-the-rich laws were enacted under Clinton. The notes are absurd. They're pointers to newspaper articles! Even if you could find one, it wouldn't have source notes. Johnston repeatedly tells us of malicious tax laws, designed to shield rich cheaters. He NEVER gives us the number of the US Code he's talking about. Had he done so, we'd have something definite to point our congresspeople and senators toward. But nope. So his a The best tax policies money can buy. 2003 book. Many of the worst don't-tax-the-rich laws were enacted under Clinton. The notes are absurd. They're pointers to newspaper articles! Even if you could find one, it wouldn't have source notes. Johnston repeatedly tells us of malicious tax laws, designed to shield rich cheaters. He NEVER gives us the number of the US Code he's talking about. Had he done so, we'd have something definite to point our congresspeople and senators toward. But nope. So his admonition on page 304, "we have to demand reform," is hollow to the point of hypocrisy. Johnston does cite people who watch tax policy in the public interest. Unfortunately they have no political clout: Citizens for Tax Justice https://www.ctj.org Center on Budget and Policy Priorities https://www.cbpp.org Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes, William H. Gates Sr. Thomas Piketty Capital in the Twenty-First Century and other books and his World Inequality Database https://wid.world Center for Responsive Politics https://www.opensecrets.org Consumer Federation of America https://consumerfed.org National Consumer Law Center https://www.nclc.org

  2. 4 out of 5

    Michael

    After reading Johnston’s subsequent Free Lunch, I assumed I’d love this book. Here Johnston condenses his experience as an NYT tax journalist in order to pinpoint the big issues – circa 2003 – that enable the top percent to pay less tax than their minimum wage and middling counterparts. As startling as this story is, I found the authors investigations of the innumerable devices, shelters, and strategies granted by Congress, and the IRS, and exploited by clever lawyers to be, well, taxing. The br After reading Johnston’s subsequent Free Lunch, I assumed I’d love this book. Here Johnston condenses his experience as an NYT tax journalist in order to pinpoint the big issues – circa 2003 – that enable the top percent to pay less tax than their minimum wage and middling counterparts. As startling as this story is, I found the authors investigations of the innumerable devices, shelters, and strategies granted by Congress, and the IRS, and exploited by clever lawyers to be, well, taxing. The breakdown of corporate subsidies in Free Lunch was far more accessible and interesting. Here there’s necessarily too many numbers, statistics and the like that tends to harsh one’s buzz. Important information, no doubt, but none of it as engaging as the anecdote told by my ex-hockey player friend Sara that when a tooth gets knocked out, dip it in milk and reinsert within two hours – and it’ll take! On top of this there’s the occasional overlapping of different studies that, while telling the same overall story statistically, the author picks and chooses random particulars from to shore up different arguments. It made my head spin like an unfortunate Evan Williams incident a couple decades back. Part of my ambivalence may revolve around the fact that this was written six or seven years ago and I’m not sure how certain forecasts (many up to 2010) have played out. What is the status of the Alternative Minimum Tax that’s supposed to negatively affect most of us by next year? I dunno if it’s even still on the books. Probably is. I should do further research, but as this is my second tax book of late, I don’t think so. And what is this pension thing that the Government supposedly regulates and “requires”? Who gets those?!? I thought that was just for municipal employees and 50s sitcom dads. Most conspicuously, of course, is that this was written before our latest recession. He writes from a vantage point after the 2000-2001 downturn. I personally felt that one to be a huge pain in the ass, but everyone within our current context seems to have forgotten it existed. And indeed the issues around the dot.com bust do seem almost quaint in comparison to our “Great Depression 2009.” Somehow the government now has an endless supply of (taxpayer) billions to pour into a domestic auto industry that, if I recall correctly, has been an indisputable embarrassment my whole lifetime – and I’m no spring chicken. No doubt our children who won’t be driving a GM product and certainly won’t be working in their long-shuttered factories will be paying for this questionable subsidy. Or the Feds can just pilfer the remainder of our Social Security to cover it (perhaps the most alarming fact covered by this book is how taxpayers between the early 70s and 90s paid such a high rate of SS taxes that the system was supposed be easily supported, basically forever…had our elected officials not stolen almost all of the funds for other purposes). If there’s one important point to take away from Johnston’s narrative is that our pent-up angst towards the IRS is perhaps a bit misguided. Congress (and our executive leaders) are the main villains here and the IRS – not 100% blameless of course - is mostly just operating with the crappy hand dealt to them from the Capitol. Startling cuts in enforcement and funding, coupled with performance quotas led to that bizarre situation where the lowest level of taxpayers get audited (and penalized) at a significantly higher rate than big corporations and billionaires. Johnston’s exposé is yet another example of how the US appears to be on the express train to becoming the butt of Mexican and Kazakhstanian jokes.

  3. 5 out of 5

    Martin

    Infuriating look at tax policy (I now that sounds dull to most people) but its really easy to understand. And you will not believe how the tax system is structured. How is so incredibly skewed to server the rich. Just to give an example from the book to peak interest, we all MUST pay social security taxes (which is something like 5-7% somewhere in there I believe). Its all the same, pulled automatically at pay period. Well, that is only up to 100,000 (approx.) So for example Bill Gates who earns Infuriating look at tax policy (I now that sounds dull to most people) but its really easy to understand. And you will not believe how the tax system is structured. How is so incredibly skewed to server the rich. Just to give an example from the book to peak interest, we all MUST pay social security taxes (which is something like 5-7% somewhere in there I believe). Its all the same, pulled automatically at pay period. Well, that is only up to 100,000 (approx.) So for example Bill Gates who earns millions each year pays the same in SS as someone earnign 100,000. Since he pays at up to that amount, everything above is SS tax free. So while someone earnign 10,000 pays SS when they can barely afford it. Some who is earnign a million, and can clearly afford it (and quite frankly should pay more to support an ailing social system in this country) doesn't pay on on 900,000 dollars a penny to SS. That's out tax system! That's only one example amongst hundreds outlined and described in the book.

  4. 5 out of 5

    C. Scott

    Fabulous as usual. This is the third book I've read by Johnston, he's just the man. Nobody can make taxes as interesting or understandable as this guy. This may be my favorite of the three I've read. This volume has such a clear sense of purpose - conveying how the tax burden is used and abused to redistribute wealth upward. I wish more people would read this and understand what's happening. I believe that if they did things might change.

  5. 4 out of 5

    Book

    Perfectly Legal: The Secret Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else by David Cay Johnston "Perfectly Legal" is a depressing, infuriating, eye-opening book that reveals how the super rich take advantage of the political system and the rest of us by rigging the tax code and other laws in their favor. Pulitzer Prize-winning author David Cay Johnston brings us this mind-boggling account of the America of the rich and powerful. This 352-page book is compose Perfectly Legal: The Secret Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else by David Cay Johnston "Perfectly Legal" is a depressing, infuriating, eye-opening book that reveals how the super rich take advantage of the political system and the rest of us by rigging the tax code and other laws in their favor. Pulitzer Prize-winning author David Cay Johnston brings us this mind-boggling account of the America of the rich and powerful. This 352-page book is composed of the following twenty-one chapters: 1. Taxes - They're Not for Everyone, 2. A Nickel an Hour More, 3. The Rich Get Fabulously Richer, 4. Big Payday, 5. Plane Perks, 6. When the Old Man is Dead and Buried, 7. The Stealth Tax, 8. How Social Security Taxes Subsidize the Rich, 9. Preying on the Working Poor, 10. Handcuffing the Tax Police, 11. Mr. Rossotti's Customers, 12. For Want of a Keystroke, 13. Mr. Kellogg's Favorite Loophole, 14. Mass Market Tax Evasion, 15. Getting off the Hook, 16. Profiting off Taxes, 17. Profits Trump Patriotism, 18. Letters to Switzerland, 19. Gimme Shelter, 20. Only the Rich Deserve a Comfortable Retirement, and 21. Is Reform Possible? Positives: 1. Well-written, well researched, and surprisingly even-handed book. 2. This is an infuriating book. I'm surprised at the lack of outrage... 3. This book focuses on the complex tax system in an accessible manner. Many terms well explained for the laymen. 4. The author does a wonderful job of laying the blame where it needs to be. His criticism is fair and even-handed. 5. Taxes in a whole new light. A historical look at how the tax code has evolved. 6. A true expose if there ever was one. 7. Example after example of how the rich abuse the tax system to their advantage. 8. The lack of comprehensive understanding of the tax laws by members of Congress and why that matters. 9. The various methods in which the super rich understate their true income and overstate their tax deductions. 10. Deferred compensation as a legal stealth tax cut. 11. How our tax system forces Americans to subsidize the lifestyles of the very rich. 12. Mind-blowing facts throughout this book. "The 13,400 top households had slightly more income than the 96 million poorest Americans." 13. The lowering of the tax rate on capital gains over the years. 14. Tax shelter specialists and how they benefit the rich. 15. Power means access, access buys influence, and influence buys favors. 16. A thorough look at the IRS. 17. How CEO compensations hurt us all. 18. Offshore shelters. The abuse in detail. 19. Abuses of corporate jets. 20. The truth about estate taxes. 21. The marketing of terms to deceive the public...death taxes as an example. 22. The alternative minimum tax and its implication. 23. Social security taxes in proper context. 24. Why the working poor get audited more. 25. Great quotes..."If we can't make sure that everyone pays their fair share, then honest taxpayers get stuck making up the difference". 26. Partnerships as vehicles for the rich and why that is so. Very interesting and of course upsetting. 27. The story behind Enron. 28. Tax-exempt insurance companies. 29. How the Cayman Islands has become a paradise for tax fraud. 30. How Visa gold cards were used for tax dodging purposes. 31. The unbelievable tax revenue losses due to tax fraud perpetuated by the rich. 32. Abusive tax shelters of all colors. 33. Foreign tax credit abuses...it never stops, now does it? 34. The manipulation of the media. 35. The interesting tale of Bermuda mailboxes, no tale however. 36. The fabrication of profits? 37. Creative uses of insurance to avoid paying taxes... 38. Tax avoidance techniques...for the super rich. 39. The most important measure of tax burden is how much money goes out to taxes. 40. Great recommendations on how to address the problems stated in the book. Negatives: 1. No links to talk about on the Kindle. 2. It's a little dated but still a great book. In summary, this is one of the best exposes of the super rich that I have ever read. It's informative, educational and yes infuriating. In a nutshell, this book is about how the super rich have rigged the tax system to their exclusive benefit at the expense of the rest of us. A great book that hurts. Highly recommended.

  6. 4 out of 5

    Marcus

    There is a quote by Ralph Reed, former director of The Christian Coalition, near the end of the book that sums up the contents pretty well: "In public policy, it matters less who has the best arguments and more who gets heard - and by whom" Perfectly Legal describes how our tax system has been metastasized over that years to minimize tax for the wealthy and simultaneouly provide them with a myriad of ways to cheat or simply avoid paying taxes altogether. The system is not about fairness, it about There is a quote by Ralph Reed, former director of The Christian Coalition, near the end of the book that sums up the contents pretty well: "In public policy, it matters less who has the best arguments and more who gets heard - and by whom" Perfectly Legal describes how our tax system has been metastasized over that years to minimize tax for the wealthy and simultaneouly provide them with a myriad of ways to cheat or simply avoid paying taxes altogether. The system is not about fairness, it about what is legal. The law being heavily influenced by political donations by the wealthy. I found this book shocking as it goes through numerous taxes and codes such as Private plane perks, social security taxes, The Alternative Minimum tax (AMT) and the estate state tax. In each case, the book shows how the government describes it's policy as reducing taxes but when you dig into the details it is often the case that only richest 1% see the tax decrease. The AMT wipes out many tax reductions as it ensnares more and more of the middle class. The IRS has a larger budget to audit people making $15,000 or less than it does to audit private partnerships. I am all for lower taxes and putting more money in people's pocket, but we are not getting what is being promised. As we face $1 Trillion dollar deficits, I think it is highly relevant that due to tax cheats and unfair policies which favor the mega wealthy (like hedge fund managers paying 15% tax rate on a $1 Billion dollar bonus)the Treasury fails to collect $300 BN + per year.

  7. 5 out of 5

    Marshall

    This book details many of the ways the ultra-rich cheat the tax system, reaping billions of dollars in unpaid taxes. This book never fails to explain this means that revenue must be made up by the lower- and middle-classes. Some of these tricks are extremely clever, conceived by highly paid tax lawyers. I do mean HIGHLY paid--many of these tricks cost a million dollars just for the sales pitch! These aren't just loopholes and illegal maneuvers--although this book outlines plenty of those--this bo This book details many of the ways the ultra-rich cheat the tax system, reaping billions of dollars in unpaid taxes. This book never fails to explain this means that revenue must be made up by the lower- and middle-classes. Some of these tricks are extremely clever, conceived by highly paid tax lawyers. I do mean HIGHLY paid--many of these tricks cost a million dollars just for the sales pitch! These aren't just loopholes and illegal maneuvers--although this book outlines plenty of those--this book focuses on "perfectly legal" tricks which can only be explained by the influence of wealth in politics. As I read this book, I alternated between horror and boredom, which is why it took me so long to finish. The author has a knack for presenting a dismal case, but he sticks to the facts. And we're talking about politics and taxes here--it can get pretty dry. Politically, he's a very balanced writer. He has no love for either major party, but otherwise it's impossible to pin down his ideology. That's impressive for such a hot political topic as taxes. This book is almost 10 years old, and only recently has this discussion arisen in politics, with Obama, Buffett, and the Occupy Movement. Nobody wants to tackle it. It's a big and very complex problem. At the end, this book explains some of the trade-offs. But it can be solved--must be solved--if we really want to live in a democracy. It all starts with discussions like this book.

  8. 5 out of 5

    John

    Insightful and immediately relevant examination of taxation. On Social Security: Reagan's tax cuts for the rich led to huge deficits. Along comes the Greenspan Commission on SS saying it will run out of money for benefits in 31 years, according to some questionable forecasts. Payroll taxes go up to fund future benefits. The additional money is used to balance the budget. These payroll taxes impact working people greatly and the very rich not at all, so this chain of events was an income redistri Insightful and immediately relevant examination of taxation. On Social Security: Reagan's tax cuts for the rich led to huge deficits. Along comes the Greenspan Commission on SS saying it will run out of money for benefits in 31 years, according to some questionable forecasts. Payroll taxes go up to fund future benefits. The additional money is used to balance the budget. These payroll taxes impact working people greatly and the very rich not at all, so this chain of events was an income redistribution from working people (higher payroll taxes) to rich people (their Reagan tax cuts.) Working taxpayers had to fund the government in return for a promise of retirement benefits 30 years later, while the rich saw their income tax rates cut in half, capital gain tax rates cut, etc. And it transformed SS from a pay-as-you-go system to one in which working people are expected to pre-fund their retirement benefits decades in advance, which Johnston points out is the reverse of a deferred tax. A tax payed tomorrow costs less today than a tax paid today, and a tax paid today costs more than one paid tomorrow. And that additional cost is paid by those paying the payroll tax, so that Reagan can "reduce taxes." One of the smartest books I've read on government policy, with the additional virtue of being well-written. Great book.

  9. 4 out of 5

    Tim

    despite some minor repetitions from chapter to chapter--the book was probably composed out of a number of serialized columns-- this book is an encompassing, mostly comprehensive* view of our american tax system and what has happened to it in the last thirty years. *(mostly comprehensive, though i'll admit there were a few moments where i was scratching me head at the dizzying explanations of tax shelters, and others where i wish Johnston had gone further into detail. but overall, good work.) In t despite some minor repetitions from chapter to chapter--the book was probably composed out of a number of serialized columns-- this book is an encompassing, mostly comprehensive* view of our american tax system and what has happened to it in the last thirty years. *(mostly comprehensive, though i'll admit there were a few moments where i was scratching me head at the dizzying explanations of tax shelters, and others where i wish Johnston had gone further into detail. but overall, good work.) In those 3 decades, the gap between the uber-rich and the rest of the population has experienced out of control growth. And that growth had little to do with "wise choices" by the wealthy. it had a lot more to do with "crafty", "clever", and "amoral" choices. the book as at its best when explaining the mechanisms used for evasion and obfuscation, perhaps at its weakest when it veers into more "human interest" areas. As such i tried to filter out the *personal* bias in what is clearly, and rightfully so, an *economically* biased book, and focus on the facts. Overall this book gave me those facts, and thereby gave me plenty of opportunities to shoot informed holes into the fake "free market" lassez faire economy fan theories.

  10. 5 out of 5

    Joe

    Perfectly Legal covers many of the schemes used by the rich to avoid paying taxes. While it gets quite detailed, it's never incomprehensible. However it is very likely to fill you with rage. Johnston not only details tax dodges, but also takes on the validity of taxes (like the estate tax) and why they should be paid. If you're like me, you'll be shocked to learn how tax audits are actually ordered, and how much information the government captures (or doesn't). Johnston paints a picture of a very Perfectly Legal covers many of the schemes used by the rich to avoid paying taxes. While it gets quite detailed, it's never incomprehensible. However it is very likely to fill you with rage. Johnston not only details tax dodges, but also takes on the validity of taxes (like the estate tax) and why they should be paid. If you're like me, you'll be shocked to learn how tax audits are actually ordered, and how much information the government captures (or doesn't). Johnston paints a picture of a very broken IRS that focuses on pursuing the poor and lower middle class relentlessly, while largely ignoring small businesses, corporations and partnerships. While Johnston can belabor points, and in some chapters felt like he was repeating himself, overall this book is filled with very enlightening information that everyone should know.

  11. 4 out of 5

    Daniel

    This is an interesting book but definitely not a light read. It's a bit wonkish and though there are several good examples of how the system benefits the rich, there are probably one or even two too many. There are also a few pages that come across as angry as opposed to explanatory, which is probably by design but sort of annoying to read. At certain points, it feels like I'm being lectured. That being said, if you can stand the minutia, this is an eye-opening book that shows there has been a r This is an interesting book but definitely not a light read. It's a bit wonkish and though there are several good examples of how the system benefits the rich, there are probably one or even two too many. There are also a few pages that come across as angry as opposed to explanatory, which is probably by design but sort of annoying to read. At certain points, it feels like I'm being lectured. That being said, if you can stand the minutia, this is an eye-opening book that shows there has been a redistribution of wealth in this country for nearly 3 decades - from the middle class straight to the top. If you want to know one of the most debilitating and unspoken problems in the country this book is worth perusing if not necessarily studying.

  12. 5 out of 5

    Jason

    More of a 3.5 but the limitations of the system have tied my hands. The book centers around tax avoidance methods in the United States by the super rich and how the taxation system is currently set up to benefit the rich. For example, the rich usually gain all their income from capital gains where wage saves earn their funds from their jobs,guess what? Capital gains have a lower tax rate that earned income. There's more to those statements but it's in the book. The book falters by being a little More of a 3.5 but the limitations of the system have tied my hands. The book centers around tax avoidance methods in the United States by the super rich and how the taxation system is currently set up to benefit the rich. For example, the rich usually gain all their income from capital gains where wage saves earn their funds from their jobs,guess what? Capital gains have a lower tax rate that earned income. There's more to those statements but it's in the book. The book falters by being a little superficial and conclusory when I wanted it to be in depth and explanatory.

  13. 5 out of 5

    Drew

    Honestly, I didn't even get close to finishing this, but I felt like I got the message. The problem with it isn't that it requires some background knowledge of how taxes work (of which I don't have much); it isn't that the writing is lackluster (although that contributes); it's that all the problems Johnston outlines in the book have only gotten worse. Maybe this is true of most socially conscious non-fiction--it gets dated really fast because the problems it discusses either go away or intensif Honestly, I didn't even get close to finishing this, but I felt like I got the message. The problem with it isn't that it requires some background knowledge of how taxes work (of which I don't have much); it isn't that the writing is lackluster (although that contributes); it's that all the problems Johnston outlines in the book have only gotten worse. Maybe this is true of most socially conscious non-fiction--it gets dated really fast because the problems it discusses either go away or intensify. I guess I'll read whatever he wrote most recently and see if it feels any fresher.

  14. 4 out of 5

    Wayne

    Overall I thought that the author made some good arguments against the tax system, but too many times he starting adding nonsensical data points to his arguments that I ended up diasgreeing with him on principle.

  15. 5 out of 5

    Brett Green

    Infuriating... Yeah, I'd agree with that. The ins and outs of the myriad of legal tax dodges employed by the country's wealthy class.

  16. 4 out of 5

    Liz Young

    Critical reading. I now understand so much more about how our tax system functions to benefit the ultra rich. Even though the book was published in 2003, it’s so relevant today. I wish I could have read a to-date version, but for that, I‘m sure I can turn to Johnston’s more recent works. This book took me a long time to get through, which was frustrating as someone who’s typically a fast reader, but it was very worth pushing through. The writing is clear and the stories are captivating.

  17. 5 out of 5

    Adam

    David Cay Johnston is a Pulitzer-Prize winning tax journalist who has spent his career exposing the methods, both legal and illegal, that the super-rich and mega-corporations have used to escape or reduce their contribution to social welfare. Perfectly Legal is essentially a series of vignettes about this topic. The book begins by examining the tax cuts and other perfectly intentional ways that the tax system has favored the wealthy and fostered the growing inequality of wealth and power we are David Cay Johnston is a Pulitzer-Prize winning tax journalist who has spent his career exposing the methods, both legal and illegal, that the super-rich and mega-corporations have used to escape or reduce their contribution to social welfare. Perfectly Legal is essentially a series of vignettes about this topic. The book begins by examining the tax cuts and other perfectly intentional ways that the tax system has favored the wealthy and fostered the growing inequality of wealth and power we are suffering from today. He briefly reviews the evidence: the economy has grown substantially over the past few decades, yet wages for over 90% of Americans have risen, in real terms, by only a nickel an hour. The vast increases in productivity have all been siphoned off into the coffers on the extremely wealthy. As Johnston explains, part of this has to do with executive pay. As executives demand ever more absurd levels of compensation, regardless of their real worth to shareholders, this money must either be taken away from the salaries of other workers or away from the pool of capital that can be invested in productive expansion, research, and repair. As there is no free lunch, executive overpay hurts everyone except the executives. Another wealth redistribution scheme emerged when Social Security taxes were raised to expand the pool of capital in the SS fund. This was necessary because, after cutting taxes on the rich, the government needed to use the SS fund to support basic government functions, and the existing pool wasn't large enough. Since the maximum contribution to social security taxes is low (around $110,000 at the moment), these tax increases hurt the low and middle classes but were essentially irrelevant to the wealthy. A potentially unintentional but very important turn of fate made the Alternative Minimum Tax, which was created to prevent the upper classes from paying no taxes by using a surfeit of deductions, into an increasingly nasty surprise for the middle classes. Since its creation, due to inflation and legislative adjustments, the AMT has shifted its burden from the rich to the not-so-rich. This became a particular problem when the Bush tax cuts went into effect. While the tax cuts reduced the official income tax, it didn't affect the AMT, so many families who would have been entitled to the tax cut were instead merely forced to pay the AMT - which, by its nature, offers many fewer deductions and often ends up being more expensive than the normal income tax. For some reason I never grasped, this problem didn't threaten the upper class. The rest of the book focuses on the battle between the IRS and those who would use illegal or underhanded means to avoid paying taxes. It seems that the IRS has been under attack for several decades now, as Republicans have realized that demonizing the tax-man is good politics. The result has been a handcuffed IRS that doesn't have the resources it needs to go after even a handful of the nearly ubiquitous tax avoidance schemes and tax shelters and straight-up lies used by corporations and the super rich to cheat the government and the people. IRS agents are often actively discouraged from pursuing high-profile tax cheats, apparently because the cheats are political donors with an access to the ear of politicians willing and able to call off the IRS. Instead, the IRS has been legally mandated to audit Earned Income Tax Credit returns at a higher-than-average rate, despite the facts that that demographic by definition doesn't have access to the kind of professional help they need to avoid making simple mistakes on tax returns, that that demographic, even in aggregate can't cheat the government out of an amount of money that would be worth pursuing, and that they are essentially automatically crippled by even the accusation of cheating. The rich, on the other hand, are often able to essentially ignore the legal repercussions of being caught cheating. And with the complex schemes they are able to purchase from expert lawyers and accountants, their cheating is rarely caught. When they do go to court, expensive legal letters purchased from accountants often force the court to acknowledge that the evader purchased the avoidance scheme on the good faith advice of people who knew better that the scheme was legal. At worst, the company is forced to pay the taxes, so the scheme bears essentially no risk. In this low-risk environment, tax cheats of various stripes have proliferated among slightly lower classes as well, and Johnston spends a decent amount of the book on them as well, essentially to point out that an absence of enforcement encourages cheating. The IRS estimates losses to tax fraud at up to $500 billion per year, though Johnston seems to, reasonably, believe that the IRS' estimates are generally low.

  18. 4 out of 5

    Libby

    Really good. P.181 "At the behest of Congress, the IRS was auditing the working poor at eight times the rate of partnerships and yet the losses from partnerships were at least four times as large." P. 204 "Hardly any resources are devoted to looking for those who simply do not file. When the IRS tried to find such cheaters in the early nineties, it turned up hundreds of thousands of them without much effort- and five years later most of those it found had dropped back out of the system again, no l Really good. P.181 "At the behest of Congress, the IRS was auditing the working poor at eight times the rate of partnerships and yet the losses from partnerships were at least four times as large." P. 204 "Hardly any resources are devoted to looking for those who simply do not file. When the IRS tried to find such cheaters in the early nineties, it turned up hundreds of thousands of them without much effort- and five years later most of those it found had dropped back out of the system again, no longer filing tax returns... If the figures from the last study are simply adjusted for the increased size of the economy, then tax evaders cheat the government out of more than $300 billion each year." P.210 "Vicini pleaded guilty in 1997 to evading $2.2 million in federal income taxes and got a light sentence, just five months in custody." P.212 "There were 230,000 MasterCards, which suggested that, along with the much larger Visa operation, between 1 million and 2 million offshore credit cards had been issued to Americans. Just 117,000 Americans disclosed on their income tax returns having any kind of offshore account, so even if only a half million cards had been issued by offshore banks, the IRS had a major problem. ... Blum had for years been saying that the United States was losing $70 billion a year to offshore tax fraud and now his estimate no longer seemed beyond imagining. And that estimate meant that seven cents of each dollar Americans paid in federal income taxes were just making up for the offshore tax cheating." P.248 ""The Republicans' mantra to their corporate buddies is 'Friends don't let friends pay taxes,'" [Texas Dem Representative Lloyd] Doggett said... "We need to take a pro-business stance and level the playing field so thousands of businesses that stay here and pay their fair share are not at a disadvantage" to those that avoid taxes through a Bermuda address." P.256 "In all, the 10,000 biggest American companies reported $758 billion in profits worldwide in 1999 and paid taxes to the United States of $154 billion, or 20 percent, which was well below the statutory rate." P.258 - the consequences of LLP incorporations by legal and accounting firms "Traditionally, legal and accounting firms operated as professional partnerships. Under this arrangement, each partner was individually liable for misconduct by any other partner. This created a powerful incentive for legal and accounting firms to monitor each partner, to make sure that they were not only honest, but acted reasonably, lest every partner be exposed to lawsuits and damages.... Government regulation cannot be the answer to the moral hazard problem and to the actual amoral and immoral conduct encouraged by the new limited liability rules. Government cannot effectively, efficiently or fairly regulate the activities of the legal and accounting fields because their day-to-day operations are all judgment calls. Government can set minimum standards for admission to these professions. It can also pursue wrongdoers after the fact. But the blunt instrument of a regulatory agency can never be fine enough to police the professions. These day-to-day judgment calls can only be made by those in firms themselves, who can decide what is acceptable conduct and acceptable risk. The old partnership form accomplished just this with the savings and loan scandals serving as a reminder to behave properly, a reminder that was turned into an exercise in shedding professional responsibility." The chapter about the erosion of defined-benefit retirement plans made me nauseous. P.293 "What Rossotti [IRS Commissioner] would have told Houghton [richest man in Congress + chair of IRS Oversight Subcommittee]: "The tax system continues to grow in complexity, while the resource base of the IRS is not growing and in real terms is shrinking. Basically, demands and resources are going in the opposite direction. This is systematically undermining one the most important foundations of the American economy."" P.295 "The IRS had about $46 per tax return to process returns, educate the public, advise on complex rules, audit, conduct criminal investigations and collect taxes. In comparison, many vendors of 401(k) plans charge $50 annually just for record keeping and mailing quarterly statements."

  19. 4 out of 5

    William Frentz

    Every American should read this.

  20. 5 out of 5

    Kressel Housman

    I first heard of this book in one of Dan Ariely's books, and he described it as explaining the tax code in plain English. Since I earn my living as a paralegal for an estate planning attorney, I figured this was necessary education for me. But I also guessed, based on the subtitle, that it would convince me that I'm in the wrong field. Not only was I correct about that, I was so persuaded by the author's cry for reform that I sent him my resume in case he knew anyone who could put my skills to w I first heard of this book in one of Dan Ariely's books, and he described it as explaining the tax code in plain English. Since I earn my living as a paralegal for an estate planning attorney, I figured this was necessary education for me. But I also guessed, based on the subtitle, that it would convince me that I'm in the wrong field. Not only was I correct about that, I was so persuaded by the author's cry for reform that I sent him my resume in case he knew anyone who could put my skills to work for justice. So far, the reaction has been much like what I've gotten from fiction submissions - a big, gaping nothingness. Other than that, the book affected me the way it affects most people: it made me angry. It did not, however, teach me any lasting lessons about the tax code. In that sense, it was similar to my experience of reading This Is Your Brain on Music - too technical to stick. The main point I got though: billionaires have dozens of tax dodges at their fingertips, and it's the middle class and even the poor who are paying the price. To my mind, the very worst tax dodges are those off-shore business addresses in the Cayman Islands and such. Some CEOs have even renounced American citizenship to avoid taxes! And this when young men are putting their lives on the line in Afghanistan! Out of curiousity, I showed this book to the tax specialist in my office. She called it a polemic, which it is, but she also said that what the author is saying is true. And then she concluded about the tax code what I've concluded about my job: "It may not be good, but it's what we've got to work with."

  21. 5 out of 5

    Mason J 6

    Perfectly legal by David Cay Johnston is a book that follow the way that rich have skewed the economy to them so they get richer and the poor get poorer. You learn that since the mid 1970s the enforcement and tax policies have turned into a disaster. It also shows how some corporations ditch the federal income tax. They show how the the working poor is seven times more likely to be audited than the rich. This book can be valuable because you can learn how many rich people exploit the system and i Perfectly legal by David Cay Johnston is a book that follow the way that rich have skewed the economy to them so they get richer and the poor get poorer. You learn that since the mid 1970s the enforcement and tax policies have turned into a disaster. It also shows how some corporations ditch the federal income tax. They show how the the working poor is seven times more likely to be audited than the rich. This book can be valuable because you can learn how many rich people exploit the system and it shows you how you could and get some more money. This whole book was pretty much slow because it draws into detail how they did this thing that can help them gain money which has a lot of words that if you knew a lot about auditing or taxes it would make sense. It was kind of frustrating to read because you need to know a lot before you read the book to actually know what they did. I think the author knew everything about what was in the book which made it better in a sense like he knew what most of words used in taxes. I can make connections with all of the people in the book all of the people exploiting were very greedy. The voice of the character matters because you wouldn’t know how the characters exploited the system if they weren’t the main characters. The theme of the book is greed is a language anyone can use everyone in this story had ways they were different but they were common by how greedy they were.

  22. 5 out of 5

    Harvey

    So, I react poorly to hyperbole and over-politicized words. And despite many forays into the land of poor arguments and logical flaws, there are a few pieces of this book that cohered into a sensible critique of the modern American tax system. Something like this: Primarily spurred by the complexity of taxation, current law permits countless tax-centric structures that meaningfully change the tax implications of identical real world events (save for the use of particular magic words or systems, a So, I react poorly to hyperbole and over-politicized words. And despite many forays into the land of poor arguments and logical flaws, there are a few pieces of this book that cohered into a sensible critique of the modern American tax system. Something like this: Primarily spurred by the complexity of taxation, current law permits countless tax-centric structures that meaningfully change the tax implications of identical real world events (save for the use of particular magic words or systems, as deemed by legal, financial, or accounting advisers). That's probably a bad outcome for a tax system. Agreed, mostly. The last chapter went too far for my liking and was drenched in rhetoric. Altogether an interesting, if slightly outdated, read. PS - this book, like Liar's Poker, can be used as an introductory how-to guide, but this maps the landscape for tax structurers of the future.

  23. 4 out of 5

    Gina

    This book is sickening. It is pretty well-written and accessible, but you will learn things that are just sickening. Still, it needs to be learned. Do not be intimidated by the focus on the tax code. Information is clear and comprehensible. Also, don't worry that the book is overly politicized. There are good and bad moves by both sides. Sadly, it is mostly bad moves on either side, as politicians are beholden to political donors, and federal employees get beholden to the people who will give the This book is sickening. It is pretty well-written and accessible, but you will learn things that are just sickening. Still, it needs to be learned. Do not be intimidated by the focus on the tax code. Information is clear and comprehensible. Also, don't worry that the book is overly politicized. There are good and bad moves by both sides. Sadly, it is mostly bad moves on either side, as politicians are beholden to political donors, and federal employees get beholden to the people who will give them cushy private sector jobs. Johnston gives some suggestions for reform, but it's hard not so see that what is most needed is widespread integrity, and that is not something that legislative reform will fix.

  24. 5 out of 5

    Johnny Galt

    Another first, reading a book about taxes. Although this book had some great anecdotal stories it was still about taxes. Many of the examples in this book covered the topics strangers drop over dinner conversations but in slightly more detail and only slightly more recountable. Still, it was only specific enough to connect in one's mind and not specific enough to become tax blabber. Even so, I really enjoyed the story of Jack Welch's divorce and dismemberment of the Stanley Works tool company. I Another first, reading a book about taxes. Although this book had some great anecdotal stories it was still about taxes. Many of the examples in this book covered the topics strangers drop over dinner conversations but in slightly more detail and only slightly more recountable. Still, it was only specific enough to connect in one's mind and not specific enough to become tax blabber. Even so, I really enjoyed the story of Jack Welch's divorce and dismemberment of the Stanley Works tool company. It concluded by stating that we are all responsible for those who cheat and when we cheat it hurts ourselves and it is up to us individually to contribute honestly and forthrightly. I still don't know how I feel about an ending like that...

  25. 5 out of 5

    Sarah

    I admittedly did not read this book in its entirety. It was due to my own weaknesses, though, and not a reflection of the book. I am not much of a numbers person (all the accounting practices and taxation statistics forced me to re-read a lot of passages in order to understand). That aside, the book reveals a shocking system that should infuriate any tax paying American (or at least any non-mega-wealthy American). It is written clearly and gives examples of families who are benefitting from the I admittedly did not read this book in its entirety. It was due to my own weaknesses, though, and not a reflection of the book. I am not much of a numbers person (all the accounting practices and taxation statistics forced me to re-read a lot of passages in order to understand). That aside, the book reveals a shocking system that should infuriate any tax paying American (or at least any non-mega-wealthy American). It is written clearly and gives examples of families who are benefitting from the corrupt system and examples of hard-working families who are being crushed by the inequal taxation.

  26. 5 out of 5

    Greg Chabala

    I picked this up thinking that it might be instructive in avoiding taxes by legal methods. However, most of the issues discussed were questionable in nature, and much had to do with tax dodges used by large corporations. The most unfortunate part of the book was the writing. The tone was whiny, and as chapters drew on there were not just repeating themes but repetitive statements. I felt insulted to be told the same statement about taxes benefiting the rich in multiple chapters without any rephra I picked this up thinking that it might be instructive in avoiding taxes by legal methods. However, most of the issues discussed were questionable in nature, and much had to do with tax dodges used by large corporations. The most unfortunate part of the book was the writing. The tone was whiny, and as chapters drew on there were not just repeating themes but repetitive statements. I felt insulted to be told the same statement about taxes benefiting the rich in multiple chapters without any rephrasing or additional content, as though I wouldn't remember having read the same line in the previous chapter.

  27. 5 out of 5

    Nick

    whoa, i kept avoiding this book knowing it would make me crazy and frustrated. that it did. but at least now i understand the immense dirty world of tax shelters, tax evasion, corporate ultra perks... and how we the little people never get anywhere. so bottom line, the regular wage earner - me, you - is a sucker. we lose so the super rich can protect and have more of their millions tax free. safe in bermuda, the cayman islands, with goldman sachs. every lame paycheck of mine provides more subsid whoa, i kept avoiding this book knowing it would make me crazy and frustrated. that it did. but at least now i understand the immense dirty world of tax shelters, tax evasion, corporate ultra perks... and how we the little people never get anywhere. so bottom line, the regular wage earner - me, you - is a sucker. we lose so the super rich can protect and have more of their millions tax free. safe in bermuda, the cayman islands, with goldman sachs. every lame paycheck of mine provides more subsidies to the rich. how did our democratic systems and the IRS lose its integrity? david cay johnston explains in full, clear detail. my eyes have been opened. shocking.

  28. 4 out of 5

    Resposito

    Holy Cow! American citizens have fallen victim to a farce courtesy of the American Government. There is a common misconception that everyone has to pay their taxes and the rich pay the most. 'Perectly Legal' cracks the falsehoods by producing 100% hard facts pertaining to Congressional hearings, documents, and testimony. I truly don't understand how our presidents, senators, and representatives have the audacity to rig our tax system to benefit a chosen few. The top one percent of America as a m Holy Cow! American citizens have fallen victim to a farce courtesy of the American Government. There is a common misconception that everyone has to pay their taxes and the rich pay the most. 'Perectly Legal' cracks the falsehoods by producing 100% hard facts pertaining to Congressional hearings, documents, and testimony. I truly don't understand how our presidents, senators, and representatives have the audacity to rig our tax system to benefit a chosen few. The top one percent of America as a matter of fact. Read this book, get off of your butt, and join the resistance.

  29. 4 out of 5

    Kip

    Wow, I'm stunned. The US tax code is a convoluted and complex beast but the author does a good job deciphering the twists and turns. Then showing how the uber rich stay that way and everybody else pays for it. There's some opinion along the way, but it's well researched and full of amazing statistics. * Couldn't finish ** I had nothing else to do *** Passed the time, would be **** for genre / author fans **** Everyone could enjoy this book ***** Everyone should read this book, I'll read it again

  30. 4 out of 5

    Vicki

    The tax system is complicated in order to hide the title's truth. If you like policy, intrigue, or just being righteously indignant, give it a read. I think he did a good job simplifying the Code to make his points and walking you through where simplicity would've been the wrong choice. Also I think this book helped me pass Tax law w/o attending the classes, but that's probably not universally important.

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