The Bizarre Consequences of Lying
Today, Judge Lewis Kaplan derailed a major criminal prosecution against former partners of KPMG for an illegal tax shelter they promoted in the early part the century. Kaplan is a Clinton appointee. So at first blush it might seem bizarre that he would dismiss these charges against formerly wealthy defendants when the indigent get screwed everyday. But it was the right call and Kaplan was correct to be indignant.
A common and persistent republican theme is lower taxes. The mechanism may change (eliminating “double”-taxation on corporate dividends, instituted a “flat tax,” creating a consumption tax), but the message has always been the same: smaller government and lower taxes will make the world a better place. Of course, government costs money. And republicans are acutely aware of this fact. So to pander to their base they find ways to reduce taxes without completely bankrupting the federal government. For example, we have pretty low corporate tax rate, which makes corporations happy. But our federal income rates are still reasonably high. So although we lose some taxes on corporate gains, we make up a lot of it by taxing really rich people that own corporations. But what happens when really rich people figure out how to avoid paying taxes? Well, then you have two choices: 1) prosecute these people and fess up and admit that we need taxes and higher tax rates or 2) go ape-shit on these rich people and treat them as an aberration so you can continue the charade that lower taxes are better for everyone. Obviously, the Bush administration chose the latter and aggressively and unconstitutionally pressured KPMG to cut off their partners’ legal fees to make it easier for the justice department to prosecute them.
Now, this isn’t a pure consequence of republican duplicity. Our “tough on crime” culture plays a part and creates incentives to prosecute people outside the boundaries of the law. But lying is part of it. When you tell people one thing that you know is demonstrably false, you have to cut corners to prevent people from finding out you are full of shit. Thankfully, Judge Kaplan called them on their lies.
