Anything David Cay John­ston writes for the New York Times is worth read­ing, and his arti­cle today on the Con­gres­sional tes­ti­mony of Nina E. Olson, the national tax­payer advo­cate, is no excep­tion. In the space of a single two-​column arti­cle, he gives us more hard infor­ma­tion than we can get in a week’s worth of primary-​season pun­ditry. In today’s arti­cle we learn that:

1/ Olson has pro­posed “apology payments” rang­ing from $100 to $1000 that would be used to com­pen­sate tax­pay­ers who endure “excessive expense or undue burden” on their time as a result of I.R.S. mistakes.

2/ The gov­ern­ment could col­lect $100 bil­lion or more in taxes on the cash econ­omy by track­ing credit card pay­ments, state sales tax reports, and other records.

3/ The use of pri­vate tax col­lec­tors may cost more money than it brings in: [Read more]

From an arti­cle in today’s NYT by David Cay Johnston:

Retail elec­tric­ity prices have risen much more in states that adopted com­pet­i­tive pric­ing than in those that have retained tra­di­tional rates set by the gov­ern­ment, new stud­ies based on years of price reports show…. The dif­fer­ence in prices charged to indus­trial com­pa­nies in market states com­pared with those in reg­u­lated ones nearly tripled from 1999 to last July, accord­ing to the analy­sis of Energy Depart­ment data by Mar­i­lyn Showal­ter, who runs Power in the Public Inter­est, a group that favors tra­di­tional rate reg­u­la­tion. The price spread grew from 1.09 cents per kilowatt-​hour to 3.09 cents, her analy­sis showed. It also showed that in 2006 alone indus­trial cus­tomers paid $7.2 bil­lion more for elec­tric­ity in market states than if they had paid the aver­age prices in reg­u­lated states.

Another reminder that market com­pe­ti­tion is not about lower prices for cus­tomers; it’s about profit max­i­miza­tion for firms. Some­thing to keep in mind the next time energy com­pa­nies come pitch­ing dereg­u­la­tion in your neighborhood.

Source: “Tax Cuts Increased Income, but Hardly Equally” by David Cay John­ston in today’s NYT.

The New York Times reports that thanks to a com­pli­cated tax struc­ture, part­ners of the Black­stone Group will, over the course of 15 years, receive $1.1 bil­lion in tax deduc­tions for their IPO. That’s $198 mil­lion over what the part­ners will pay in taxes on the stock sale, mean­ing that they will not only avoid paying taxes on the IPO but will actu­ally earn a neg­a­tive tax of some $200 million.

Once you get past the shock of this fact, the most vexing part of the whole thing is that Blackstone’s neg­a­tive tax turns on an account­ing fic­tion known as good will, “the value of the intan­gi­ble assets, like a well-​known brand name, that are built up by a com­pany over time.” The NYT’s David Cay John­ston explains how they’ll do it:

Indi­vid­u­als who create good will cannot deduct it. But when good will is sold the new owners can [deduct it] because its value is assumed to erode. The Black­stone part­ners sold the good will from their left pocket to their right.

It’s a nice trick I don’t rec­om­mend trying on your next 1040: sell your­self some quan­tity of fading charm or falling beauty and take a deduc­tion for your future losses. But what won’t work for you will work for Black­stone, and with that bit of finan­cial leg­erde­main the Black­stone part­ners will actu­ally turn a profit off the U.S. Treasury.

It’s their busi­ness if the super-​rich want to get richer, but you’d think they could have the cour­tesy to leave the rest of us out of it. As it stands, for the next 15 years we the people will be sub­si­diz­ing the depre­ci­a­tion of Blackstone’s good will, an entity whose existence—especially of late—one has very good rea­sons to doubt.