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The Unrelenting Arrogance of the Greedy Class
Fair Use Statement
More information about the Alternative Minimum Tax.
Background articles about the negative effects of the dot-bomb.
I've
been waiting and hoping that the dot-bombers would finally come
around, get out in the streets, and rally and rail against the greed,
the arrogance, the sprawl, the destruction of neighborhoods and
small businesses, the evictions, the misused capital, the SUVs,
the upward spiraling housing costs -- one of the biggest rip-offs of
the century -- that they all played a part in creating.
Well, they finally got out there and did it! Problem is that they still
will take no responsibility for the destruction that they took part in.
Rather, they say they shouldn't have to pay taxes. There is no end
to the arrogance of the greedy class, is there?
Stop the DotBomber Bailout - Email Your Senators, Email Representative Matsui and tell him what you think about the proposed DotBomber Bailout, tell Representative Lofgren ([email protected]) the same thing. And ask them all where the rest of us go for relief from the effects of the DotBomb disaster?
=============================
Source: San Jose Mercury News
Posted at 10:46 p.m. PDT Monday, June 18, 2001
High-tech employees blast tax at S.J. rally
The Alternative Minimum Tax is denounced as `horrible'
BY MARK SCHWANHAUSSER
Mercury News
High-tech employees who triggered huge tax bills by exercising stock options rallied and railed in downtown San Jose on Monday, seeking relief from arcane tax rules that have drained savings and forced some into bankruptcy.
Stories -- and sometimes tears -- flowed at U.S. Rep. Zoe Lofgren's ``town hall meeting'' at San Jose City Hall. But in short supply was a clear sense of how, when -- and whether -- Congress and the Internal Revenue Service might fix the problem.
``How many victims do you need before you say it's horrible?'' asked Kathy Swartz, a Mountain View woman, six months pregnant and soon to sell her ``dream house'' because she and her husband, Karl, owe $2.4 million in alternative minimum tax.
U.S. Rep. Robert Matsui, invited because he's a member of tax-writing Ways and Means Committee, listened for an hour as speaker after speaker explained that they face five- to seven-figure tax bills that they cannot pay.
``We need instant relief,'' said the Sacramento Democrat. ``We need for something to be done immediately. There are too many people affected.''
Matsui's feeling was almost universal among the estimated 250 people at the meeting, many of whom owed the AMT because they exercised incentive stock options and then held the stock into the next calendar year as it plunged in value. They owe the tax on paper profits they feel they never had.
To many Americans -- even those in Silicon Valley -- the tax problems are those faced by greedy workers who gambled with stock options -- and lost when the Nasdaq nosedived last year.
The meeting was the first step by Lofgren and the grass-roots group Reform AMT to change those minds. They said they must prove the alternative minimum tax also is trapping lower- and middle-class workers in high-tech communities from San Jose to Austin to Arlington.
No rich people
``I didn't hear any rich peosple talking today,'' said Lofgren, D-San Jose. Her bill seeks to remove the paper profits of incentive stock options from the AMT, retroactive to Jan. 1, 2000.
``I heard victims of an unintended consequence of a tax law written years ago,'' Lofgren said. ``If the people speaking here had been victims of floods or fire, the government would have extended a hand long ago.''
Still, Lofgren and Matsui doubt that this year they can push through her bill or a broader reform of the AMT. The estimated $200 billion or more needed to make up for eliminating the AMT isn't available in the wake of the president $1.35 trillion tax cut.
The AMT was created in 1969 to ensure the rich couldn't use tax shelters to avoid paying their ``fair share.'' Taxpayers are supposed to calculate both their regular tax and the AMT bill, then pay whichever is higher. The AMT is likely to snare 1.5 million taxpayers this year and nearly 36 million by 2010.
``This is an issue whose time is coming,'' said Clint Stretch, director of tax policy for Deloitte & Touche in Washington, D.C. ``I'm doubtful there is progress that can be made this year. . . . But what's happening is people are becoming aware of it.''
If the bystanders at a rally before the town hall meeting are any indication, that awareness is not widespread. About 50 optionees gathered in the shade of a tree outside City Hall, holding placards that said ``Guns Don't Kill People, AMT Kills People,'' ``Income Tax Should Be On Income,'' and ``Paper Gains, Real Losses.''
Two San Jose workers watched with curiosity as they lunched on a nearby park bench, but neither could guess what AMT stood for, let alone say whether they would be sympathetic to a change. ``I've never heard of it,'' said Jen Styczynski.
Inside at the town hall meeting, Lofgren, Matsui and IRS representative Don C. Hallenbeck sat before the crowd as taxpayers stepped to the microphone. Many were Reform AMT members, but others included sympathetic tax professionals. Several urged legislators to broaden Lofgren's proposal to taxpayers who owe tax bills on non-qualified stock options.
Can't pay
``Even if I sell everything I possess, I cannot pay the tax,'' said C.T. Vanajakshi, an unemployed Mountain View astrophysicist who said her broker's plan to exercise her non-qualified options with a margin loan left her owing $300,000 in taxes. At one point she felt she had little choice but to ``throw myself off a cliff.''
Other optionees told of the financial toll their mistakes are causing them. Some have drained savings, taken out home-equity loans, borrowed cash from relatives. Some paid what they could, others are negotiating with the IRS and California Franchise Tax Board. Some told tales of personal stress causing physical illness.
Not everyone was swayed. Listening to the testimony, financial planner Richard Haas said Lofgren's bill ``would be a bailout for the greedy.'' He says several of his clients avoided the problem by selling their depressed stock in 2000, before the AMT was triggered. By doing so, their profits were taxed as income at rates as high as 39.6 percent, but they avoided the AMT on the paper profits.
Retroactivity
``It's the retroactivity that bothers me,'' Haas said. ``It's because they bet and lost that they owe the tax.''
Howard Greenstein of San Jose rejects that he was greedy. ``The greedy ones are the ones who did the same-day sale,'' said Greenstein, who owes $71,000 of AMT. ``We were the ones who invested in our company, our country . . . but we're the ones holding the bag.''
Reform AMT organizers considered the rally and town hall meeting a success because they publicized the strain that optionees face.
Reform AMT leader Jay Cena said the meeting reinforces that it's one thing to change minds, it's another to change laws. Politicians are telling them to be patient, but that's difficult when tax penalties and interest are mounting.
``I didn't hear any quick-turn solutions,'' Cena said. ``I'm looking for a lifeline. I didn't necessarily see or hear one yet.''
Contact Mark Schwanhausser at (408) 920-5543 or [email protected].
Stop the DotBomber Bailout - Email Your Senators, Email Representative Matsui and tell him what you think about the proposed DotBomber Bailout, Tell Representative Lofgren (a href="mailto:[email protected]">[email protected]) the same thing. And ask them all where the rest of us go for relief from the effects of the DotBomb disaster?
More information about the Alternative Minimum Tax.
Background articles about the negative effects of the dot-bomb.
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