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File, Deduct, Hide: Six Essential Stories About Taxes

A seasonal "Statue of Liberty" waver for Liberty Tax walks down the streets of Janesville, Wisconsin. (Anthony Wahl / The Janesville Gazette via AP)

Today is Day 85 of the Trump Administration, and like a sailor condemned to four years at sea we carry on, stooped and weary from the weight of this albatross around our necks—Donald Trump’s taxes.

We know they exist—but what does their existence even mean any more? We’ve seen a few pages here and there, sent as proof of life to the New York Times and waved around by Rachel Maddow. In a bid to bring attention to President Trump’s noteworthy silence on his financial position, a tax march will take place on April 15 worldwide in response to a single tweet by a Vermont law professor.

Taxes are at once no one’s business and everyone’s business. We all pay them: how we pay them, what they are used for, what we want them to be used for, and what the government would rather do with them instead, is the Great American Story.

1. “Tax Time” (Jill Lepore, The New Yorker, November 2012)

Lepore takes the long view on taxes with a history of how the U.S. decided to levy an income tax. It’s easy to dismiss taxes, she argues, and much harder to defend them. But that’s not a problem our ancestors shared—despite opposition to King George’s levy on goods like tea, the founding fathers had no problem squeezing the rich with large indirect taxes for market exchanges such as imports. More than a century later, the constitutional amendment that made income tax the law of the land wasn’t even an issue in Congress. But taxes have since become a bone of endless contention, especially as they concern how much rich and poor should pay. Lepore weaves a deft story to tell us exactly why.

Taxes dominate domestic politics. They didn’t always. Since the nineteen-seventies, almost all of that talk has been about cuts, which ought to be surprising, because more than ninety per cent of Americans receive social or economic security benefits from the federal government. Americans, though, find it easier to see what they pay than what they get—not because they aren’t paying attention but because the case for taxation is so seldom made.

2. “Too Rich to Live?” (Laura Saunders and Mary Pilon, The Wall Street Journal, July 2010)

One of the most hotly contested forms of taxation is the estate tax, when a dead person’s estate is transferred to another person. Though the idea is thousands of years old and the American permutation has been around in some form or another for a century, the tax was gradually phased out starting in 2001. But when it came back in 2011—the product of impermanent legislation—the rich who stood to lose the most from the transfer of their substantial assets bucked.

It didn’t matter; the tax became permanent in 2013. But when Saunders and Pilon interviewed dying people and their potential heirs on the eve of the tax’s return, they found a strange phenomenon—people who make life-or-death decisions about their health and end-of-life care based on the potential of saving their heirs money on taxes.

In 2009, more than a few dying people struggled to live into 2010 in hopes of preserving assets for their heirs. Clara Laub, a widow who helped her husband build a Fresno, Calif., grape farm from 20 acres into more than 900 acres worth several million dollars, was diagnosed with advanced cancer in October, 2009. Her daughter Debbie Jacobsen, who helps run the farm, says her mother struggled to live past December and died on New Year’s morning: “She made my son promise to tell her the date and time every day, even if we wouldn’t,” Mrs. Jacobsen says.

In New York the lapsing tax spawned a major family conflict, according to one attorney. As a wealthy patriarch lay dying at the end of the year, it became clear that under the terms of the will his children would receive more if he died in 2010, while his wife (not the children’s mother) stood to benefit if he died in 2009. The wife then filed a “do not resuscitate” order and the children challenged it. The patriarch lived a few days into 2010, but his estate, like Mrs. Laub’s, remains unsettled given the legislative uncertainty.

3. “The Throwaways” (Melissa Chadburn, The Rumpus, January 2012)

Taxes are a matter of life and death not just to the wealthy, but to the people who need tax-funded social services to survive. Chadburn, who endured horrific abuse and a traumatic stint in foster care, considers what taxes mean to the people she calls “the throwaways,” those who depend on the small sums of money that anti-taxation advocates fight not to have to pay. As disparities between poor and rich grow, she argues, taxation can be seen as a revolutionary lifesaving act, a statement about the very worth of the people it helps.

Strangely, it was for dreams like these—the simplest dreams of rest, of feeling, of safety—that I first began to look at taxes. Taxes are the tool that makes these dreams of ours possible. Shelter for everyone, food for everyone, taxes ensure public safety. And what about love? Love is given and received. Love is not a solitary act. Love requires people to commune with one another.

My previous associations with taxes were shame and guilt and trickery. Then I looked at my history with money and public funding in general. Some people have argued that we are a nation of self-interested people. People who only care about themselves. Their own well-being.

I disagree. I think we are better than that but have been assaulted by the overwhelming personification of Greed….It’s our first lesson in pain.

4. “Tax Hero” (Planet Money, NPR, March 2017)

Despite the stakes of taxation, the act of filing taxes can be unbearably mundane. But there’s a darker side to doing taxes—the poor pay a disproportionate amount to tax preparation firms that gouge them on relatively simple filings. Enter Joseph Bankman, a Stanford tax law professor who thought he’d figured out a simpler way. But as Planet Money reveals, simpler isn’t always better for those who benefit from the current, complex system. His fight for painless filing became a legislative battle—and his opponents were a strange coalition of their own.

5. “Mossack Fonseca: Inside the Firm That Helps the Super-Rich Hide Their Money” (Luke Harding, The Guardian, April 2016)

While your average Joe struggles to pay the tax preparers, there’s a shadowy world of ultra-wealthy corporations and individuals who’ll do anything they can to not pay taxes at all. Last year, the lid on one of these complex tax-avoidance schemes blew open when 11.5 million documents—now known as the Panama Papers—were leaked, revealing inside information on over 200,000 offshore shell corporations that exist to help the one percent sidestep their tax obligations.

The Guardian won a Pulitzer for their groundbreaking investigation of the Panama Papers (Here’s a breakdown of how they got the scoop—and an in-depth podcast that tells the entire sordid story behind their award-winning investigation.) One of their most fascinating stories was about Mossack Fonseca, the Panamanian law firm that helped the rich find tax-friendly parking places for their cash. Harding tells the story of a company that’s part financial services provider, part peddler of international intrigue—one that’s marketed directly to Americans with money to hide.

Mossack Fonseca’s leaked emails reveal the extraordinary measures that some of its well-heeled clients took to keep their financial affairs secret. Especially the Europeans and Americans, who have latterly found themselves under scrutiny from their own governments.

One theme that emerges is anxiety. Wealthy individuals with “undeclared” offshore bank accounts are afraid they might get rumbled.

Another theme is victimhood. The super-rich, it appears, feel they are being unfairly picked on—persecuted even.

6. “Donald Trump Tax Records Show He Could Have Avoided Taxes for Nearly Two Decades, The Times Found” (David Barstow, Susanne Craig, Russ Buettner, and Megan Twohey, The New York Times, October 2016)

What happens when a tax evader is not an average citizen but the President of the United States? Of course, the answer is “we don’t know yet,” because we have no idea what’s in Donald Trump’s personal tax returns. Despite Rachel Maddow’s overhyped scoop on a few pages from Trump’s 2005 return, nobody’s been able to get ahold of what could be the most sought-after documents in modern history. And thus, we don’t know what wealth the President has to brag about—or hide.

After receiving several pages from Trump’s 1995 returns from an anonymous source, Barstow, Craig, Buettner, and Twohey hypothesized that back when he was a mere real estate mogul, the president used a $916 million business loss to cancel out his tax debt for decades. Is it true? Until Trump comes forward with his tax returns, there’s no way to know. But journalists won’t stop piecing the story together—and if the tax march is any indication, citizens won’t stop insisting that he tell the truth about his financial situation.

But the most important revelation from the 1995 tax documents is just how much Mr. Trump may have benefited from a tax provision that is particularly prized by America’s dynastic families, which, like the Trumps, hold their wealth inside byzantine networks of partnerships, limited liability companies and S corporations.

The provision, known as net operating loss, or N.O.L., allows a dizzying array of deductions, business expenses, real estate depreciation, losses from the sale of business assets and even operating losses to flow from the balance sheets of those partnerships, limited liability companies and S corporations onto the personal tax returns of men like Mr. Trump. In turn, those losses can be used to cancel out an equivalent amount of taxable income from, say, book royalties or branding deals.

 

When Does a Company Decide You Are Human?

(Larry MacDougal via AP)

Here are two stories to read in the wake of the horrific behavior of both United Airlines and law enforcement agents who bloodied and dragged a passenger off of a flight in Chicago on Sunday. Read more…

The 2017 Pulitzer Prize Winners

2017 Winner for Feature Photography. (E. Jason Wambsgans/Chicago Tribune/TNS via Getty Images)

The winners of the 2017 Pulitzer Prize were announced today — on the 170th birthday of Joseph Pulitzer — and though there were some surprises, the majority of the honors were bestowed on some of the year’s most talked about pieces of writing. For example, Colson Whitehead won for his ground-breaking work of fiction, The Underground Railroad. And C.J. Chivers of the New York Times snagged a Pulitzer for his heart-breaking portrayal of a soldier grappling with his life stateside in “The Fighter.”

The entire list of the other Pulitzer recipients can be found here, but below is a compendium of some of the celebrated works. Read more…

Margaret Atwood: The Prophet of Dystopia

Longreads Pick

At The New Yorker, Rebecca Mead profiles Margaret Atwood — Canada’s prolific queen of literature. Mead and Atwood cover the resonance of The Handmaid’s Tale in Donald Trump’s America, Atwood’s approach to feminism, and the purpose of fiction in today’s society. Beloved for her incisive mind along with her works, Atwood uses unlimited curiosity as her approach to a life well lived — whether that’s living in a tent while birding in Panama, engaging with her 1.5 million Twitter followers, or writing as a septuagenarian. “I don’t think she judges anything in advance as being beneath her, or beyond her, or outside her realm of interest,” says friend and collaborator, Naomi Alderman.

Source: The New Yorker
Published: Apr 17, 2017
Length: 34 minutes (8,622 words)

Are Regular Russians Ready to Take On Vladimir Putin?

Protesters wave a national flag as they crowd in downtown Moscow on March 26, 2017. (AP Photo/Ivan Sekretarev)

The Russian presidential election is a year away, but protests have already begun. Last week, images of Russians being carried and even dragged from Moscow’s Red Square spread throughout the Western media. Then came the crackdown—blocked access to web pages and social media showing the photos, and a criminal case against the protesters. Earlier this week, the square was nearly empty despite another planned action.

The protests demanded the resignation of Prime Minister Dmitri Medvedev and objected to widespread corruption, but they also served as a rare moment of rebellion in a country that rarely dares defy its leader, President Vladimir Putin.

Read more…

The Top 5 Longreads of the Week

This week, we’re sharing stories from Peter Waldman, Garrett M. Graff, Rachel Aviv, Catrin Einhorn, Jodi Kantor, andd Eric Boodman.

Sign up to receive this list free every Friday in your inbox. Read more…

Seven Stories About the Science Behind Fast Food

(AP Photo/Sunday Alamba, File)

I am a pizza apostate. Not only do I use a fork and knife whenever I eat pizza, I also sometimes bypass my normal slice joint for the siren call of deliciously buttered-and-garlic salted crust that only Dominos can deliver.

According to Bloomberg, I am not the only one who can’t resist the Michigan chain’s pies: the company is now worth a staggering $9 billion—its share price has risen more than 2,000 percent since 2010 (outpacing the likes of Google and Apple)—and Dominos has not only been brought back to life, it is now the leading force in the intersection of fast food and technology. As Susan Berfield writes,

Domino’s has always understood the importance of not having to go anywhere. Although you can still walk into a restaurant if you must, there are at least a dozen ways to order a Domino’s pizza in absentia. Some are self-explanatory: mobile apps, Apple Watch, Facebook Messenger. Others need some explanation. To order via Twitter, you must create an online account, save a pizza as your favorite (known as your Easy Order), and connect it to your Twitter account. Then tweet a pizza emoji to @dominos. “We’ll know who you are, what pizza you want, your default location and payment,” Maloney says. “We send a ‘Sounds awesome, are you sure?’ You send a thumbs up.” But if you want to order something other than your favorite, you’re out of luck.

Maloney clears away the remains of our lunch (Pacific Veggie, thin crust) to show me option 12 on his phone: zero-click ordering. “This will freak you out,” he says. “What’s the easiest way to order? When you don’t have to do anything.” One day Maloney and Garcia were in the car with their ad guys, dreaming of how to one-up Amazon’s one-click ordering. Three months later they had their zero-click app, which does require one click to start. “Tap the Domino’s icon to open it and find my Easy Order,” Maloney says. That’s it. “I have 10 seconds before it automatically places the order.” A big countdown clock appears on Maloney’s screen. If he does nothing, his Easy Order, a 12-inch hand-tossed pizza, will be on its way to his home.

While Dominos is at the forefront of our fast food, it isn’t the only company to have paired food science and tech to deliver a product that is utterly craveable. The following are some of the best pieces in the past several years to capture this culinary shift. Read more…

The Immigration-Obsessed, Polarized, Garbage-Fire Election of 1800

John Adams and Thomas Jefferson. Images via Wikimedia Commons

A. Roger Ekirch | American Sanctuary: Mutiny, Martyrdom, and National Identity in the Age of Revolution | Pantheon | February 2017 | 33 minutes (8,149 words) 

Below is an excerpt from American Sanctuary, by A. Roger Ekirch.

For background, it is important to know that a seaman named Jonathan Robbins participated in a mutiny on the HMS Hermione in 1797, the bloodiest mutiny in British naval history. Afterward, he joined the American navy, but he was eventually recognized and jailed. To justify his actions, Robbins claimed he was an American citizen who had been impressed—that is, captured and forced into servitude—by the British navy. However, his American citizenship was disputed. The British sought his extradition, which the president, the Federalist John Adams, granted—an action which had disastrous political consequences for his party. Robbins was found guilty by a British naval court and hanged from the yardarm of the HMS Acasta in 1799.

This story is recommended by Longreads contributing editor Dana Snitzky. Read more…

The Restless Ghosts of Baiersdorf

The new entrance gate to the Jewish cemetery in the center of Baiersdorf, a small town in Bavaria. (All photos by Sabine Heinlein unless otherwise noted.)

Sabine Heinlein | Longreads | March 2017 | 25 minutes (6,248 words)

 

David Birnbaum got off the train in Baiersdorf. The Bavarian village 12 miles north of Nuremberg as the crow flies made a pleasant, pastoral impression. Green fields surrounded the railroad station, and men in leather trousers stood in front of traditional timbered houses.

In 2000, Birnbaum, a corporate business development manager, had come all the way from Rechovot, Israel. He had never heard of Baiersdorf until he looked at one of his family trees. His great-great-grandfather, the renowned numismatist Abraham Merzbacher, was born there in 1812, as was another famous relative, the mountaineer and explorer Gottfried Merzbacher. In the first half of the 19th century, the era in which the two men were born, almost one third of Baiersdorf’s 1,400 residents was Jewish.

David Birnbaum’s relatives had left Baiersdorf for various reasons and in all directions. Abraham Merzbacher went to study in Munich. He became a banker and collected one of the largest private Jewish libraries in the world. Gottfried Merzbacher caught wanderlust. He went to explore Central Asia’s Tian Shan mountains, indulging in nature’s “wondrously sweet, flowery alpine valleys… wild gorges… rock chains of unprecedented boldness.” Later, a glacial lake there was named after him. In his expedition “sketches” (available only in German) Merzbacher also wrote that in the magic of this “unworldly solitude (…) the struggles and passions caused by the contrast of people’s real or perceived interests appeared surreal, like phantoms.”

David Birnbaum knocked at the town hall in Baiersdorf’s neat main square. He expected to unearth information about his family by looking at 300- or 400-year-old tax records at the town’s archive, as he had done in other places in Germany. A clerk said that the archive was a complete mess; no way that he’d find anything there. Normally, the clerk disclosed, they don’t even let people go to the Jewish cemetery unescorted. But since Birnbaum had come all the way from Israel and only had a few hours, he could take the big iron key and go to the cemetery which was, unlike other Jewish cemeteries, located right in the center of town. Read more…

Rebecca Solnit Explains Things–Expertly

For Elle, Keziah Weir profiles prolific feminist and activist Rebecca Solnit. Solnit is expert at crystalizing common experiences in such a way that lays bare deeply ingrained patriarchal influences. You can never un-see them again, and suddenly you realize how entrenched they are. Weir herself had this experience reading Solnit.

The title essay of Men Explain Things is based on an encounter Solnit had with an older man at his Aspen house party in 2003; he expounds at great length to her about a recent biography of Eadweard Muybridge, the pioneering stop-motion photographer famous for his image series of a horse galloping—talking over her friend’s efforts to tell him that Solnit herself had written the book. “I like incidents of that sort,” Solnit writes, “when forces that are usually so sneaky and hard to point out slither out of the grass and are as obvious as, say, an anaconda that’s eaten a cow.” Peggy Orenstein, the author of last year’s best-seller Girls & Sex: Navigating the Complicated New Landscape, likens the essay’s reception to the feminist “click moments” of the 1970s, when “something you knew deep in your bones that nobody had ever quite articulated zapped into focus.”

I can relate. Raised on the girl-power feminism of the ’90s—Spice Girls, The Vagina Monologues, Hermione Granger, Daria—my friends and I didn’t think we needed feminism. We thought the battle for women’s rights had already been won. Besides, feminism carried uncomfortable anti-man connotations, amplified by “empowered” female pop-culture icons from Katy Perry to Madonna, who denounced the term as exclusionary. “I’m not a feminist, I’m a humanist” was a popular refrain. But then, in Men Explain Things, I read about Solnit, six or seven or nine books into her career and still having her own thoughts explained back to her by men. In the same collection, I read her trenchant take on FBI whistle-blower Coleen Rowley, who issued pre-9/11 warnings about Al Qaeda and was ignored by her mostly male colleagues. I read about how an unnamed American university responded to campus rapes by telling young women to stay inside after dark. I started to wonder: Why do I gravitate toward books by male authors? Why hasn’t it bothered me that my academic mentors were exclusively men? Why do I feel competitive with my female classmates (and, later, colleagues) but not male? Without being conscious of it, I’d put the men in a different, more exalted category; my definition of “winning” essentially meant taking home the silver, or the bronze. The guys would land three out of four of the top jobs, and they’d dominate the conversation—whether on literature or abortion, whether at parties or in the serious matte pages of the New Yorker. Click.

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