April 2003 Selected News Clips

(Especially noteworthy articles’ headings highlighted in gold.)

MICROSOFT AUSTRALIA USES OFFSHORE SALES OFFICES TO REDUCE TAX BILL

Microsoft has revealed that it books much of its Australian sales revenue through offshore offices in the region as a tax-saving measure. The revelation has come to light as the Australian Tax Office (ATO) steps up its investigations into multinational technology companies employing tax minimisation schemes.

However, under current Australian taxation laws, it is perfectly legal for multinational companies to book some of their Australian sales through offices in Singapore, Malaysia or Hong Kong to lessen their tax bill, and many corporations, including Microsoft, employ this method.

TRACKING SADDAM’S BILLIONS

As U.S. troops advance on Baghdad, a parallel assault on another prize -- the wealth of Iraq’s elite, particularly that of Saddam Hussein and his family -- is also speeding up. From the U.S. Treasury Dept. to creditors angling to collect decades-old debts, financial sleuths around the world are trying to figure out how much money Saddam, his family, and his cronies have stashed away, where it is hidden, and how quickly they can get their hands on it.

For the U.S., the hunt for Saddam’s wealth is a key test. To bolster its case that the war in Iraq is aimed at liberation, not empire, the Bush Administration has decreed that any funds looted from Iraq -- starting with $1.7 billion in Iraqi accounts frozen in the U.S. since 1990 -- will be devoted to rebuilding the country. U.S. officials and private analysts estimate that an additional $7 billion to $10 billion is hidden away. Finding the disputed loot, claiming it, and winning consensus on how best to use it will severely tax already strained ties among the U.S., Europe, and the Middle Eastern nations where the bulk of the cash probably resides.

DAVE BARRY ON DETERMINING YOUR TAXES (HUMOR)

It’s tax time. I know this because I’m staring at documents that make no sense to me, no matter how many beers I drink. Take, for example, my Keogh Plan. If you’re wondering what a Keogh Plan is, the technical answer is: Beats me. All I know is, I have one, and the people who administer it are always sending me Important Tax Information. Here’s the first sentence of their most recent letter, which I swear I am not making up:

“Dear David: The IRS has extended the deadline for the restatement of your plan to comply with GUST and various other amendments until, in most instances, September 30, 2003.”

I understand everything in that sentence, up to “David”. After that I am lost.

... I’m not the only taxpayer who has no idea what he’s sending to the IRS. This year, only 28 percent of all Americans will prepare their own tax returns, according to a voice in my head that invents accurate-sounding statistics.

WHY WE MAY NEVER REGAIN THE LIBERTIES THAT WE HAVE LOST

NEW YORK: The Empire State Building is now the tallest structure in the city, still half-stunned from the attacks that brought down the two taller buildings 18 months ago. As a new war raged in Iraq, the people in the room were acutely aware of the only slightly older war that has consumed their daily lives like nothing before -- the way in which the war on terrorism has also turned into an assault on individual liberties. The activists were in New York for the annual Computers, Freedom and Privacy conference.

Liberties ebbed and flowed in America’s past. Leaders curbed liberties, with the public’s often ignorant endorsement, in times of crisis. But the rights tended to come back when the crises ended. The fabled pendulum of liberty may not swing back this time. Why?

For one thing, the damage that one evil or deranged person or group can cause has grown. Even if America somehow persuades all Islamic radicals that we are a good and just society, there will still be some evil and deranged people who will try to wreck things and lives in spectacular ways. In other words, the “war on terrorism” cannot possibly end.

The Bush administration’s attitude, assisted by a Congress that long since abandoned any commitment to liberty, is that government has the right to know absolutely everything about you and that government can violate your fundamental rights with impunity as long as the cause is deemed worthy. You, on the other hand, have absolutely no right to know what the government is doing in your name and with your money, unless the information is deemed harmless by people who have every motive to cover up misdeeds. Bush and his people have turned secrecy into a mantra, and too few people recognize the danger that poses to our freedoms, much less our pocketbooks.

INTERNATIONAL LIVING 2003 QUALITY OF LIFE INDEX PUBLISHED

For the 19th time in 22 years, the United States comes in first. Current events notwithstanding -- e.g., airport security hassles, and recent “Homeland Security” measures, the U.S. remains, practically speaking, among the safest, freest places on earth. (Some are expected to take issue with this assessment.) There is no debating, though, that the U.S. is a comfortable and convenient place to live.

But is convenience your top priority? Certain countries on every continent have virtues that may merit your consideration.

US SUPREME COURT SETS LIMITS ON SIZE OF DAMAGE AWARDS

The Supreme Court set new constitutional limits on punitive damages today in a ruling that the business community hailed as a major victory in the long-running effort to shield corporate defendants from unconstrained jury awards. Punitive damages are not new to the court, which has wrestled with the issue for 20 years and has become increasingly sympathetic to defendants. But this decision in favor of the State Farm insurance company went beyond recent rulings in ways that could have a widespread effect.

The most significant departure in the 6-to-3 decision was the court’s declaration that juries should generally not be permitted to consider a defendant’s wealth when setting a punitive damage award. The practice is common, and the court had not previously addressed it in a majority opinion. “The wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award,” Justice Anthony M. Kennedy said for the majority today.

The court overturned $145 million in punitive damages that a Utah jury awarded against State Farm and that the Utah Supreme Court upheld. The jury had awarded $1 million in compensatory damages to a Utah couple. Justice Kennedy said the ratio of 145 to 1 resulted in a damage award that was “neither reasonable nor proportionate to the wrong committed.” He called it “an irrational and arbitrary deprivation of the property of the defendant.”

ALTERNATE MINIMUM TAX HITS US MIDDLE CLASS EARNERS

Bob Reilly is just a middle-class schoolteacher trying to get by. Sure, his family’s earnings total $100,000 a year. (His wife works in a doctor’s office). But that does not go far when you are paying $10,800 in property taxes, $5,600 in state income taxes, $14,000 in federal taxes -- plus raising five kids and paying off a mortgage in Miller Place, Long Island.

Of course, the Reillys -- like many middle-class taxpayers -- used to write off many of those big expenses on their federal income tax forms. But this year, they were prohibited from claiming many of the most valuable deductions that normally would take the sting out of their tax bill. As a result, the couple’s federal tax refund was slashed by $3,400.

As the current tax season draws to a close, 2.4 million taxpayers are discovering that they, like the Reillys, are subject to an expensive tax system known as Alternative Minimum Tax or “AMT”. What makes the AMT so punishing is that it prohibits filers from claiming the most basic of middle-class write-offs.

NINE PEOPLE ACCUSED OF CONSPIRING TO DEFRAUD IRS

Nine people have been indicted on charges of conspiring to defraud the IRS through a tax-dodge program operated by an Arizona company. The indictment says Ahwatukee-based Innovative Financial Consultants sold trust packages based on false claims that consumers could legally avoid paying income taxes. The company allegedly created about 3,000 bogus trusts from 1996 to 2001, with clients paying $10,500 for offshore packages and $4,154 for the onshore materials.

A message posted on IFC’s Web site acknowledged that company officials are being targeted on suspicion of hampering federal tax collection efforts. It says the government is using an obscure criminal law to meet a “political agenda (aimed) at scaring the American public with more disinformation about the tax system.”

“Those of you who know us KNOW that we never promote tax schemes,” continues the unsigned note. “Within 24 hours of typing this message, I shall be behind bars. I may never be returned to freedom. And the reason ... I taught the truth about the government and its confusing and misleading and sometimes fraudulent use of language and laws.”

REPUBLICANS WANT TERROR LAW MADE PERMANENT

Working with the Bush administration, Congressional Republicans are maneuvering to make permanent the sweeping antiterrorism powers granted to federal law enforcement agents after the attacks of Sept. 11, 2001. The move is likely to touch off strong objections from many Democrats and even some Republicans in Congress who believe that the Patriot Act, as the legislation that grew out of the attacks is known, has already given the government too much power to spy on Americans.

When it passed in October 2001, moderates and civil libertarians in Congress agreed to support it only by making many critical provisions temporary. Those provisions will expire, or “sunset”, at the end of 2005 unless Congress re-authorizes them. But Republicans in the Senate in recent days have discussed a proposal, written by Senator Orrin G. Hatch, Republican of Utah, that would repeal the sunset provisions and make the law’s new powers permanent. Republicans may seek to move on the proposal this week by trying to attaching it to another antiterrorism bill that would make it easier for the government to use secret surveillance warrants against “lone wolf” terrorism suspects.

LIBRARIANS MAKE SOME NOISE OVER PATRIOT ACT

MONTEREY PARK, California -- Every public computer inside this city’s library has a new warning taped to its screen. Beware, the message says, anything you read is now subject to secret scrutiny by federal agents.

Across the country, in a movement that belies their staid image, librarians are rising up in anger and rallying against a law the Justice Department calls one of its most important new tools to help catch terrorists before they strike. The USA Patriot Act gives federal investigators greater authority to examine all book and computer records at libraries. The law requires investigators to get a search warrant from a federal court before seizing library records, but those proceedings are secret and not subject to appeal. It also forbids libraries from informing patrons that their reading or computer habits are being monitored by the government.

Earlier this year, the American Library Association, which has 64,000 members, formally denounced the Patriot Act provision and passed a resolution urging Congress to repeal it. Since then, about two dozen state library groups -- from California to Georgia -- have taken the same stand. And that is only the beginning of the backlash.

THE CIVILIZED LIBERTARIAN

If the U.S.A. ever returns to the sturdy principles of liberty and republican virtue on which it was founded, then Thomas Jefferson’s birthday, April 13, should be a national holiday, notwithstanding that when some good citizens of Boston sought to do precisely that, he refused to tell them his birthday, saying he did not approve of “transferring the honors and veneration for the great birthday of our Republic to any individual.”

It has been fashionable of late to debunk Jefferson -- thoughtfully, regretfully and with respect, of course, but with purpose -- as a hypocrite on the issue of slavery, as a politician who did not practice what he preached, as a clay-footed human rather than a marble statue to be venerated. That is fine. Jefferson is more valuable to posterity as an imperfect human being than as a marble statue.

What rankles modern intellectuals about Jefferson is that he distrusted concentrated power with every fiber of his being, and most modern intellectuals worship concentrated power and seek to serve it -- to make it constructive and refined and sensitive, of course, but to celebrate political power rather than to decimate it or even to question it. Worse, Jefferson was no backwoods yahoo spouting this retrograde nonsense, although he got along with yahoos and saved his scorn for those ambitious for power. “Whenever a man has cast a longing eye on offices,” he noted, “a rottenness begins in his conduct.” He was perhaps the most cultivated, civilized American of his era, and he wrote, “I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”

PANAMA A LEADER IN RESISTING OECD ARM TWISTING

This January, after 13 years of bargaining, bullying and persuasion an agreement on the taxation of personal savings within the European Union was reached. The agreement, however, realised Panama’s previously expressed concerns when Belgium, Austria and Luxembourg, all members of the EU, were dealt with preferentially. The salt on the wound was one of the EU’s justifications for the deal. It was argued that the 3 EU members should be granted special treatment because their respective economies were closely tied to being providers of international financial services. Surely, in the case of developing countries that depend heavily on international financial services, such as Panama, the argument for special treatment would be even more compelling? Panama has stated, as a consequence, that the OECD’s tax information exchange project must be considered stalled until it can be determined whether there are sufficient grounds and guarantees to continue with the initiative. Panama’s reaction has been echoed by other offshore participants in the project and the momentum created means that Panama can afford, at this stage, to step back and watch as events unfold if it wants to.

THE TAX MAN COMETH

Above the front entranceway to the IRS, engraved in stone, is the famous line by Oliver Wendell Holmes: “Taxes are the price we pay for a civilized society.” If ever there were an absurd (and self-serving) motto for a federal agency it is this one. Holmes had it backwards. As Cato Institute President Ed Crane has said, “Taxes are actually the price we pay for our failure to create a civil society.”

This is useful food for thought as tax filing season is upon us. Today, when combining federal, state and local taxes, many middle-income Americans work as large a share of the day to pay the government’s bills as their own, according to a new report by the Texas-based Institute for Policy Innovation.

DELTA AIRLINES FACES BOYCOTT

As a pilot test of a new Orwellian airline “security” program, Delta will be running background checks on anyone who flies Delta from one of three as-yet undisclosed airports. What will Delta do? Run a credit check on you; Investigate your banking history; Run a criminal background check. Until Delta Airlines withdraws from testing CAPPS II and stops treating citizens like criminals, there is only one thing the American people can do: Boycott Delta!

ENCRYPTION AND THE RIGHT TO FREEDOM

More and more people are becoming aware of the intricate surveillance capabilities possessed and used by government agencies and the private sector to monitor the daily communication of law-abiding American Citizens. Whether it be the ease of wiretapping and email capture that was granted under the “Patriot Act” or the data collection brought about by the Carnivore program, few people can argue the link between personal privacy and personal freedom.

While at first glance, it may appear that those who wish to deprive you and I of the dignity and liberty that is associated with being “secure in their persons, houses, papers, and effects, against unreasonable searches and seizures” have an unbeatable hand, there is no need to worry, as we as citizens still have the right to exercise our 4th Amendment rights legally and for free ... through the use of encryption.

Pretty Good Privacy (PGP) is a program that enables you to send and receive email, telephone calls and computer files in a manner that is as secure as possible in the civilian world. To try PGP go to www.pgpi.org and download the latest version for your operating system.

MURRAY ROTHBARD: TAXATION IS SIMPLY ROBBERY

No more and no less. For what is “robbery”? Robbery is the taking of a man’s property by the use of violence or the threat thereof, and therefore without the victim’s consent. And yet what else is taxation? And if taxation is robbery, then it follows as the night the day that those people who engage in, and live off, robbery are a gang of thieves. Hence the government is a group of thieves, and deserves, morally, aesthetically, and philosophically, to be treated exactly as a group of less socially respectable ruffians would be treated.

Murray Rothbard Archives here.

ORWELL REDUX: U.S. CITIZENS NOW HAVE A MEDICAL IDENTIFICATION NUMBERS

The next time you visit your doctor, you may notice some changes. For instance, you might see privacy screens placed around the edges of computer monitors to prevent someone from glancing at your personal medical information. And once you have received your new medical ID number, the receptionist may call you in from the waiting room by your number instead of your name -- a procedure designed to protect your privacy from others in the waiting room.

More importantly, you will be asked to read a description of the new federal regulation that, in theory, is designed to protect the privacy of your medical records in this new age of electronic record-keeping and file transfer. And you will be asked to sign a document, stating that you have read about the new regulation, understand it, and agree to the new procedures.

The kicker? If you do not sign the form, your doctor is allowed to refuse to treat you and your insurance company is allowed to refuse coverage.

If you are wondering why this new “privacy” that is granted to you is, in effect, being forced down your throat, the answer lies in the fact that these regulations actually weaken your ability to restrict access to your medical history.

MEDICAL PRIVACY TAKES A HIT WITH NEW RULE

As of Monday, a new federal medical-privacy rule gives data-processing companies, insurers, doctors, hospitals, certain researchers, and others legal permission to share citizens’ personal health information -- including genetic information -- without individuals’ consent.

Citizens will be notified that their data legally can be exchanged with others. But under the federal rule, they will not be guaranteed the right to stop the flow of data for purposes related to treatment, electronic claims processing, and healthcare operations -- this last term being so broad that it includes marketing.

In essence, the federal government is giving the medical industry regulatory authority to decide whether personal health information can be obtained by others without patients’ permission. What is more, some powerful industry groups strongly support having the federal rule preempt state medical-privacy laws. Given their lobbying success, it is likely that in the near future these groups will attempt to accomplish this.

THE NEW “DUE PROCESS” IN AMERICA: GUILTY UNTIL PROVEN INNOCENT

Intel engineer Mike Hawash is in solitary confinement in a federal prison in Sheridan, Oregon On March 20, the FBI arrested Hawash at gunpoint in Intel’s parking lot near Portland for reasons that remain confidential. A 38-year-old American citizen with a wife and three children, he has not been charged with a crime. Hawash is being held as a “material witness” under a 1984 law that the Justice Department believes should let the government detain American citizens at will for an arbitrary length of time. A well-researched Washington Post article from last fall said the Justice Department has imprisoned at least 44 people, including seven U.S. citizens, under the same law, with some held for many months and possibly for more than a year.

The odd thing about this law, through which Congress intended to prevent the flight of possible witnesses to a crime, is how backward it is: If Hawash had been accused of a violent crime, he would have been out on bail weeks ago.

Combine Attorney General Ashcroft requests for more power to snoop on the Internet, observing private conversations by installing secret microphones, spyware and keystroke loggers, with the broad powers that the Justice Department received under the 2001 Patriot Act, and you have got a situation that concentrates a tremendous amount of surveillance power in a small group of federal police and prosecutors.

These legal battles over the imprisonments are fierce and ongoing. “It’s remarkable -- none of us has ever seen anything like this,” says Dave Fidanque, director of the Oregon chapter of the American Civil Liberties Union. “This is unprecedented. We have no idea what kind of evidence they might have... Our Constitution was designed to prevent secret court procedures. Our Constitution was intended to guarantee every individual the right to due process. Since Sept. 11, Attorney General Ashcroft and the Justice Department have taken the position that they’re entitled only to the rights that John Ashcroft thinks they’re entitled to.”

THE MEANING OF FREEDOM

Few people think of freedom in very similar terms. To some, it is about political rights: the right to assemble, to free speech, to participate in government (vote, run for office), etc. To others, it is all about property rights: to do with one’s land, possessions, or body as one sees fit. To others, freedom means freedom from hunger, or health fears, or other woes. To a few, freedom means total freedom to do anything -- in some cases limited only by other people’s freedom, and in other cases limited only by the individual’s will and ability to exercise power.

To Iraqis dancing in the streets, the meaning of freedom seems crystal clear: not to live in terror under the rule of a tyrant.

In western culture, philosophers have staked out two basic ways of thinking about freedom. The older kind, associated with what is called “liberal” thinking everywhere except in the U.S., focuses on political rights. Your rights, in this paradigm, do not guarantee you particular things or outcomes, but simply that you will not be molested as you go about your business.

A newer, “progressive” idea of freedom, is that of “freedom from want”. Many influential social thinkers in the 19th and 20th centuries thought that political freedom was not enough; they advocated freedom from the “tyranny of necessity”. In this view, a person too hungry to work, or too poor to feed his or her family, is not really free. Defenders of the liberal tradition of freedom charge that a right to “important things” necessitates a right to force other people to provide them, and coercion, especially organized society-wide coercion, is the antithesis of freedom.

Many free-marketeers recognize the importance of freeing the world’s huddling masses from poverty. They believe that is exactly what the Statue of Liberty promises, and further believe that these two poles do not have to be opposites. Material well-being improves quickly in places where liberal values flourish, enabling more and more of the people affected to exercise their freedom in the material world.

PAYPAL CAUGHT UP IN CIVIL FORFEITURE LAW NET

PayPal has been in the news lately. A Missouri prosecutor sent Ebay a letter insisting that its recent acquisition, PayPal, was violating the Patriot Act by processing payments from Internet gambling operations. Internet gambling is illegal in the U.S., but about 5 million Americans use overseas sites. Ebay discontinued PayPal’s gambling operations last fall. This comes on top of troubles PayPal has had with the New York attorney general and authorities in other states. So what is up with PayPal? Is something sinister going on there? Far from it. Prosecutors may get paid by the public, but they do not always serve the public.

Police are interested in pursuing larger amounts of money, especially when they can seize it and keep it. And this may well be what is underlying state prosecutors’ interest in PayPal’s past role in gambling. The Patriot Act provisions that PayPal allegedly violated bar the transmission of funds known to have come from criminal activity. And they also provide for civil forfeiture. Civil forfeiture means that prosecutorial discretion will be directed not at the actual wrongdoers (under our assumption, gamblers or gambling businesses), but businesses caught up with them because they offer services to everyone without inquiries into the exact nature of their business.

So again the weight of the law comes down on PayPal, despite the amazing service they offer at extraordinarily low cost. As long as prosecutors and police are tempted by forfeiture laws, law enforcement will remain divorced from ordinary concepts of individual responsibility and the civil servant’s duty to the public. And it will begin to look a lot more like legalized extortion.

REP. RON PAUL: CONGRESS EXCEEDS ITS CREDIT LIMIT

The term “national debt” really is a misnomer. It is not the nation’s debt, but rather the federal government’s debt. The American people did not spend the money, but they will have to pay it back. And if Congress has its way, the U.S. Treasury will have twice as much debt ten years from now as it does today.

Most Americans do not spend much time worrying about the national debt, which now totals more than six trillion dollars. The number is so staggering that it hardly seems real, even when economists issue bleak warnings about how much every American owes -- currently about $22,000. Of course the federal government never hands each taxpayer a bill for that amount, for obvious reasons. Instead, it uses income tax collections to pay interest on this debt, which is like making minimum payments on a credit card. Notice that the principal never goes down. In fact, it is rising steadily.

The problem is very simple: Congress almost always spends more each year than the Treasury collects in revenues. Congress is at it again, raising the debt limit in a new budget that is as wasteful as any I have seen during my tenure in Washington -- and that is a strong statement. In fact, the 2004 budget passed by the House raises the debt limit by nearly one trillion dollars, the single largest increase by far.

WHITE HOUSE SEEKS TO EXPAND DNA DATABASE

WASHINGTON: DNA profiles from juvenile offenders and from adults who have been arrested but not convicted would be added to the FBI’s national DNA database under a Bush administration proposal. Under current law, only DNA from adults convicted of crimes can be placed in the national database, which is used to compare those samples with biological evidence from the scenes of unsolved crimes. As of January, there were about 1.3 million DNA samples in the database, U.S. officials say.

“DNA is to the 21st century what fingerprinting was to the 20th,” says Deborah Daniels, assistant U.S. attorney general for justice programs. “The widespread use of DNA evidence is the future of law enforcement in this country.”

Critics say adding juvenile and arrestee profiles to the database threatens privacy by expanding the pool of samples beyond adult criminals. “It’s only a matter of time before the government gets its hands on those DNA samples and starts playing around with our genetic codes,” says Barry Steinhardt, privacy specialist for the American Civil Liberties Union’s national office in New York City. “They say they don’t want to do that, but not too long ago they were saying they’d only take DNA profiles from rapists and murderers and now they want juveniles ... We’re not just on a slippery slope, we’re halfway down it.”

HOUSE JUDICIARY CHAIRMAN HESITANT ON PATRIOT ACT II

The Bush administration’s plans to expand a post-September 11 anti-terrorism law face resistance from a powerful House Republican who says he is not even sure he wants the government to keep its new powers. James Sensenbrenner of Wisconsin, the House Judiciary Committee chairman, complains that the Justice Department is not sharing enough information for lawmakers to make a judgment on how well or poorly the USA Patriot Act is working.

Sensenbrenner maintains that because the department refuses to be forthcoming, it is losing the public relation battle needed to extend the law beyond its October 2005 expiration, much less expand it. For example, the American Civil Liberties Union this week used newspaper ads to attack one provision that the ACLU says allows the government to enter homes, conduct searches, download computer contents and Internet viewing histories without informing the occupant that such a search was conducted.

Passed weeks after the September 11 attacks, the USA Patriot Act granted the government broad new powers to use wiretaps, electronic and computer eavesdropping and searches and the authority to access a wide range of financial and other information in its investigations. It also broke down the traditional wall between FBI investigators and intelligence agents. Advocates say the current law has helped quash other terrorism attacks, but opponents claim it has eroded civil liberties.

LOCAL OFFICIALS RISE UP TO DEFY THE PATRIOT ACT

ARCATA, California: This North Coast city may look sweet -- old, low-to-the-ground buildings, town square with a bronze statue of William McKinley, ambling pickup trucks -- but it acts like a radical. Arcata was one of the first cities to pass resolutions against global warming and a unilateral war in Iraq. Last month, it joined the rising chorus of municipalities to pass a resolution urging local law enforcement officials and others contacted by federal officials to refuse requests under the Patriot Act that they believe violate an individual’s civil rights under the Constitution.

Then, the city went a step further. This little city (population: 16,000) has become the first in the nation to pass an ordinance that outlaws voluntary compliance with the Patriot Act. The Arcata ordinance may be the first, but it may not be the last. Across the country, citizens have been forming Bill of Rights defense committees to fight what they consider the most egregious curbs on liberties contained in the Patriot Act. Citizens groups are becoming increasingly organized and forceful in rebuking the Patriot Act and the Homeland Security Act for giving the federal government too much power, especially since a draft of the Justice Department’s proposed sequel to the Patriot Act (dubbed Patriot II) was publicly leaked in January.

To date, 89 cities have passed resolutions condemning the Patriot Act, with at least a dozen more in the works and a statewide resolution against the act close to being passed in Hawaii. “We want the local police to do what they were meant to do -- protect their citizens,” said Nancy Talanian, co-director of the Bill of Rights Defense Committee in Florence, Massachusetts, which gives advice to citizens groups on how to draft their own resolution.

MARTIN FELDSTEIN: BRITAIN MUST AVOID GERMANY’S MISTAKE

As Gordon Brown, the chancellor of the exchequer, considers whether adopting the euro would be in Britain’s interest, he should look carefully at the experience of Germany. Membership in the monetary union has weakened the German economy and is preventing it from escaping its current slump. Although Germany also suffers from a variety of structural problems, it is the euro that raised its unemployment rate over the past year to 10.6%.

The German example shows that Britain’s decision about adopting the euro is not a question of whether the time to do so is now right. Adopting the euro is a permanent commitment with permanent consequences. My judgment is that it would not be in Britain’s long-term economic interest to accept the constraints of the single currency.

NOT MUCH GOLD LEFT IN CENTRAL BANK VAULTS

One of the statistics complied by the International Monetary Fund is the quantity of gold owned by the world’s central banks. That weight is reported to be 32,291 tonnes of gold. Most people accept this number at face value and without questioning its accuracy. However, central banks actually own less gold.

In reality central banks own 32,291 tonnes of gold AND gold receivables. This distinction is important. From both a legal and an accounting point of view, gold in the vault is clearly very different from gold owed to you. The reason is that gold in the vault is much less risky than someone’s promise to pay you gold.

“Gold receivables” equal 46% of the 32,291 tonnes of gold reported by central banks. So only 17,291 tonnes of physical metal is left in central bank vaults. In 1945, 68% of the world’s gold was in central bank vaults, and the total quantity of money, i.e., national currency in circulation, was about $300 billion. Today the total quantity of national currency is about $30 trillion, a one hundred-fold increase in 57 years compounded at an 8.4% annual growth rate. And central banks hold in their vaults some 17,291 tonnes of gold, which is just 40% of the weight they held in 1945 and only 11.9% of today’s aboveground gold stock.

FREQUENT FLIERS FEAR PRIVACY LOSS

Frequent fliers might forfeit more than future flights on their favored carrier if any of the country’s beleaguered airlines go out of business. They could also lose control over their personal information.

The airline industry has been reeling from business losses related to the Iraq war, the slowdown in the economy, the Sept. 11 terrorist attacks and the recent SARS outbreak. Both United Airlines and Hawaiian airlines are operating under bankruptcy protection, while American Airlines narrowly avoided having to file for bankruptcy this week by securing $1.8 billion in labor concessions.

If any of these carriers do go out of business, its assets will go on the auction block or be passed to its creditors. Privacy advocates contend the sale of either frequent flyer databases or general passenger records, if legally permitted, would severely compromise the privacy and rights of airline passengers.

Frequent flier records include detailed personal information about an airline’s best customers -- addresses, phone numbers, e-mail addresses, dietary preferences and the names of children and travel companions. United Airlines’ Mileage Plus program alone has more than 40 million members. The records also contain detailed histories of each passenger’s previous flights, car rentals and hotel bookings. And for those who participate in programs that accumulate miles for credit-card or supermarket purchases, the data could be even more detailed.

It remains unclear, however, whether the airlines or its creditors could legally sell their frequent flier databases.

ELF TRIAL REVEALS MORAL VACUUM

What happens when unimaginable wealth meets unscrupulous politics? Anyone interested in the question would do well to follow the proceedings of a four-month trial that is currently under way in Paris. The so-called Elf trial has gone largely unreported because of its very length and the mind-numbing detail of much of the evidence.

But for those patient enough to watch, it provides a fascinating insight into the moral vacuum that existed at the heart of France just 10 years ago. The three men who ran the then state-owned oil firm Elf-Aquitaine in the early 1990s -- chief executive Loik Le Floch-Prigent, his “general affairs manager” Alfred Sirven and the company”s Mr Africa Andre Tarallo -- are accused of raking off hundreds of millions of dollars of company money.

But the interest lies less in their personal enrichment than in the extraordinary mixture of secret accounts, bribes, personal favours and political influence-buying that was not just tolerated, but officially sanctioned by successive French governments. Billions passed through this complex and illicit money machine. What the defendants creamed off was just a tiny percentage.

CREDIT BUREAUS DEAL WITH IDENTITY THEFT

The USA’s three major credit bureaus are trying to make it easier for consumers to sort out problems stemming from identity theft. Starting this month, consumers cannotify any one of the agencies -- Equifax, Experian or TransUnion -- that they have been victimized by an identity thief, and that agency will relay the information to the other two bureaus.

All three will then put a “security alert” on the consumer’s credit file, remove the person’s name from mailing lists for preapproved offers of credit cards and insurance, and mail the consumer a copy of his or her credit report. They also promise to speed up the removal of fraudulent items from credit reports after the victim files a police report.

Identity theft is a growing problem in America. More than 161,000 consumers filed complaints with the government about identity theft last year, according to the Federal Trade Commission, which maintains a database of cases. That is nearly double the number in 2001.

“OPENTABLE” ENABLES RESTAURANTS TO KEEP FILES ON CUSTOMERS

OpenTable.com, an online restaurant reservation service, has more than 1,400 member restaurants in more than 30 cities. Although OpenTable initially emphasized online reservations in its marketing campaign, that function accounts for, on average, only about 5% of the total reservations at member restaurants. A more important element of the service -- to restaurants and customers alike -- is the data-tracking capability of the OpenTable software for all customers, no matter how they made their reservations. OpenTable enables restaurants to collect and access quickly such information as their customers’ favorite wines, waiters, water and tables, their food allergies, their birthdays and anniversaries -- everything they need to know to “treat every customer like a VIP”, in the words of Thomas Layton, chief executive of OpenTable.

In Los Angeles, where egos seem especially large -- and especially fragile -- and where dietary habits often range from the merely exotic to the obsessively ascetic, the ability to make customers feel pampered and important is especially useful. Some information that restaurants enter as “customer codes” or “customer notes” are far more personal -- and not always complimentary. “Orders and eats at a snail’s pace. Schooled in hell and graduated with honors,” reads the note on one woman who dines regularly at Michael’s in Santa Monica.

WILL LIECHTENSTEIN’S AUTONOMY PREVAIL?

The Principality of Liechtenstein is a small State in Central Europe, situated between Austria and Switzerland. Though its geographical location and diminutive size make it a somewhat anonymous State, its independent political climate gives rise to an exemplary model for the study of political and economic phenomena.

The glory of Liechtenstein’s political freedom, overall, has been due to unequivocal banking secrecy; lax regulatory oversight; anonymity in business formation and banking; legal company structuring that is friendly to wealth-creating holding companies; overall moderate taxes; tax laws allowing for tax-efficient asset management; and a minimal licensing and permit environment.

However, the future could be bleak for this Principality. The Financial Action Task Force (FATF), a unilateral organization that operates under the auspices of “anti-money laundering”, had long ago made Liechtenstein a favorite target because of its tax haven status and its refusal to “cooperate” with regulatory measures. Essentially, the FATF is a pro-big government blackmail organization that adopts a fluffy and well-meaning name, but operates to rid the world’s individuals of financial wealth and privacy. By 2002, the Liechtenstein government had kowtowed under pressure to the organization’s decrees, agreeing to cooperate with the FATF in the establishment of various “anti-money laundering” programs and regulations. This was the trade-off to get off the organization’s blacklist.

HOW TO JUMP THE UK INHERITANCE TAX NET

With house prices in the UK rising by more than 26% last year, many people who have never considered themselves particularly wealthy, now find themselves caught in the inheritance tax net.

Say a married couple’s house is worth £500,000 and they have £150,000 in savings. If everything is left to the surviving spouse, he or she will have an estate worth £650,000. When the surviving spouse dies, everything over £255,000 will be taxed at 40%, leaving a tax bill of £158,000. But if everything is divided between the couple, each partner will have an estate worth £325,000. The inheritance tax bill will be £28,000 each -- a saving of £102,000.

The first step a couple should take is to change the ownership of their home from joint tenancy to “tenants in common”, so that each owns half the property. The couple should state in their wills that the other tenant can have the other share of the house when the first dies in exchange for an IOU, which is put in trust. If the house is worth £500,000, the IOU is made out for £250,000. By doing this, the couple have made sure they keep their home -- but half the value is removed from their estate for tax purposes. When the survivor dies, the IOU is repaid to the trust, removing the amount of the debt from the estate. The trust only comes into existence when the first person dies and is known as a nil-rate band discretionary will trust.

Single people, those widowed or divorced, unmarried couples with children and couples with a home worth in excess of £500,000 have to resort to a more complicated and expensive method of reducing the tax bill.

PRELUDE TO AN AMERICAN POLICE STATE

A theme has emerged in this week’s articles in the Colorado Freedom Report. Whether it is the police persecuting blue-collar workers for selling alcohol to undercover adult cops, or the police arresting gay men for having sex in the privacy of their own home, or the police abusing the Fourth Amendment on the side of the road, the police in the United States are too often out of control. The Police State rises ominously all around us. The image of the helpful peace officer keeping people safe from thugs is quickly fading into memory. Instead, the modern police force more resembles an occupying army. But the police are “merely” the agents: the primary fault lies with the legislators. “Just following orders!”

What we are talking about precisely is fascism. Not the fascism of the death camps, but a banal, tedious, petty fascism that slowly leaches the spirit of freedom from the American soul. Fascism is defined as state control of nominally private property. Such as the property of a restaurant owner. Or our property in our own bodies in our own houses.

America is a law-respecting society. When the laws are simple and honest and their focus is the prevention of violence, respect for the law is a virtue. But today, as the prohibited and the mandatory slowly squeeze out what is left of our liberty, the worship of laws makes us subjects of an oppressive state.

Whereas dystopian novels like 1984, Brave New World, and Fahrenheit 451 might be read as frightening warnings, sometimes it seems like some politicians view these books as training manuals.

LEARNING HOW TO DISAPPEAR

Advice from a professional skip tracer on how to truly “disappear”. Starting point: Do not just pick up and go. Take your time, do your research and enjoy the beach.

BORDER PLAN RAISES WORRIES

NOGALES, Arizona: Some Mexican nationals say they are suspicious of a new U.S. security plan that will eventually track all foreign visitors as they enter and leave the United States. The Department of Homeland Security’s National Security Entry-Exit Registration System will be implemented by next year at the 50 largest land ports of entry in the United States.

Some Mexican residents who cross frequently into the Arizona to shop, visit or work are concerned about how the government will use the tracking data. Others wonder how the new plan will affect the time it takes to cross back into Mexico. Crossing into the United States, they say, already can take a long time.

“We’re not coming here to commit any crimes. We’re coming here to shop,” said Amelia Acuña of Nogales, Sonora, as she carried three bags of clothing she had just purchased. If shopping in the United States means her comings and goings will be tracked and recorded, “it’s better not to come,” she said.

It is comments like Acuña’s that make Arizona border city officials cringe as they contemplate what the new tracking system might do to their cities’ economic security in the name of homeland defense.

VERIZON LOSES RECORDING INDUSTRY ASSOCIATION OF AMERICA PIRACY CASE

Verizon has vowed to continue its fight to refuse to reveal the identity of one of its customers accused of pirating music, claming the matter could have a “chilling effect” on Internet users. Its continued stand for online privacy comes as a US judge upheld an earlier decision forcing Verizon to hand over the information. Verizon has 14 days to surrender the data although it is embarking on a last-ditch appeal to try and get the decision blocked.

The case stems from lawsuit filed last summer by the RIAA. The RIAA demanded that Verizon Online hand over the name of a customer it alleged held illegal copies of copyrighted music files. The U.S. Department of Justice had weighed in earlier on behalf of the RIAA.

Verizon has maintained that divulging the suspect’s identity without a proper court order -- that is, one based on solid evidence of criminal activity and approved by a real judge -- violates Constitutional guarantees of due process of law and unduly burdens free speech.

RIAA lawyers are arguing that a simple subpoena obtained from a court clerk, which any fool can file against anyone suspected of copyright violation, should afford adequate protection of due process, as the dreaded Digital Millennium Copyright Act (DMCA) provides.

THE IMMORALITY OF THE U.S. INCOME TAX SYSTEM

Unique among countries of the world, the foundation of the United States rests on self-evident moral principles. These are simply, that all men are created equal, that they are endowed by their creator with certain unalienable rights. These moral principles pervade every institution and aspect of life in the United States except one -- tax.

In the United States, 16% of the federal budget goes for defence and less than 2% goes to criminal justice. The rest goes to welfare and wealth redistribution programs. Essentially, the government extracts money by force of law from one small segment of the economy and gives it to a larger group in return for their votes. Ignored in the current tax system, is something which Chief Justice John Marshall observed in 1819, when he said that any tax system creates a threat to individual liberty because, “the power to tax involves the power to destroy”.

While the Constitution embodies in legal terms the moral principles of the United States, it is clear that Constitutional rights, such as financial privacy, do not apply when taxes are involved. While the presumption of innocence is the foundation of English and American law, the tax code does not follow this principle. Information provided on the tax returns is a waiver of all Fifth Amendment protections, yet failure to provide the information and sign under penalties of perjury is a violation and the tax return is considered not filed. A cornerstone of the American legal system is a guarantee of equal protection under the law. Nowhere is it more prominently violated than the US tax system. The difference in tax burden on taxpayers on different income levels is shocking to say the least.

There is something radically wrong with the income tax system. It is for the most part driven by errant socialist policies by a runaway government’s insatiable desire to create more programs for newly created societal needs. Our politicians feel no remorse in either abusing the taxpayer’s money or virtually regulating away our constitutional rights. It is not enough to say that the income tax system is unfair or inequitable or even unreasonable. It is beyond that. It is immoral.

BOOK REVIEW: MURRAY ROTHBARD’S A HISTORY OF MONEY AND BANKING IN THE UNITED STATES

Money, in a free market system, is like any other commodity: subject to economic laws, and equally subject to distortion in the face of government interference. In reality, of course, money has rarely gone unregulated by governments. Since the earliest days of civilization, governments have sought out ways to manipulate the money supply whether it be through clipping coins, schemes of bimetallism or outright fiat currency. Governments have always done this, and they have realized the great power that comes with control of the money supply. The government that controls its money supply has gone a long way toward controlling its subjects. As a modern State, the United States has never escaped this impulse itself.

Murray Rothbard’s posthumously released new book examines the development of the American State’s control of the money supply and its economic consequences. As Joseph Salerno notes in the introduction, a key to Rothbard’s analysis is his concern with the question of Cui bono? -- Who benefits? -- from changes in how the American money supply is regulated and manipulated. While the 8th grade version of American history that most people cling to dictates that no public figure in the history of American civilization has ever been motivated by mere self-interest, Rothbard seems to believe that policies that benefit one group greatly over another just might be the result of design rather than mere good intentions gone awry. At the very least, this makes for better reading. The method employed by Rothbard here, known as “power elite” analysis, examines the inner workings of those in power with the greatest financial and/or ideological interests in controlling the money supply. This method has often been derided as a kind of conspiracy theory, yet such criticisms rest on an assumption that all political actions are somehow without motive, sinister or otherwise. Daily experience would tend to argue against such assumptions, not to mention the entire body of “pressure group” research in political science.

Rothbard makes clear that the control of the money supply is indeed profoundly powerful, and this is why for so many centuries, governments everywhere have benefited from that control, and have always sought to increase it not just over their own subjects, but over foreign lands as well. The United States has never been any different; not even in the earliest days of the Republic. Nor is the United States any different from any other country in that some day, like has happened to a thousand other regimes, confidence in the American money supply will collapse, and when that day comes, woe to those whose life savings, incomes, and investments are dependent on the value of the dollar.

PATRIOT RAID ACCOUNT SHOULD GIVE ONE PAUSE

A month ago I experienced a very small taste of what hundreds of South Asian immigrants and U.S. citizens of South Asian descent have gone through since 9/11, and what thousands of others have come to fear. I was held, against my will and without warrant or cause, under the USA PATRIOT Act. While I understand the need for some measure of security and precaution in times such as these, the manner in which this detention and interrogation took place raises serious questions about police tactics and the safeguarding of civil liberties in times of war.

Every American citizen, whether they support the current war or not, should be alarmed by the speed and facility with which these changes to our fundamental rights are taking place. And all of those who thought that these laws would never affect them, who thought that the Patriot Act only applied to the guilty, should heed this story as a wake-up call. Please learn from my experience. We are all vulnerable so speak out and organize, our Fourth Amendment rights depend upon it.