Magazine article The American Prospect

Sam's Amazing $5,000 Dream Coat: And Other Lies Told to the House Tax Shelter Committee. (the Taxonomist)

Magazine article The American Prospect

Sam's Amazing $5,000 Dream Coat: And Other Lies Told to the House Tax Shelter Committee. (the Taxonomist)

Article excerpt

YOU CAN HARDLY PICK UP THE NEWSPAPER THESE DAYS without reading about some freshly discovered corporate tax shelter scam, whether it's an Enron-style tax-haven subsidiary or a Bermuda shell company. The Bush administration and House Republicans, who generally support these kinds of tax abuses, have been in full stall mode, hoping to ride out the storm of public outrage without having to take serious action.

The House Tax Shelter Committee (formerly the Ways and Means Committee) has been killing time by holding a series of subcommittee hearings on various international tax questions, featuring witnesses from tax-avoiding companies and their trade associations, accounting firms and Republican-oriented think tanks. One of those hearings, which might have been titled "Lies from Former Chairmen," led off with testimony from former Reps. Sam Gibbons (D-Fla.) and Bill Archer (R-Texas).

Gibbons has long argued that the United States should scrap the corporate income tax in favor of a value-added tax, a complicated sales tax used extensively in Europe. Gibbons mistakenly believes that sales taxes encourage exports because they apply only to domestic consumption. To over-illustrate his point, he told the following story:

"I first ran into [the TVA, the French value-added tax] when I found myself without an overcoat in Paris ... sometime in the late 1960s or early 1970s. I had to go buy an overcoat.... Well, the fellow from the embassy who was with me jabbered off in French to the clerk there something about TVA. I didn't know what the heck they were talking about. Well, two months later I was sitting in my office in the Rayburn Building and in comes a check from a bank in New York for about 200 bucks.... I called the bank. I said, `Why did you send me $200?' They said, well, that is the rebate on the French TVA tax that I had paid on the overcoat."

Consider that the French sales tax when Gibbons says he bought his coat averaged 22 percent. So if Gibbons really paid a $200 tax, then the coat must have cost him $1,100 before the rebate. In today's dollars that would be a $5,000 overcoat!

Rep. Mark Foley (R-Fla.) noticed the implausibility of Gibbons' arithmetic. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.