This is a different kind of tax scam. Not the case where a wealthy taxpayer sells a business and wants to avoid tax on a $70 million capital gain so hires a well-known accounting firm to devise a complex transaction using various financial derivatives to generate an artificial loss to offset the real gain. Not the outright fraud of the shim-sham man who counseled hundreds that the federal income tax applied only to foreigners.
Instead, this involves buying influence and power over Congress. It turns out that Jack Abramoof didn't always want it to be clear whose money was going to whom for what. So the corrupt lobbyist did what most crooks do--he "laundered" the money. What is interesting here is just who did the laundering. In effect, some tax exempt organizations served as a hidden part of Abramoff's lobbying empire. See this AP story on Prob Links Norquist, Abramoff.
Remember Grover Norquist, who consulted with Mr. Bush back in 2003 about the best way to cut taxes for the rich? Norquist runs Americans for Tax Reform, a group that has aggressively lobbied for estate tax repeal, privatization of Social Security, and consumption-type taxes that exempt capital income from taxation. Norquist hosts get-togethers in Washington where people of privilege can rub shoulders with high officials in the Bush Administration. See this item on DailyKos from the National Journal.
Norquist is also an old buddy of Abramoff, from college days, so Norquist's group also served as a conduit for money flowing from Abramoff clients to finance fake grassroots campaigns--Abramoff just needed to remind himself to "Call Ralph re Grover doing pass through." (That'd be Ralph Reed, the purportedly upstanding leader of the Christian Coalition and now a politico in his own behalf.) See Susan Schmidt and James Grimaldi, NonProfit Groups Funneled Money for Abramoff, Washington Post, June 25, 2006, at A1 (reporting on the Senate Indian Affairs Committee report on tribal lobbying).
Abramoff also cautioned Norquist to be discreet, since they wouldn't want to appear to be "buy[ing] the taxpayer movement." Id. The article notes that Norquist claimed that his group and Abramoff's gambling clients just happened to share the same anti-tax views and that ATR wasn't concealing the source of funds.
The Senate hearings on the lobbying activity are available at this Indian Affairs Committee site. The 373-page report, "Gimme Five--Investigation of Tribal Lobbying Affairs" (June 22, 2006), is available in pdf form here. The report concludes that various tax-exempt organizations were engaging in activities outside their purpose, helping to channel funds to hide their source and/or to evade taxes, and serving as "extensions" of lobbying organizations. Yet the committee concludes that no further legislation is needed and settles for recommending some "best practice" measures.
I suspect lobbying needs to be more strongly regulated. How about publicising the time, place and names of lobbyinsts who meet with any government official? And organizations like ATR that have funneled money from one pocket to another should be denied tax exemption. These activities of serving as a conduit go to the core of the purpose of tax exemption--it was not intended to facilitate the Abramoff-Norquist type of influence-peddling.
Recent Comments