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Section 382
SECTION 382....Today, Amit Paley of the Washington Post tells us the riveting story of Section 382 of the tax code, which the Treasury Department suddenly gutted (via a five-sentence notice) a few weeks ago while the rest of us were wrapped up in the drama of the bailout bill:
The change to Section 382 of the tax code — a provision that limited a kind of tax shelter arising in corporate mergers — came after a two-decade effort by conservative economists and Republican administration officials to eliminate or overhaul the law, which is so little-known that even influential tax experts sometimes draw a blank at its mention. Until the financial meltdown, its opponents thought it would be nearly impossible to revamp the section because this would look like a corporate giveaway, according to lobbyists.
The reason it looks like a corporate giveaway, apparently, is that it is a corporate giveaway — and it's going to cost the taxpayers something north of $100 billion. Plus, the notice was probably illegal. But no one wants to complain about it because it might put some big bank mergers in jeopardy:
"It was a shock to most of the tax law community. It was one of those things where it pops up on your screen and your jaw drops," said Candace A. Ridgway, a partner at Jones Day, a law firm that represents banks that could benefit from the notice. "I've been in tax law for 20 years, and I've never seen anything like this."
More than a dozen tax lawyers interviewed for this story — including several representing banks that stand to reap billions from the change — said the Treasury had no authority to issue the notice.
....Several [congressional] aides said they were still torn between their belief that the change is illegal and fear of further destabilizing the economy.
"None of us wants to be blamed for ruining these mergers and creating a new Great Depression," one said.
Some legal experts said these under-the-radar objections mirror the objections to the congressional resolution authorizing the war in Iraq.
"It's just like after September 11. Back then no one wanted to be seen as not patriotic, and now no one wants to be seen as not doing all they can to save the financial system," said Lee A. Sheppard, a tax attorney who is a contributing editor at the trade publication Tax Analysts. "We're left now with congressional Democrats that have spines like overcooked spaghetti. So who is going to stop the Treasury secretary from doing whatever he wants?"
I guess some things never change. On either side.
Where'd these guys in congress get the notion that billion dollar giveaways to banks were popular?
Having read Naomi Klein's Shock Doctrine, I'm not shocked. Not even surprised.
Just one more thing for the Transition Team to look into.
Those folks are gonna be real busy. Hope they get Christmas off.
"...For the love of money is the root of all evil..." - 1st Timothy 6:10
This is somewhat old news Kevin. I'm glad the WAPO figured it out, but others have been talking about it for sometime.
This is one item (amongst many) that makes me laugh when I hear pundits say that because of the meltdown capitalism will never be the same.
I thought the tax policy was to avoid the "buying" of tax losses in connection with acquisitions.
More crazy outgoing Bush rules: this time to cut outpatient Medicaid eligibility
President Bush, on Friday, "narrowed the scope of services that can be provided to poor people under Medicaid's outpatient hospital benefit."....
"Public hospitals and state officials immediately protested the action, saying it would reduce Medicaid payments to many hospitals at a time of growing need," the New York Times reports. Ann Clemency Kohler, the executive director of the National Association of State Medicaid Directors, said:
The new rule is a pretty sweeping change from longtime Medicaid policy. Since the beginning of the program, states have been allowed to define hospital outpatient services. We have to question why the rule is being issued now, three days after the election, with a new administration coming in."
This is the level of assault against the people of the United States to which Bush has accustomed us.
Shag, it was. According to the treasury it isn't now.
Treasury can't change the Code, that is the law and can only be changed by Congress. They can only change the Treasury Regulations which have much less force than the Code, and which explain how the Code works and is to be applied.
Of course the Dems will roll over on this too. Obama is well past al dente.
Where'd these guys in congress get the notion that billion dollar giveaways to banks were popular?
Posted by: Boronx on 11/10/08 at 2:01 AM Respond
Where did YOU get the idea Congress cares about what's popular? They're looking out for themselves and for the people who can help THEM (in this case the banks). Did you forget to take you cynic pills AGAIN?
Why, hello, Shock Doctrine! Yep, these guys never change. Wait for a crisis, use the politics to push overt changes that wouldn't be palatable under normal circumstances, and slip some other crap in while people are freaked. January 20, 2009 can't come soon enough.
Kevin, would you please approve my earlier comment linking to this thread? I guess it was held for approval because it had too many links in it.
Here we go again. I thought we had to bail out these banks because they're too big to fail, so we just make it easier for them to get bigger? Add that hundred or so billion more to the bailout, and let me run a shell company that loses all its money paying me. Hey, ain't that investing in infrastructure?
I love this notion of government we have: "Who cares if it was illegal and the person had no right or standing enacting it, we don't want to look bad complaining about clearly illegal activity during a crisis"
Can we take it out back and shoot it in the head...say, mid/late January?
http://thesebastards.blogspot.com/
Silly me, that I might want to actually see what Section 382 actually is before we get all bent out of shape over it disappearing from the tax code? Of course, we should know about it being illegally deleted from the law, but it would be nice to see what it actually means as well as the justification for its deletion. Help us out here, Kevin, Please?
On a similar note, someone above also mentioned a Medicaid rule change that Bush made in recent days. From the link we were supplied yesterday, it appears that what was cut was only that eye exams & dental work will no longer be paid for if done in an ER. If that is indeed the case, it sounds like a good idea since doing these in an ER setting is needlessly & unnecessarily expensive. I realize that receiving these services elsewhere is an real problem in some areas, but there are much better ways to solve that problem than having it done in a hospital. For example, rolling Medicaid into Medicare as part of the Universal Health Care package coming up in Congress next year.
Also, FWIW, I am among those scratching my head over taking bankrupt banks & other corporations that are too big to fail & using govt to have them merge with other such corps. to make even bigger to big to let fail banks & corps. Shouldn't we be in the process of breaking these outfits up so they cannot so easily wreck the National & world economies? Or maybe I'm being naive here?
Mea Culpa. It took me awhile to find the link explaining Section 382 further. And after reading it, now I know why we had the sudden bidding war & lawsuits = over Goldman-Sachs? - between Citigroup & Wells Fargo. Also, makes more sense why both banks were named in the initial dispersal of the $700B bailout bill funds. Call it "Hush Money". Click the link. Very informative, but it will probably piss you off more than you are already.
When the hell are the Dems going to take legal action about this 382 scam? We must insist to them and to Obama.
Bob in Fl...where is the link explaining Section 382 and is it in laymen's terms?
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