Wealth International, Limited

Offshore News Digest for Week of April 17, 2006


Note:  This week’s Financial Digest may be found here.

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GLOBAL LIVING & BUSINESS

COSTA RICA: FROM DREAMLAND TO NIGHTMARE

Publisher’s note: Costa Rica is a swell place to live when you compare it to Detroit or Baltimore, and there is plenty to do in Costa Rica that you could never do in Detroit or Baltimore. Costa Rica is exceedingly beautiful with a variety of climatic conditions, and it is still possible to find good real estate prices in Costa Rica, especially compared to the prices in Europe and Canada. If you have your heart set on Costa Rica, then move to Costa Rica. My article, “Real Estate in Costa Rica - The Greater Fool Phenomena”, seems to have started a fresh rash of Costa Rica bashings. All of the email we received regarding the article was positive and in agreement with my assessment, and now we have received the following article. I wish someone would send us a positive article on Costa Rica. Every time I have gone to Costa Rica I have had a ball. I want to make it clear that I am not bashing Costa Rica … just trying to set the record straight. I was much more militant when I wrote that article than I am today … but the article comes back to haunt me.


Some fifteen years ago, an old time friend told me about “dreamland” – rain forests full of vibrant and colorful life, tamed volcanoes and pristine beaches. A paradise offering springtime weather all year round, low cost of living and first world class services. A friendly place where wealth and social justice were walking together harmoniously and violent crime was known as a reference to our overcrowded and polluted cities. Two years into my new “costarrican” life, I have rediscovered a very simple rule of rational thinking: myths are just that, myths. There are no promised lands, nor greener pastures, nor better people elsewhere.

The glamorous Costa Rica of the ‘60s, ‘70s, and early part of the ‘80s is badly crippled nowadays. It was not a sudden attack. It is a lengthy and dolorous disease. A social and economical Osteoporosis slowly eating the bones of the “Welfare state” of this small country, once called the Swiss of Central America. Cities in the Central Valley – San Jose, Alajuela, Heredia and Cartago – where peasants were able to walk the streets unconcerned and secure, are nothing more than remembrances. Crime is rampant, frequently violent. One could get shot for a cellular phone, a few Colones (local currency) or even for a cheap watch. It can happen in the worse slum and in the best neighborhood. Hotels located in downtown San Jose, advice their guests not to venture out by foot after dusk and to take all kind of precaution. Guards with bulletproof vests and armed with shotguns stood vigilantly in front of supermarkets and shopping centers. Petty thefts, robs and assaults occur in the surroundings of the Metropolitan Cathedral all day round!

But if tourists are exposed, not less are residents. Police deficits, in addition to a tolerant legal system and extended drug consumption have contributed to crime record highs. Corruption plays no small part. Blending into this explosive compound, 50% of people are living in poverty. Within them, 21.2% are hardly surviving extreme poverty, relegated to “Precarios” or misery slum, without minimum conditions. Results are highly inflammable. Costa Rica ranks as World’s 19th in murders per capita, and 5th place in the Americas (USA ranks as America’s 7th and World’s 24th). A nighttime trip across Costa Rica’s cities reveals people caged into their ironwork enclosed homes, prisoners of prevailing insecurity. During the last eleven months, my girlfriend’s Toyota, protected by a superb alarm system, has resisted three robbery attempts, including one inside our ironwork-closed garage!

National inflation for 2005 reached 14%! It was 12.9% in 2004. The forecast for 2006 is 11%! During the last decade, this fast paced cost of living has imposed a heavy toll on society, even affecting basic foods. Although GDP and exports have grown steadily, Midas has touched a very few chosen. Middle class and workers are sliding downhill. A bloated public debt affects government capacity to deal successfully with infrastructural and social issues. Reluctant to tackling the real causes of the deficit, successive governments have transferred the load to people shoulders, while the oligarchy gets away with tax evasion and corruption. Making things worse, uncontrolled immigration from neighboring Nicaragua has created havoc.

These are not good news for expatriates willing to save on their hard-earned pensions while looking for an upscale life they cannot afford in America. Expatriates may live here somehow more economically than in USA, but they should be aware that third world countries do not offer first world living standards. In addition, the biggest lost will be security. Savings in rent and utilities are real, as well as in medical bills, but vehicles, gas, clothing, personal care items, home appliances, computers and general electronics, cost 40 to 300% more. Making things even more difficult for foreign retirees, lawmakers are actually debating new legislation enforcing taxes to foreign income, including pensions. Furthermore, ballooning Real Estate prices are surrealistically out of touch with building costs and national rent. Personally, I have found no suitable dwelling for a reasonable price. I am not looking for a once in a lifetime bargain, but for a fair price. Costa Rica cities are far from what you may expect from a contemporary metropolis. The infrastructure is severely damaged. Except for a few highways, roads are in poor condition.

On the other side, Costa Rica’s landscape is as magnificent as ugly are its cities. Glorious nature at its best, this country has a bounty to offer those craving for a simple rural life. Springtime weather all year round at the highlands, and tropical weather at sea level. There are only two seasons, rainy and dry. The first one last for about seven months and believe me, if it is not a “Macondo’s” clone – the flooding town in One Hundred Years of Solitude by Nobel Prize laureate Gabriel Garcia Marquez – it is really close. So if you like rainy days, pure nature and a simple life, this might be your destiny.

If you are planning to live in Costa Rica – or any other Spanish speaking country – learn the language first. Otherwise, you will feel isolated. Costa Rica nationals speak Spanish and only a handful are fluid in Shakespeare’s language. It is not a good idea to collect info from tourist guides and hotel clerks for dwelling purposes. They have been programmed to enhance your experience, converting you in a faithful believer, eager to return. If you really want to walk beyond the façade, you must actively interact for an extended period of time. Some self-proclaimed experts in Costa Rica have ties to real estate and tourism industries. Considering the huge income gap between USA and Costa Rica, suitable real estate properties are overpriced and totally out of touch with local economy.

As for my mercurial old friend – the one that introduced me to “dreamland” … less than a year later, totally discouraged by violent crime and a much higher than expected cost of living, he and his family returned to the states. As for myself, I am actually looking south. Two trips later, Panama seems like a better place to live or to invest on a second home. The cost of living is by far lower than Costa Rica, including Real Estate prices. Dwellings do not look like fortresses. No barbed wire. Many cars sleep in the streets. Additionally, we were able to walk unharmed throughout downtown Panama at 2:30 a.m. Panama City is a modern metropolis. The infrastructure is sound. Panama also offers the best incentive programs for retirees and entrepreneurs all over the world. I am not promoting Panama. Neither I am an expert, nor I do I have a vested interest there. Besides, I am not even certain that Panama fulfills my expectations. Fortunately, we live in a wide world full of opportunities …

Link here.

CONTENT TO WATCH BANANAS GROW, MORE RETIREES RELOCATE TO PANAMA

Migratory retirees have lent more than a touch of gray to Florida, Arizona and Southern California. Next stop on the aging boomer bandwagon? Panama. With low housing and living costs, a stable political environment, relatively safe streets and that tropical climate, people in their 50’s and early 60’s are flocking to the Central American nation, rather than working for a few more years to scrape together enough money for a condo on the Florida coast. “We’re seeing a significant number of Americans coming here to retire,” said William Ostick, a spokesman for the U.S. Embassy in Panama City. “Panama as a nation is trying to attract people who want to build second homes here, but a lot of them are selling their homes in the U.S. and just buying here.” Mr. Ostick said the embassy did not keep statistics on Americans who have moved to Panama to retire, but he said there were 25,000 to 30,000 Americans living there. According to the Panamanian government, four times as many American retirees applied for visas last year as in 2004.

Although Panama, a country of 3.2 million people, can present challenges to those unaccustomed to living in a developing nation, its quirks are, for many, part of its charm. “This is a place for people who don’t need outside stimulus, unless it’s looking at the sunrise or watching the bananas grow,” said Honey Dodge, who moved to the mountain town of Altos del María with her husband, Larry, a retired sociologist, in 2004. Ms. Dodge, 58, was the national chairwoman of the Libertarian Party and ran a furniture business with her brother in Dallas just before moving to Panama. She said that she and her husband considered moving to countries in nearly every part of the world before settling on Panama. “We found charts on various aspects of life around the world – like what percentage of a country’s population is in prison, how much corruption there is – and Panama never came out the best on any one chart, but it was always in the Top 10,” Ms. Dodge said. “By the time we flew down here, I said if it’s half as good as it’s supposed to be, it’ll be great. Well, it was more like 90 percent as advertised.”

Like many retirees, Ms. Dodge said that a chief concern about moving to another country was the quality of its health care and medical insurance. Mr. Dodge, who is 62, “has had a lot of heart trouble,” Ms. Dodge said, “and we’re to the point where we can’t afford health insurance.” While that may be a major problem in the U.S., Ms. Dodge said that medical procedures in Panama are inexpensive “and very good.” She said that Mr. Dodge has required two heart stents to open clogged arteries. One in Houston cost $52,000, and one in Panama cost $11,000, with good results. Ms. Dodge added that if either she or her husband ever had a debilitating disease like Alzheimer’s, she could hire someone to be there full time “to make food, feed and bathe you for $10 a day. If you need someone 24 hours, it’d be $30 a day,” she said. “That’s where this place really kicked in.”

Overseas retirement specialists said that while Panama is among the hottest foreign destinations, others are growing in popularity, too. Roger Gallo, publisher of EscapeArtist.com, a Web site about international relocation, said that Belize and Argentina have also attracted many American retirees in recent years. As for Panama, most of the recent American retirees gravitate to one of three regions: (1) Coastal areas near the Costa Rican border, like the Bocas del Toro archipelago. (2) The cooler mountain regions of the Chiriquí Province or Altos del María. And (3) Panama City, to a lesser extent. According to Bob Adams, who runs RetirementWave.com, a Web site for Americans looking to retire in foreign countries, “For $200,000 to $250,000 you can get a very nice condo or home with a beautiful ocean or mountain view.” The cost of living, too, can be significantly lower than in the U.S., Mr. Adams and others said. Restaurant meals are typically inexpensive, as is supermarket fare. Gas tops $3 a gallon. And, yes, the dollar is the Panamanian currency.

Link here.

Americans have friends in Panama.

In 1979, I first paid an official visit to Panama, shortly after President Jimmy Carter signed the Torrijos-Carter treaties that promised the eventual handover of the Canal to Panama in 1999. Although I opposed the treaties and viewed them as a wrongful surrender of the Canal to the unstable and unfriendly Omar Torrijos government, our House subcommittee had the role of drafting the implementing legislation required to carry out the treaty provisions. Naturally, I tried to make the law as beneficial to the United States as possible, while recognizing the rights of Panama.

From the very first I was impressed with the people of Panama. Years of contention over control of the Canal with the U.S. made nationalism a major theme in politics there. Much of the time this meant whipping up emotions against the Yankee gringos. Based on my long years of association with them, at every social level, I can assure you that you will find most to be friendly, open and hospitable, even to strangers, and especially to foreigners. Panamanians are used to foreigners, many who just come for a visit, and a good many that stay. Panamanians may drive a hard bargain, but they learned that from a century of dealing with Americans.

And Panamanians are a patriotic people. In 2003, they celebrated noisily the centennial of their independence from neighboring Colombia. It was no doubt a disappointment to Panama’s early leaders that, after gaining independence from Colombia, they were forced into near total dependence on the District of Columbia – Washington, D.C. that is. After the long association with and domination by Americans, the reclaiming of the Canal from U.S. control finally truly liberated Panama as a nation, and Panamanians as a people. A 2004 report in the Los Angeles Times accurately described the attitudes of Panamanians today: “Four years after the last U.S. troops pulled out and Panamanians gained control of the canal that is their most important national asset, the Yankee footprint here remains deep and surprisingly welcome. Although anti-Americanism is on the rise in much of Latin America, Panamanians heartily embrace their onetime occupiers’ values and symbols, from language to music and fashion – and the almighty dollar.” Much of these good feelings are the result of extensive intermarriage and dual citizenship during the U.S. control of the Canal Zone. Hundreds of ex-Zonians have stayed on, strengthening the bonds between the two nations.

When you go the Panama, either for a visit or a longer stay, I predict you will fall in love with Panama and its people. They are proud of their rich cultural heritage and they are glad to be free from U.S. colonial domination. But Panamanians are used to Americans in particular, and foreigners in general – and, if you are a decent human being, they will welcome you and make you feel right at home. The local joke is that more people there speak English here than they do in Miami. This is a country where folks are friendly and laid back, willing to live and let live. Life does move at a slower pace than frantic American gringos are used to up north. The humid, tropical weather alone has a tendency to lull you into slower acting, even slower thinking. And that’s not all bad.

Link here.

ALL BETS ARE OFF, ONLINE ANYWAY

The U.S. is taking aim at internet casino ads as tensions build in a high-profile trade fight over the country’s largely toothless online gambling ban. Although many website operators insist internet gambling ads are legal, a recent crack down by U.S. authorities has led some website operators to disgorge or forego online casino advertising revenues and spurred others to rethink their advertising policies, jeopardizing millions of dollars in revenues. Shawn Riley, whose Amateur Poker League draws 2.5 million visitors a month, figures his Wichita, Kansas, business has passed up seven figures in revenue by refusing to run ads or affiliate links for gambling sites. “I would really like the money but I have to avoid the headaches,” he said. “I feel like I’m doing 55 down the highway and everybody else is doing 80.”

Because gambling operations are based in foreign countries such as Antigua and Costa Rica, and individual gamblers have extremely low odds of being prosecuted, websites and media organizations that sell gambling ads are being caught in the middle. One of the biggest losers is Sporting News, the media company owned by Microsoft co-founder Paul Allen. In January, the company surrendered $4.2 million in revenue to avoid prosecution for advertising gambling sites between 2000 and 2003 in its magazine, as well as on its website and syndicated radio network. Tune in Sporting News Radio today and you will hear the other half of the settlement – a $3 million, 3-year barrage of anti-gambling public service ads.

Publishers of gambling- and poker-related websites disagree about whether accepting the ads is a safe bet. Websites in the U.S. that accept advertising from internet casinos are rolling the dice, says the chief of the organized crime and racketeering section of the Department of Justice. That takes in a lot of websites. Ads for poker sites, casinos and sportsbooks appear all over the web, as well as in other media, and online gambling raked in an estimated $12 billion last year, according to Christiansen Capital Advisors. Half the wagers came from the U.S., the research firm said. The DoJ began warning media organizations about gambling ads with a letter to the National Association of Broadcasters and three other trade groups in 2003, efforts that seem to have gained steam in recent months. Brad Waller, who writes a blog on affiliate programs for ReveNews, has a cynical view of the government’s actions. “They target the easy prey here in the U.S. because the gaming companies themselves are difficult to prosecute,” he wrote in January after the Sporting News settlement. “Time will tell, but I predict we will see the first casino affiliate prosecuted this year.” Though large sites such as Yahoo and Google have stopped taking the ads, gambling sites offer a substantial source of revenue for thousands of smaller web publishers.

Link here.
Poker players flock to PartyGaming – link.

CHINA ISSUES RULES ON OFFSHORE INVESTING

China’s banking regulators issued rules for commercial banks to invest client funds offshore, an important step toward opening up the country’s tightly controlled foreign exchange regime. The regulations, which take effect immediately, are meant to widen the investment options available to institutional and individual investors, allowing them to diversify their risks and get better returns, the People’s Bank of China, or central bank, said in an announcement. Currently, most Chinese investors are allowed only to invest in domestic assets.

The new rules only apply to investments made on their behalf by designated commercial banks. However, their release follows a decision announced last week sharply increasing the amount of foreign currency companies and individuals can take abroad. Together, they indicate a renewed loosening of controls, Jonathan Anderson, chief Asia economist for the UBS brokerage in Hong Kong, said in a research report issued Tuesday. “Simply put, this is the first time that domestic households and firms have been granted official access to overseas securities markets,” Anderson said. He noted that Chinese hold nearly $4 trillion in local currency cash and domestic bank deposits. Changes in those holdings could have a significant impact on foreign exchange flows and foreign capital markets, he wrote.

The change in policy reflects growing confidence among Chinese regulators in bank management and in the national financial situation. It also is meant to help Beijing to counter the huge surplus in its capital account, the central bank said.

Link here.

EURO MAKES TAXPAYERS PAY BANKS FEES FOR GOVERNMENTS’ BORROWING

For all its success as a currency, the euro has yet to give European taxpayers the advantages of financing their governments that the dollar gives U.S. citizens. Almost every country in Europe, from Austria to Spain, paid about $345 million to investment bankers since the start of last year to sell bonds, data compiled by Bloomberg show. The comparable price that the U.S. Treasury paid to sell $4.8 trillion of debt in the same period? Zero.

More than seven years after the advent of the common currency, 10 of the 12 governments sharing the euro pay a concession fee to banks rather than sell their debt directly to the highest bidder at auction. In the process, Barclays Plc, BNP Paribas SA and Deutsche Bank AG are reaping record fees from taxpayers in Austria, Belgium, Finland, Portugal and Greece. The paradox of governments getting charged by less creditworthy middlemen to sell their securities has some of the most sophisticated investors in disbelief. “You have strong demand” for European government bonds with the highest credit ratings and no risk of default “so why pay someone else to sell it for you?” said Stuart Thomson, a fixed-income investment strategist at Charles Stanley Sutherland, an Edinburgh-based brokerage firm. The anomaly persists because European “bureaucrats don’t like risk, and for a fee, investment banks will reduce risk.”

Link here.

BRITISH VIRGIN ISLANDS MAINTAIN CAPTIVE INSURANCE BUSINESS GROWTH IN 2005

Figures released by the BVI Financial Services Commission reveal a 10% overall growth in the Territory’s captive insurance business in 2005, solidifying the BVI’s position as the third largest offshore center for captives. Since the captive legislation was introduced in the BVI, a total of 543 captives have been formed in the domicile, of which 380 renewed or were issued licenses during 2005, in a year when many domiciles posted decreased volumes. A total of 68 new captive licenses were issued during the year, with licenses for six new insurance managers.

Humphry Leue, Chief Operating Officer at the BVI International Finance Centre, commented, “2005 was another very good year for the BVI captives industry, especially in light of the fact that the pace of captive insurer formations slowed globally. The majority of offshore captive domiciles have reported a decrease in volumes, as did a number of European onshore domiciles. In contrast, the British Virgin Islands’ insurance sector can be proud of the fact that it has achieved the best reported growth amongst offshore domiciles …”

The U.S. continues to be the region of origin of parent companies for most BVI-licensed captives. However, the jurisdiction has global appeal and captives originating from countries such as Switzerland, Guernsey, Taiwan, the Middle East and South America have also been formed in the BVI. The construction industry accounts for the most BVI captive licenses, with 21% of the sector. Finance/insurance (18%), Real Estate (16%) and Healthcare (16%) are the other major industries represented.

Link here.

IRELAND ON COURSE FOR CONTINUED GROWTH, BUT CENTRAL BANK SOUNDS PROPERTY SECTOR WARNING

The Irish Central Bank has forecast that the outlook for the Irish economy is good, with GDP set to grow by 5% in 2006, slightly above previous estimates. However, the bank also warned that the economy’s dependence on the health of the property sector could be storing up problems for the future. An increase in employment of 87,000, or 4.7% on average, accounted for almost all of economic growth last year, the Central Bank said in its Quarterly Bulletin. Productivity increased only marginally as the employment increase was concentrated in the labor-intensive construction and services sector, where productivity increases are traditionally relatively low.

However, while the economy is generally performing well, the bank noted that areas of concern remain. One related to cost competitiveness – productivity increases have been very limited and unit labor costs have increased “significantly” in the past two years. The average increase was about 4.5% a year, compared with an increase in the euro area of about only 1%. The other major source of concern was the property sector. Looking at the sources of growth, the bank noted that the current level of activity in the house-building sub-sector of the construction sector is “beyond what is required over the medium-term”, and suggested that some contraction will be required at some point. This could present adjustment problems if the contraction were to be quite rapid.

Regarding house price inflation, there was a large annual increase in February of 11.1%, a development that the bank considered “worrying” as it represents a significant re-acceleration from increases of 6% to 7% last autumn. “While the Bank considers that the most likely scenario is that of a soft landing, nevertheless this re-acceleration increases the risk of a sharp correction in the future,” the bulletin stated. The increase in house prices coincided with some easing of credit conditions by mortgage lenders. The underlying year-to-year increase in mortgage lending has been running at close to 30% in the first two months of 2006. “Combined with very strong increases in credit to the property sector in general, the economy’s already high dependence on the health of the broad property sector constitutes a significant risk,” the bank cautioned.

Link here.

YUKOS PERSECUTION CONTINUES AS LAWYER JAILED FOR EMBEZZLEMENT AND TAX EVASION

A Moscow court has sentenced a lawyer for the embattled oil company Yukos to a seven year prison term after finding her guilty of tax evasion and embezzlement, in what Russian media reports have suggested is an attempt to flush out other more senior figures wanted by the Russian authorities for their part in supposed criminal activities perpetrated while at the company. Svetlana Bakhmina was arrested in connection with the investigation of alleged asset-stripping at a Yukos subsidiary in December 2004 when she was a junior lawyer at the company. She was accused of embezzling property worth a total of 8 billion rubles ($300 million) belonging to Tomskneft and the Eastern Oil Company.

Prosecutors also charged Bakhmina with evading approximately 600,000 rubles in taxes, despite the fact that her lawyers say that she has paid 606,040 rubles in back taxes for 2001-2002. Bakhmina argued that, as a junior lawyer, she was merely carrying out the instructions of senior staff. Russian newspaper Kommersant has suggested that the authorities will release Bakhmina if Dmitri Gololobov, head of the Yukos legal department, returns to Russia from London. Several former senior Yukos employees have fled Russia since the government began its systematic persecution of the company in 2004.

Link here.

TAXES

AMERICANS WILL CELEBRATE “TAX FREEDOM DAY” THREE DAYS LATER IN 2006

Despite recent tax cuts, Americans will celebrate this year’s Tax Freedom Day on April 26, three days later than in 2005, according to the Tax Foundation’s annual calculation. Surpisingly, Tax Freedom Day will fall 10 days later in 2006 than it did in 2003 and 2004 when, according to Tax Foundation President Scott A. Hodge, a combination of slow income growth and tax cuts caused Tax Freedom Day to arrive comparatively early. “The economy has been growing at a good clip since mid-2003,” observed Hodge, “and those growing incomes are pushing people into higher tax brackets. When that happens, tax collections grow faster than incomes.” 2006’s Tax Freedom Day is still considerably earlier than it was in 2000, when the economic boom, the tech bubble and higher tax rates pushed tax burdens to a record high, and Tax Freedom Day was postponed until May 3.

Tax Freedom Day is calculated by dividing the official government tally of all taxes – federal, state and local – collected in each year by the official government tally of all income earned in each year. This year the Tax Foundation calculates that taxes will amount to 31.6% of total U.S. income. The annual report then compares the number of days Americans work to pay taxes to the number of days they work to support themselves. According to the Tax Foundation, In 2006, Americans will work 77 days to afford their federal taxes and 39 more days to afford state and local taxes. That makes taxation a bigger financial burden than housing and household operation (62 days), health and medical care (52 days), food (30 days), transportation (30 days), recreation (22 days), or clothing and accessories (14 days). Americans will spend more on taxes than they spend on food, clothing and housing combined, noted Hodge.

By state, 6 out of the 10 states with the heaviest tax burdens and the latest Tax Freedom Days are in the northeast – Connecticut (May 12), New York (May 9), New Jersey (May 6), Massachusetts (May 2), Maine (May 1) and Rhode Island (May 1). The other four are Washington (May 4), Minnesota (May 3), California (April 30) and Illinois (April 30). Most of these states have large metropolitian areas where more high paid jobs are situated, meaning many of the citizens earn enough to pay income tax at the highest rates. The ten states with the lightest total tax burdens celebrate Tax Freedom Day the earliest. Alabama’s April 11 is the earliest of all. The next nine are Alaska (April 12), Mississippi (April 13), Oklahoma (April 14), Tennessee (April 14), New Mexico (April 15), South Dakota (April 16), Montana (April 16), Idaho (April 16) and West Virginia (April 17).

Link here.

U.S. Treasury really is working on tax reform proposals.

U.S. Treasury Secretary John Snow has said that his department remains “busy” working on proposals for simplification of the U.S. tax code, despite the fact that the Bush administration appears to have quietly shelved its tax reform commitments until 2007. However, Mr. Snow once again reiterated that the Bush administration is in no immediate hurry to forge ahead with tax reform. “Reform of the code is so important and the opportunity to really improve it only comes around every twenty years or so, so we want to be sure that we get it right. So at this time we must consider all options carefully and be sure that we are creating a more simple and fair tax system for all,” he explained.

With mid-term elections approaching, it is now widely believed that moves towards serious tax reform will not begin in earnest for about a year. Indeed, Senate Finance Committee chairman Charles Grassley (R-Iowa) told Tax Council members earlier this month that the Treasury will not publish its long-awaited report on tax reform until next year at least.

After months of discussion in numerous meetings throughout 2005, President Bush’s Advisory Panel on Federal Tax Reform recommended two options for simplification of the U.S. tax code in its final report, which was published last November. Under both plans state and local taxes would be non-deductible, while the Alternative Minimum Tax (AMT) – which is projected to raise the taxes of more than 21 million taxpayers in 2006 and 52 million taxpayers by 2015 – would be eliminated.

Link here.

U.S. TAXPAYERS CHOOSE TO E-FILE, BUT NOT TO FREE-FILE

Computer users are preparing and filing their income tax returns electronically in record numbers, according to the IRS, although the numbers using the agency’s “free file” scheme, which encourages taxpayers to file electronically, has undergone a marked decline. As of April 13 the IRS had received a total of 17,629,831 e-filed returns from computer users, surpassing last year’s yearlong total of 17,100,353 returns. Compared to the same period last year, on-line filing is up 15%. The e-file systems offers many advantages to filers beyond speed and efficiency. For example, e-filers get their refunds in half the time, and people who owe money can choose to pay what they owe electronically.

Meanwhile, the numbers using the IRS “free file” scheme, which offers free online tax preparation and electronic filing through a partnership agreement between the IRS and a group of firms under the Free File Alliance, have plummeted by more than 20%, and the system has come under heavy criticism from one senior lawmaker. Sen. Chuck Grassley, (R-Iowa), chairman of the Committee on Finance, is urging the IRS to rein in the commercial offers and charges for basic services that he says “besiege” taxpayers using the IRS’s only option for electronic tax filing. “An underlying principle of the Free File Alliance is that no one should be forced to pay to electronically file a tax return. That principle has been and continues to be eroded,” said Grassley in a letter to Everson in response to a Finance Committee analysis of the program. Grassley also criticized participating companies for using their free file websites to promote an array of other products and services to taxpayers and lamented that the service appears to be “anything but free.”

Link here.
IRS gives late filers an extra six months – link.

FLAT TAX FOLLY

In his new book, Flat Tax Revolution, which is subtitled Using a Postcard to Abolish the IRS, Steve Forbes pulls no punches when describing the federal income tax code. It is (1) A monster of a system, (2) Abominably, appallingly confusing, (3) A multi-headed hydra of countless brackets, deductions, and exemptions, and (4) Horrifically heavy, appallingly complex, and corruption-inducing.

As a Republican presidential candidate in 1996 and 2000, Forbes campaigned on a platform of medical savings accounts, a new Social Security system, school choice, term limits, a strong national defense, and a flat tax – the subject of his new book. In addition to his accurate description of the horrific U.S. tax code, Forbes also correctly points out the huge costs of complying with the tax code. Compliance costs in terms of time have skyrocketed from an average of 17 hours and 7 minutes 15 years ago to 28 hours and 30 minutes today. Lost productivity is in the billions of hours. The cost in dollars is now about $200 billion.

The flat tax idea is not new to Steve Forbes. He mentions how the first proposal for a flat tax was made in Milton Friedman’s Capitalism and Freedom in 1962. This should come as no surprise to those familiar with Friedman’s statist proposals as outlined by Murray Rothbard in his classic 1971 essay, “Milton Friedman Unraveled”. The “prime movers” behind the flat tax are acknowledged by Forbes to have been Hoover Institution economists Robert Hall and Alvin Rabushka, who authored The Flat Tax back in 1985. Flax Tax Revolution, with a foreword by that great champion of limited government, Newt Gingrich, contains glowing endorsements from a diverse lot – Donald Trump, Sean Hannity, Neil Cavuto, Lawrence Kudlow, and former congressmen Joe Scarborough and Jack Kemp. But is the Forbes plan a solution to the horrendous, convoluted, wealth-destroying federal income tax code?

There is no question that many people will have a lower tax bill and a shorter and simpler tax form to fill out under the Forbes flat tax plan. But as we shall presently see, there is another winner under the flat tax: the U.S. federal government – a bloated, corrupt, monstrosity that now spends almost $3 trillion a year while redistributing the wealth of its citizens, enriching federal contractors and other special interests, and maintaining an empire around the globe. Is shortening and simplifying the federal tax code the solution or does it mask the problem? Will it perpetuate the federal leviathan or result in more liberty and less government?

The invectives hurled at the federal tax code and the tax collection system are misplaced. The real problem is the very existence of the federal leviathan that feeds off tax dollars. A tax plan that perpetuates the welfare state and pays for the warfare state is not the solution. I would appeal to Forbes to consider not only something he said about taxes early in the first chapter of his book – “first and foremost, we pay too much” – but also that the reason we pay too much is that the federal leviathan devours too much. As Congressman Ron Paul (R-Texas) so succinctly says, “The real issue is total spending by government, not tax reform.”

Link here.

BRITISH VIRGIN ISLANDS GOVERNMENT TO INVESTIGATE PROPERTY STAMP DUTY EVASION

The BVI government has launched an investigation into allegations that a number of properties in the jurisdiction have changed hands at less than their true value to avoid stamp duty. Minister for Finance Ronnie Skelton announced that he has asked the attorney general to begin an investigation into the allegations, which were made in the Public Accounts Committee’s report. Mr. Skelton indicated that the government will not hesitate to act if it finds any evidence of wrongdoing, saying that it was the duty of all residents to pay their lawful taxes.

According to the committee’s report, at least four large properties were sold under their true value to deliberately avoid paying the correct stamp duty. The properties in question, mainly hotels and resorts, were reportedly sold for sums of between $600,000 and $3 million. The committee has warned that such transactions could hurt the BVI’s financial services industry. The committee has also examined transfers of property for between $250,000 and $500,000 from June 18, 2004, to June 19, 2005, and property selling for more than $500,000 during the period June 1, 2004, to June 14, 2005. Stamp duties are paid at a rate of 12% by both “Belongers” (those born in the BVI) and non-Belongers.

Link here.

U.S. AUTHORITIES MOVE TO SHUT DOWN ZERO INCOME TAX SCHEME

The U.S. Justice Department has brought a lawsuit against nine people in a nationwide crackdown on a scheme named by the IRS as the number one tax scam on its so-called “Dirty Dozen” list of dubious tax avoidance strategies. According to the government complaints, filed in seven lawsuits across the country, the nine people have received a total of nearly $150,000 in erroneous tax refunds by submitting false forms with their federal tax returns to replace W-2 and 1099 forms that correctly reported their income.

The offences were allegedly encouraged by Peter Eric Hendrickson of Commerce Township, Michigan, who was convicted in 1992 on federal criminal charges for failing to file a federal income tax return and for a conspiracy involving a firebomb placed in a bin at a U.S. Post Office in Royal Oak, Michigan on April 16, 1990, the last day on which tax returns could be postmarked that year. Hendrickson testified at a co-conspirator’s trial that he wrapped a tea bag around the bomb’s tubing as a reference to the Boston Tea Party tax protest. In addition, the suit against Hendrickson, filed in the Eastern District of Michigan, asks the court to enjoin him from filing false tax forms and returns. A violation of the injunction would be punishable as contempt of court.

According to the complaint, Hendrickson claims that only government workers are subject to income taxes. Hendrickson tells people to not submit their W-2 and 1099 forms with their tax returns, and in their place submit substitute or corrected W-2 and 1099 forms that they create on which they change their reported income to zero. This scheme is number one on the IRS’s 2006 list of the “Dirty Dozen” tax scams. The Justice Department says that enforcement efforts have “significantly increased” during the past year. According to the DoJ, since January 2001, the Justice Department has sought and obtained injunctions against more 170 tax return preparers and promoters, including 66 since January 2005, and it expects to obtain many more throughout the year.

Link here.

FORMER U.S. ATTORNEY IN NORTH CAROLINA INDICTED IN OFFSHORE TAX FRAUD CASE

A former U.S. attorney who later headed the North Carolina Republican Party and was a Superior Court judge has been indicted in a tax fraud conspiracy, federal prosecutors said Tuesday. Sam Currin, now a private criminal attorney, was one of four people charged after a sting by investigators with the IRS. The four were involved with abusing financial trusts created under Caribbean companies to avoid U.S. taxes, said U.S. Attorney Gretchen Shappert in Charlotte. Federal prosecutors said that a federal grand jury indicted Currin earlier this month on charges of tax fraud conspiracy. He is also charged with obstruction of justice, witness tampering, and perjury charges in a related grand jury investigation of securities fraud.

Currin was formerly an aide to Sen. Jesse Helms, the U.S. attorney for eastern North Carolina from 1981 to 1987, and a Superior Court judge until 1990. Since then, he has represented criminal defendants in the state’s federal courts. Charged along with Currin were Ricky Graves, a tax attorney in Wilmington, N.C., and a North Carolina couple who headed a series of offshore financial companies. Prosecutors said they have asked a judge to order that Howell Way Woltz, the president of Sterling Trust in the Bahamas, and his wife Vernice, be held without bail. Raleigh attorney Robert Wellons pleaded guilty to conspiracy to obstruct justice and has agreed to help the government, prosecutors said.

Link here.

FEDERAL CHANNEL ISLANDS MIGHT BE ANSWER TO TAX THREAT FROM UK, EU

Sir Philip Bailhache, a former member of the States of Jersey, fears further intrusions into the islands’ tax rights and rules. And he said that when money talked, ancient constitutional privileges could be sacrificed. “The Channel Islands remain, in my view, constitutionally exposed as highly successful financial centers,” he said at an informal talk. Chief Minister Laurie Morgan and other senior ministers were also present. “Year on year the amount of money deposited here grows exponentially and the totals, while small by the standards of the City of London, are no longer insignificant. We ought to be prepared for the possibility that further intrusions into our fiscal autonomy, now the basis of our economies and our prosperity, might take place. Such intrusions might even threaten the domestic autonomy that Channel Islanders have enjoyed for centuries.”

He said that the islands could consider a future together if a tax issue – he called it the nuclear option – forced the islands’ position as Crown Dependencies to be uncomfortable. “This may sound alarmist to some. I am certainly not advocating a UDI. What I do advocate, however, is that responsible people should be giving quiet but serious thought to ways in which the Channel Islands might link their destinies as a single sovereign federated state, if it were necessary to do so at any stage in the future.”

Sir Philip said that closer constitutional ties made sense and both governments have stated that the islands would be stronger if they acted in concert. Relations with the UK Government were much better than they were just three years ago, and other European governments were also being convinced. “Recent experience ‘over the draft European Constitution’ has shown that, when they act together, the Channel Islands will usually get what they want,” he said, but, “The position of all microstates, but especially dependencies, is precarious when large countries, or the European Union, determine as a matter of policy that certain things should happen.”

Link here.

ALMOST HALF OF IRS COMPLIANCE DECISIONS OVERTURNED

Almost half of the cases brought against taxpayers by IRS enforcement officers are overturned on appeal, according to a sample of cases studied by the Government Accountability Office. Based on a review of 153 appeals cases, the GAO estimated that 41% of the 102,623 cases closed in fiscal year 2004 were not fully sustained. The GAO found that in more than half of those cases, examiners from the compliance division and officers in the appeals division applied tax laws and regulations differently. The Appeals Office closes about 100,000 cases a year involving taxpayer disputes with the IRS’s enforcement and compliance staff.

The GAO is encouraging improvements to an IRS program that provides feedback from the appeals division to IRS examiners, in order to improve the accuracy and quality of audits and taxpayer service. The study was commissioned after a request from the Senate Finance Committee in 2004. Sen Max Baucus (D-Montana), the ranking Democrat on the committee, commented that the results of the study highlight a need for an “aggressive effort” to spot patterns and problems in the compliance division’s work.

Link here.

SYMANTEC TO CHALLENGE $1 BILLION IRS TAX CLAIM RELATED TO TRANSFER PRICING

Symantec Corporation, the world’s largest maker of antivirus software, has stated that it plans to fight a claim by the IRS that the company owes $1 billion in back taxes, relating to its acquisition of Veritas last year. Symantec, which makes Norton anti-virus software, revealed in a filing with the SEC that it had received a Notice of Deficiency from the IRS on March 29, 2006, which claimed that the company owes $900 million in additional taxes, plus interest and penalties, for the 2000 and 2001 tax years. The IRS claim was based on an audit of Veritas Software Corporation, which the Company acquired in July 2005.

The back tax claim primarily relates to transfer pricing in connection with a technology license agreement between Veritas and a foreign subsidiary. The IRS has also served another notice on Symantec which claims that the firm owes an additioanl $100 million excluding penalties and interest as a result of an unrelated audit of the company for fiscal years 2003 and 2004. The adjustments relate to transfer pricing matters between the company and a foreign subsidiary.

Symantec stated in the filing that, “The Company strongly believes the IRS positions with regard to these matters are inconsistent with applicable tax laws and existing Treasury regulations, and that its previously reported income tax provision for the years in question is appropriate.”

Link here.

ASSET PROTECTION / LEGAL STRUCTURES

IRS ASKS PAYPAL FOR HELP FINDING TAXPAYERS HIDING INCOME OFFSHORE

A federal court in San Jose, California gave the IRS permission to ask PayPal – a company that enables online money transfers – for account information for American taxpayers who have bank accounts, credit cards or debit cards issued by financial institutions in more than 30 countries reputed to be tax havens. PayPal spokeswoman Amanda Pires said the company just received the summons. “We’re still evaluating our options,” she said. “The privacy of our customers’ information is something we take really seriously.”

PayPal enables individuals and businesses around the globe to send and receive money online. In 2005, users moved $27.5 billion through the money transmitter. The company, owned by eBay, has 100 million account holders globally. The request for information is an outgrowth of an IRS effort, begun several years ago, to trace money that American taxpayers hold offshore to avoid paying taxes. The IRS said many of those taxpayers access their money through credit and debit cards. The tax collectors have already obtained information from some credit card companies, merchants and payment processors. “PayPal is another one of the mechanisms by which money stashed overseas might be spent,” Eileen OConnor, assistant attorney general for the Justice Department Tax Division, told reporters.

In some cases, the IRS obtained credit card numbers but could not identify the cardholder. The IRS said PayPal might be able to lead the tax agency to those individuals. The IRS also hopes PayPal can help them identify currently unknown taxpayers’ and their payment cards, as well as offshore bank accounts, that might be evidence of tax evasion. The request covers transactions occurring from 1999 through 2004. PayPal offers service in less than a third of the locations listed in the summons, according to the company. Those places were Anguilla, Costa Rica, Cypress, Hong Kong, Latvia, Luxembourg, Malta, Singapore, Switzerland, the Channel Islands and the Isle of Mann, Ms. Pires said.

The demand promised to heighten concerns of online privacy advocates that contend law enforcement officials see the Internet as a virtual gold mine of information about people’s lives and activities. A battle between Google and the U.S. DoJ ended last month with U.S. District Court Judge James Ware ordering the company to turn over data about what people are seeking on the Internet. In what was hailed as a victory, Google convinced Ware to make the company provide only a sliver of the information originally requested by the government, as he ordered Google to turn over a random list of 50,000 Website addresses resulting from Internet search requests. The judge nixed the idea of Google handing over exact queries or other information that might infringe on the privacy of computers users.

Links here, here, and here.

TAX HAVEN GETAWAYS 2006

Is less actually more? The answer – every April, at least – is yes. As the wealthiest Americans file their income tax returns this month, many probably wish they could report just a bit less – a smaller income, a more modest bonus, less impressive stock portfolio returns. Unless they are fudging the numbers, that is not likely. 2005 was a very good year for the rich. Bill Gates’ personal net worth alone increased $3.5 billion last year, as reported in Forbes’s list of the World’s Billionaires. Investment banks such as Goldman Sachs reported record-breaking annual profits, leading to a bonus season that would make Midas blush.

The strong economy affected ordinary Americans, too. According to the Bureau of Economic Analysis, per capita disposable personal income nudged up $89 from November 2005 to December 2005. Of course, the more you make, the more you generally give back to Uncle Sam. And with tax havens things of the past and offshore accounts coming under international scrutiny, there are fewer ways to avoid it. “No matter where you live, if you’re a U.S. citizen, you’re taxable on all income from all sources,” says Robert McKenzie, a lawyer with Arnstein & Lehr in Chicago. Even if you renounce your U.S. citizenship – an extreme alternative to paying income tax, but perhaps a financially sound one – that, too, is now “a taxable event,” says McKenzie. “There is a tax imposed on assets you seek to take out of the country.”

International tax havens, fabled places where income taxes are low or nonexistent, are being looked at closely by the U.S. government, the OECD, and the related FATF. “Pressure is being imposed on all tax havens, since there are still some left for those living outside the U.S.,” Gideon Rothschild, an asset-protection attorney with Moses & Singer in New York City, emails. “The OECD and FATF are concerned about money-laundering and terrorist financing, as well as tax transparency. Most jurisdictions have succumbed to the pressures of these bodies.”

That does not deter some people, nor do other risks. McKenzie became a tax lawyer in 1978, the year he left his former employer – the IRS – to “protect” victims of tax law. In the intervening years, McKenzie has learned that people will try anything to avoid paying them. “There are a lot of tax havens I’ve had clients use over the years,” says McKenzie, citing a client who placed a “substantial amount” of money in a Bahamian bank account, only to lose it when the bank closed.

What is a U.S. citizen to do as April 15 approaches? That is where Rothschild comes in. “There are not laws that make transfers to offshore trusts for asset-protection purposes illegal, provided the transfers are made when there are no clouds, or creditors, on the horizon, and that the trusts and the U.S. taxpayers creating such trusts comply with all the IRS reporting requirements,” Rothschild explains. While he is quick to point out that asset protection does not involve minimizing income taxes, Rothschild says there are strategies that can help save estate taxes and offshore trusts. Using private-placement life insurance products is one such strategy. In the spirit of fiscal strategizing, Forbes has compiled our annual list of Tax Haven Getaways again this year – 10 sunny destinations, once famous for their very friendly tax laws.

Link here.

ST. KITTS AND NEVIS MAKING STEADY PROGRESS SINCE REMOVAL FROM BLACKLISTS

St. Kitts and Nevis has made steady progress in developing its financial services sector since securing its removal from the FATF and OECD blacklists in 2002, according to a senior government official. According to the Communications Unit of the Prime Minister’s Office, Shawna Lake, the jurisdiction’s Director of Marketing and Development, revealed last week that St. Kitts had 1,680 companies on the register as of 31st December 2005. Ms. Lake noted that while this was “a big improvement” the numbers are still relatively modest compared to other jurisdictions that receive hundreds of company formation applications per month. However, she explained that during 2001 and 2002, the department had to focus its energies on securing the jurisdiction’s removal from the lacklists, meaning that entirely new legislation and financial products had to be structured. Ms. Lake also said that St. Kitts has been keen to promote “real investment” rather than encouraging the incorporation of “shell companies”.

Link here.

PRIVACY

U.S. NATIONAL CELL-PHONE DIRECTORY PLAN ON HOLD

An ambitious plan to build a national cell-phone directory looks increasingly like a wrong number. While no one has officially killed the 2-year-old project to create a “wireless 411” service, the effort, originally expected to roll out last year, is not moving forward. There is still no planned launch date and apparently little public demand for the service. “It’s not dead, but it’s not alive,” said Patrick Cox, CEO of Qsent, the company hired to manage the 411 data by a working group that includes most of the largest U.S. cell-phone carriers.

Initially touted as a service for wireless customers who wanted to give friends, family and colleagues a way to find their numbers, the 411 project drew fire early on from consumer- and privacy-rights advocates, who worried that an improperly managed service could expose numbers to telemarketers and shatter mobile users’ expectations of privacy. “Because these devices are so personal, people want to control who gets ahold of their numbers,” said Keith Mallinson, wireless analyst at research firm Yankee Group. According to Cox, directory planners have taken measures to address all privacy concerns. Only people who choose to participate would be listed, data could be removed at any time and numbers would be available only through an operator, never online or in print. Even so, carriers are not eager to roll out wireless 411.

Even with protections in place, privacy concerns remain pertinent as more people depend on wireless phones for their primary communications devices. Today, Yankee Group estimates that about 10%t of all U.S. phone users, and more than 20% of young adults, have no land line. Those who have both a land line and a cell phone, meanwhile, make a growing share of their calls wirelessly. Cox argues that a directory is even more relevant with this “wireless substitution” on the rise.

A survey commissioned around the inception of the 411 project revealed public support for a directory. Research firm Pierz Group found that 53% of mobile users surveyed would want their numbers in a directory, provided strict privacy protections were in place. Still, Yankee Group’s Mallinson said he is not aware of any successful mobile directory efforts outside the U.S. And while it is possible, for a fee, to list a wireless number in most traditional phone directories, few people do so. Verizon Wireless, meanwhile, sees the interminable delay in the 411 project as vindication for the company’s early and continued opposition to the project. “It’s a really bad idea,” said Verizon spokesman Jeff Nelson. “The zone of privacy that’s unique to wireless would just be torn up.”

Link here.

NEW YORK POLICE DEPT. OFFERS DETAILS OF NEW PUBLIC SURVEILLANCE CAMERA PROGRAM

They are in the subways. Private businesses have them. But NYPD officials say the police have only installed a few dozen of their own surveillance cameras on the streets of the city. “The system will consist of 505 cameras to be installed in two phases in a total of 253 locations, first in Brooklyn and then in the remaining boroughs,” said NYPD Deputy Inspector Delayne Hurley. “The locations have been selected primarily on the basis of combating concentrated pockets of crime.”

“The recorded image will be digitally stored, enabling investigators to access it at a future date if necessary,” Hurley said. “Camera locations will have signs posted nearby clearly stating that the area is being monitored by the Police Department.” And soon, Lower Manhattan is slated to get hundreds more cameras as part of a new counter-terrorism initiative there. It’s a project so new, Hurley said he could tell the council little about it. “Because this program is under development, I will not be able to provide further detail about it at this time,” he said.

Police officials also were unable to provide enough details to calm worries about how surveillance recordings will be used and how misuse will be detected and punished. “What’s the plan? And how is the department holding officers to what standards? And how are they training officers and setting up a system so that our rights are not needlessly violated?” asked Donna Lieberman of the New York Civil Liberties Union. Meanwhile, the NYPD seems to be proceeding full steam ahead.

Link here.

INTERNET SNOOPING GAINING SUPPORT IN STATES, WASHINGTON

The explosive idea of forcing Internet providers to record their customers’ online activities for future police access is gaining ground in state capitols and in Washington, D.C. Top Bush administration officials have endorsed the concept, and some members of the U.S. Congress have said federal legislation is needed to aid law enforcement investigations into child pornography. A bill is already pending in the Colorado State Senate. Mandatory data retention requirements worry privacy advocates because they permit police to obtain records of e-mail chatter, Web browsing or chat-room activity that normally would have been discarded after a few months. And some proposals would require providers to retain data that ordinarily never would have been kept at all.

We first reported last June that the U.S. Department of Justice was quietly shopping around the idea of legally required data retention. But it was the European Parliament’s vote in December for a data retention requirement that seems to have attracted broader interest inside the U.S. Internet providers generally offer three reasons why they are skeptical of mandatory data retention. (1) It is not clear who will be able to access records of someone’s online behavior. (2) It is not clear who will pay for the data warehouses to be constructed. And (3), it is not clear that police are hindered by current law as long as they move swiftly in investigations. “What we haven’t seen is any evidence where the data would have been helpful, where the problem was not caused by law enforcement taking too long when they knew a problem existed,” said Dave McClure, president of the U.S. Internet Industry Association, which represents small to midsize companies. McClure said that while data retention aficionados cite child pornography, the stored data would be open to any type of investigation – including, for instance, those focused on drug crimes, tax fraud, or terrorism prosecutions. “The agenda behind this doesn’t appear to be legitimate,” he said.

Proposals for mandatory data retention tend to adhere to one of two models, address storage or some kind of content storage. In the first model, businesses must record only which Internet address is assigned to a customer at a specific time. In the second, which is closer to what Europe adopted, more types of information must be retained – including telephone numbers dialed, contents of Web pages visited, recipients of e-mail messages and so on. Without saying what model he favored, Homeland Security Secretary Michael Chertoff broadly endorsed data retention at a meeting of a departmental privacy panel last month. Federal politicians also are being lobbied by state law enforcement agencies, which say strict data retention laws will help them investigate crimes that have taken place a while ago.

Link here.

THE ANTI-ID-THEFT BILL THAT ISN’T

California was the first state to pass a law requiring companies that keep personal data to disclose when that data is lost or stolen. Since then, many states have followed suit. Now Congress is debating federal legislation that would do the same thing nationwide. Except that it will not do the same thing. The federal bill has become so watered down that it will not be very effective. I would still be in favor of it – a poor federal law is better than none – if it did not also pre-empt more-effective state laws, which makes it a net loss.

Identity theft is the fastest-growing area of crime. It is badly named – your identity is the one thing that cannot be stolen – and is better thought of as fraud by impersonation. A criminal collects enough personal information about you to be able to impersonate you to banks, credit card companies, brokerage houses, etc. Posing as you, he steals your money, or takes a destructive joyride on your good credit. Many companies keep large databases of personal data that is useful to these fraudsters. But because the companies do not shoulder the cost of the fraud, they are not economically motivated to secure those databases very well. In fact, if your personal data is stolen from their databases, they would much rather not even tell you. Why deal with the bad publicity?

Disclosure laws force companies to make these security breaches public. This is a good idea for three reasons. One, it is good security practice to notify potential identity theft victims that their personal information has been lost or stolen. Two, statistics on actual data thefts are valuable for research purposes. And three, the potential cost of the notification and the associated bad publicity naturally leads companies to spend more money on protecting personal information – or to refrain from collecting it in the first place. Think of it as public shaming. Companies will spend money to avoid the PR costs of this shaming, and security will improve. In economic terms, the law reduces the externalities and forces companies to deal with the true costs of these data breaches.

Today, the only real cost that remains is the cost of notifying customers and issuing cards. It costs banks about $10 to issue a new card, and that is money they would much rather not have to spend. This is the agenda they brought to the federal bill, cleverly titled the Data Accountability and Trust Act, or DATA. Lobbyists attacked the legislation in two ways. First, they went after the definition of personal information. Only the exposure of very specific information requires disclosure. For example, the theft of a database that contained people’s first initial, middle name, last name, Social Security number, bank account number, address, phone number, date of birth, mother’s maiden name and password would not have to be disclosed, because “personal information” is defined as “an individual’s first and last name in combination with …” certain other personal data.

Second, lobbyists went after the definition of “breach of security”. The latest version of the bill reads, “The term ‘breach of security’ means the unauthorized acquisition of data in electronic form containing personal information that establishes a reasonable basis to conclude that there is a significant risk of identity theft to the individuals to whom the personal information relates.” Get that? If a company loses a backup tape containing millions of individuals’ personal information, it does not have to disclose if it believes there is no “significant risk of identity theft.” If it leaves a database exposed, and has absolutely no audit logs of who accessed that database, it could claim it has no “reasonable basis” to conclude there is a significant risk.

Even worse, this federal law pre-empts the 23 existing state laws – and others being considered – many of which contain stronger individual protections. So while DATA might look like a law protecting consumers nationwide, it is actually a law protecting companies with large databases from state laws protecting consumers. So in its current form, this legislation would make things worse, not better. The only way to protect us from lobbyists tinkering with the details is to ensure that the federal bill does not pre-empt any state bills. That said, disclosure alone is not going to solve identity theft. The reason theft of personal information is so common is that the data is so valuable. The way to mitigate the risk of fraud due to impersonation is not to make personal information harder to steal, it is to make it harder to use.

Link here.

PEOPLE WILL GIVE AWAY THEIR IDENTITY FOR AN EASTER EGG

81% of commuters outside Victoria Station were willing to part with all the personal information needed to steal their identity for the chance to win an Easter egg bonanza, according to a survey carried out for Infosecurity Europe. The researchers presented the survey as research into the significance of Easter, telling commuters that if they took part in the survey they would be entered into a draw for an Easter egg bonanza worth £60. To put the public at ease, they were asked questions about their knowledge of Easter and Easter egg consumption. Seemingly innocent questions were inserted into the conversation to find out the details needed to steal their identities, such as date of birth and mother’s maiden name.

Organizers of the annual information security event have been running a survey of this kind for a few years. Each time, the result is the same. Whether the incentive is free theatre tickets or a free pen, people fall far too easily for these simple tricks of social engineering. The first question researchers asked was, “What is your name?” Everyone surveyed gave their names. They were then asked a series of questions about Easter and the tradition of giving Easter eggs. They were also asked if they gave any of their Easter eggs to their pets (89% said they had) and when asked what their pets name was 86% of respondents then went on to give their pet’s name. When asked if there was a tradition of giving Easter eggs in their family, 76% said there was and when asked for the names of their mother’s and father’s families, 80% revealed their mother’s maiden name. All of the commuters gave their address and post code so that the Easter egg feast could be sent to them if they won. Mother’s maiden name and first school are key pieces of identity information used by banks and utility companies in their identity checking procedures.

Finding out the date of birth was also fairly easy with 82% giving this information, as the researchers pointed out it was needed to establish their age group for survey demographics and to prove they had participated in the survey, and 90% gave their home phone number in case there was a problem delivering the chocolate. At the end of a two-minute survey, the researchers were armed with sufficient information to start stealing their victim’s identity. The researchers did not give any verification of their identity. Their only tool was a clipboard and the offer of the chance to gorge on chocolate. All the information collected by the researchers was destroyed.

Link here.

LAW

AT&T SEEKS TO HIDE SPY DOCS

AT&T is seeking the return of technical documents presented in a lawsuit that allegedly detail how the telecom giant helped the government set up a massive internet wiretap operation in its San Francisco facilities. AT&T argued that confidential technical documents provided by an ex-AT&T technician to the Electronic Frontier Foundation should not be used as evidence in the case and should be returned. The documents, which the EFF filed under a temporary seal last week, purportedly detail how AT&T diverts internet traffic to the National Security Agency via a secret room in San Francisco and allege that such rooms exist in other AT&T switching centers. The EFF filed the class-action lawsuit in U.S. District Court in Northern California in January, seeking damages from AT&T on behalf of AT&T customers for alleged violation of state and federal laws.

Mark Klein, a former technician who worked for AT&T for 22 years, provided three technical documents, totaling 140 pages, to the EFF and to The New York Times, which first reported last December that the Bush administration was eavesdropping on citizens’ phone calls without obtaining warrants. Klein issued a detailed public statement last week, saying he came forward because he believes the government’s extrajudicial spying extended beyond wiretapping of phone calls between Americans and a party with suspected ties to terrorists, and included wholesale monitoring of the nation’s internet communications. AT&T built a secret room in its San Francisco switching station that funnels internet traffic data from AT&T Worldnet dialup customers and traffic from AT&T’s massive internet backbone to the NSA, according to a statement from Klein.

Klein’s duties included connecting new fiber-optic circuits to that room, which housed data-mining equipment built by a company called Narus, according to his statement. Narus’s promotional materials boast that its equipment can scan billions of bits of internet traffic per second, including analyzing the contents of e-mails and e-mail attachments and even allowing playback of internet phone calls.

While AT&T’s open filings did not confirm the details of Klein’s statement, they did not dispute the legitimacy of his claims, and the company’s filing included a sealed affidavit attesting to the sensitivity of the documents. AT&T’s lawyers also told the court that intense press coverage surrounding the case, including publication of Klein’s statement, was revealing the company’s trade secrets, “causing grave injury to AT&T.” The lawyers argued that unsealing the documents “would cause AT&T great harm and potentially jeopardize AT&T’s network, making it vulnerable to hackers, and worse.” The EFF filed the documents last week under a temporary seal when it asked the judge to force AT&T to stop the alleged internet spying until the case goes to trial. Klein’s statement and documents are the only direct evidence filed so far by the EFF, and without them its case could be weakened.

Link here.

U.S. DROPS LIBRARY GAG ORDER IN PATRIOT ACT DISPUTE

The government has backed down in at least one battle over the Patriot Act by dropping a gag order imposed on a library that refuses to reveal a reader’s borrowing habits. The library, thought to be Connecticut, is resisting an FBI request to produce the records of one of its patrons because the agency refuses to identify the threat posed by the person. The library sought to tell its story but was bound to secrecy under a former provision of the Patriot Act, which was dropped when Congress renewed the act this year. The library’s bid to identify itself received a boost when the Justice Department wrote to a federal appeals court on March 29 explaining that “ FBI has determined that it will not oppose that request.” The government had previously argued the FBI probe would be threatened if the name of the library was disclosed.

The American Civil Liberties Union, which announced the development, called it a victory in its campaign against what it considers a government intrusion of privacy. “This calls into question every time the government has relied on national security to impose secrecy,” said ACLU lawyer Ann Beeson. “The only reason to gag our clients was to stifle their free speech rights in the debate over the Patriot Act. The government flip-flop confirms our suspicions.” Once the necessary court procedures are complete, the ACLU plans to hold a news conference to introduce the librarians. Meanwhile, the library’s challenge to turning over the patron’s records continues.

Link here.

MONEY LAUNDERING BATTLE CHALLENGES LEGITIMATE BUSINESSES

The continuing crackdown on criminal and terrorist money networks has the government scrambling to enforce tougher rules against money laundering without over-burdening or even killing legitimate businesses. Money services businesses (MSBs) – non-bank financial institutions which do services such as money transmitters, currency dealers, check cashers – are one example of an industry caught up in requirements of the money laundering laws. Government agencies are pressing for more information from the banks that do business with MSBs. The financial institutions have to deliver that data, and carry the costs.

While there are unlicensed money services businesses operating outside of government oversight, state-licensed companies have to adopt programs that combat money laundering in order to stay in a multi-billion market. But this has not always been enough to keep them in business. “A lot of big American banks had begun to refuse to open accounts with money service businesses” because they are afraid those companies do not have strong anti-money laundering programs, said Elaine Carey, senior vice president at Control Risks in Los Angeles, a consultant firm.

David Landsman, executive director of National Money Transmitters Association Inc., representing 45 companies, said the situation is growing worse. “We have reached a crisis” level, he said in a phone interview. “We estimate that 95% of banks have made it a policy not to take money transmitters accounts.” A money transmitter is an MSB whose core business consist of remittances – transfers of money by foreign workers to their home countries. “In this general atmosphere of cracking down, you have the mistaken notion that we are high risk because we’ve always been categorized together with unlicensed MSBs or foreign money transmitters, although we are not,” Landsman declared. “We have fallen between the cracks.” He criticized the lack of a federal certification system for MSBs, saying that the state license “is not given the respect that we think we deserve.”

Currency transaction reports – documents that financial institutions have to fill out for all cash transactions above $10,000 – are another issue vexing the financial industry. “There are 13 million CTRs that banks fill out every year. Our question is how effective are they,” said John Hall, a spokesman for the American Bankers Association. He pleaded for waiving some of the requirements, especially for customers well known to banks. Michael Morehart, an agent with the FBI’s counter-terrorism division, agreed that “certain categories of CTRs can be eliminated without harm.” But he warned that changing the requirements “without a careful and independent study, could be devastating” to intelligence efforts in both the global war on terrorism and traditional criminal activities. “Our experience shows that terrorism activities are relatively inexpensive to carry out and that the majority of the transactions reports are of value to us,” he said at the Senate Banking Committee last week.

Link here.

CANADIAN MONEY LAUNDERING LAWS LAX SAYS WATCHDOG

Gaps in Canadian laws that are supposed to combat money laundering and terrorist financing must be filled – and fast, says a federal watchdog. Canada has fallen behind global standards and must get things cleaned up by next year, says a briefing note to Finance Minister Jim Flaherty from the head of the Office of the Superintendent of Financial Institutions. “Canada needs to enhance rules to get closer to international standards,” Nick Le Pan warns in a briefing note written two months ago to Flaherty, as the new Conservative minister took office. The briefing note was obtained by The Canadian Press under the Access to Information Act. Canadian rules on fighting these crimes will come under scrutiny next year from the Paris-based FATF, a global body set up to fight terrorist financing and money laundering. “In the interim, questions will continue to be raised about the enforcement effectiveness of our regime,” wrote Le Pan.

OSFI, which regulates banks, trust companies and other financial institutions, refused to comment further on Le Pan’s comments or pinpoint where the problems lie. But fears about the possible misuse by money launderers of so-called “white label” or privately owned automated cash machines are prominent on a list of concerns raised by the federal Finance department. It is now floating several proposals for tightening Canadian laws related to terror financing and money laundering before the 2007 visit by the FATF. Finance officials “will be working with law enforcement and the industry to address the potential money laundering risks associated with `white label ATMs’ (i.e., machines that are not owned or operated by banks),” says a Finance Department paper. “The concerns with these ATMs arise from the possibility for owners or operators to self-load the machine with cash,” possibly from crimes. That cash could then be easily laundered by distributing the bills to ordinary users of the privately owned cash machines.

Two years ago, Canada’s auditor general, questioned the effectiveness of a major new crime-fighting agency – the Financial Transactions and Reports Analysis Centre of Canada, known as Fintrac. It was established in 2000 by Ottawa to combat money laundering but police forces complained to the auditor general that too often, they were not given enough information by Fintrac to launch proper investigations. That is because Fintrac is limited by privacy laws to sharing only very narrow information on suspects, such as bank account numbers, names of account holders and dates of suspicious transactions. Despite those limitations, Fintrac said last November it had unearthed more than CN$2 billion in suspicious financial transactions – including $180 million linked to the financing of terrorism – over the previous year.

Link here.

AMERICA’S SECRET POLICE?

A threatened turf grab by a controversial Pentagon intelligence unit is causing concern among both privacy experts and some of the Defense Department’s own personnel. An informal panel of senior Pentagon officials has been holding a series of unannounced private meetings during the past several weeks about how to proceed with a possible merger between the Counterintelligence Field Activity (CIFA), a post-9/11 Pentagon creation that has been accused of domestic spying, and the Defense Security Service (DSS), a well-established older agency responsible for inspecting the security arrangements of defense contractors. DSS also maintains millions of confidential files containing the results of background investigations on defense contractors’ employees. The merger was initially suggested by a government commission set up to recommend military base closures as a cost saving measure. An initial round of meetings about the merger, however, failed to come up with a plan.

In the meantime, CIFA, a mysterious and secretive unit created in 2002 and charged with making Defense counterintelligence efforts more effective, became the subject of two public controversies. The first erupted late in 2005 when documents surfaced indicating that CIFA (whose mission, according to its own officials, is supposed to be limited to analysis of counterintelligence data produced by other agencies) was discovered to have put together a database that included reports on anti-administration demonstrators, including peace activists protesting alleged “war profiteering”. CIFA and Pentagon officials subsequently assured Congress in writing that CIFA’s activities would be more carefully focused in the future on genuine potential terror threats to defense facilities and personnel and that data collected on legitimate peaceful protestors would be destroyed. Another controversy over CIFA took hold during the corruption scandal surrounding former San Diego congressman Randall (Duke) Cunningham. As stories about the CIFA scandals circulated earlier this year, talk about merging the controversial unit with the less controversial DSS appeared to stall. But in the past few weeks, Pentagon officials said, such discussions have regained momentum.

But both Pentagon insiders and administration critics remain queasy about the merger idea. Some veteran officials recall that DSS itself became the subject of unwelcome public attention during the Clinton administration. Both Pentagon insiders and privacy experts fear that if CIFA merges with, or, in effect, takes over DSS, there would be a weakening of the safeguards that are supposed to regulate the release of the estimated 4.5 million security files on defense-contractor employees currently controlled by DSS. According to one knowledgeable official, who asked for anonymity because of the extreme sensitivity of the subject, since its creation CIFA has on at least a handful of occasions requested access to the secret files without adequate explanation. As a result, the source said, DSS rejected the requests. A merger between CIFA and DSS would weaken those internal controls, the source said.

Defense analyst and washingtonpost.com blogger Bill Arkin, who first brought allegations about CIFA’s domestic spying to light, says that in its efforts to trying eliminate waste and better coordinate intelligence activities, “we are creating an American military secret police that is clearly acquiring way too much information and way too much power.” But Cindy McGovern, a spokeswoman for DSS, maintains that even if CIFA does merge with DSS, officials will not be able to get access to secret security files unless they have a “legitimate need”.

Link here.

VICTORY FOR OPENNESS RESULTS IN LAW MAKING SURE IT WILL NOT HAPPEN AGAIN

In nine months, Ryan Nees has gone from a precocious, 15-year-old filmmaker to an open records activist whose latest foray cost the city of Kokomo more than $11,000. Nees won that amount in attorney fees after the city lost a lawsuit he brought to force Kokomo Mayor Matt McKillip to turn over the e-mail addresses of subscribers to the city’s electronic newsletter. Nees sued under Indiana’s open records law after receiving campaign messages upon subscribing to the newsletter. “I didn’t so much become an advocate for public access until I was denied,” said Nees, who will join journalists and advocates at the national Freedom of Information Summit, which runs this Friday and Saturday in Indianapolis. “There was a certain amount of indignation there.” The victory was bittersweet. The Indiana General Assembly has amended state law to let government officials withhold lists of e-mail addresses.

Link here.

OPINION & ANALYSIS

BARBARIANS AT THE GATES

I must admit, the recent consternation over illegal immigrants marching, carrying the flag of Mexico, demanding a “right” to work, and threatening a general strike has brought a smile to my face. Not because I am in favor of this invasion or wish to see the illegal aliens get their way. No, I am amused at how history is repeating itself and few, if any, even notice. For years we have heard that the government, in all quarters, exists for the purpose of protecting its citizens from external attack and from internal disorder. Yet, here we are faced with masses of people who have successfully invaded the nation and threaten us with mammoth internal disorder – while the state in all its impotence debates legislation that they claim will deliver us from the evil within. If nothing else the last couple of weeks should have proven that Machiavelli was correct: “[N]o prince was ever at a loss for plausible reasons to cloak a breach of faith” and certainly the U.S. government is no exception.

No, current events are not another making of the Divine Comedy whereby we can be assured, by the state, that a short time in hell will ultimately deliver us to paradise. For unlike Dante’s journey through the Inferno (Hell), Purgatorio (Purgatory), and Paradiso (Paradise), the empire of the United States is embarking on a trek of destiny … a destiny that the dead empires of the past have shown, begins and ends in the inferno.

By the end of the 4th century AD the Roman Empire was staggering under crushing taxes, fraudulent judges, dishonest officials, abandoned cities and the foederati from which we get the English words federation and federalism. The foederati was the Roman idea of subsidizing those barbarian tribes Rome needed to defend the empire. In short it was a nice way of saying that the Romans were no longer willing to fight in their own armies so they were looking for others to work at the jobs the Romans would not take. We call it the hiring of mercenaries.

Traditionally the payments to the barbarians took the form of money and/or food but as inflation began to make the Roman coin more and more worthless those of the foederati were allowed to settle in Roman territories as if they were Roman citizens. However, as the barbarian became more and more discontent and the Roman State was not capable of paying its debts a rebellion began to take shape among Rome’s former allies. Out of the foederati and the Visigoths came a leader by the name of Alaric who was proclaimed king with the proclamation, “rather to seek new kingdoms by their own work, than to slumber in peaceful subjection to the rule of others.”

After a number of years of Rome reneging on promises of payment, failed military campaigns by Alaric and broken treaties, Alaric and his Visigoths had had enough. So on August 24, 410 AD Alaric and his army broke into the city of Rome through the Salarian gate on the northeastern side of the city. For the first time in 800 years the great city of Rome was plundered and it lasted for three days. When Alaric had taken what he figured he was owed, he and his army withdrew from the city of Rome. They did not set up a new government nor did they leave a governing military contingent.

The sack of Rome was not the fall or the end of the Roman Empire. Nevertheless, through the first three-quarters of the 5th century the Roman Empire began to shrink as its borders from the Black Sea to the North Sea were saturated with migrating, invading and dislocated illegal aliens. Of course this was due in large part to a disorganized and weak Roman state but it was also owing to the rapid advance of the Huns from the northeast. After a sizeable amount of pillaging these displaced tribes would ask to become part of Rome’s foederati and ally themselves with Rome against Attila and his Huns. The Roman Empire did not “fall” in the traditional sense. It shattered like an earthen vase being continually struck by a hammer with each fragment becoming a little fiefdom controlled by a group of immigrants. By 476 AD the Western Roman Empire had ceased to exist because the Roman Empire had “fallen apart”.

Do we call the influx of the barbarian tribes a migration, invasion, or immigration? The answer is yes, it was each of these. So the next time you hear of illegal immigrants plundering our system through free education, free medical care, taking advantage of the welfare system, or the social security system remember the Romans and their mistakes. Most of all when you hear the lame excuses given by policy makers and our leadership for giving into the demands of these illegal malcontents remember, like Rome, it is the death rattle of a dying empire.

Link here.
Forget about civil war in Iraq. One is coming to America – link.

WACO AND THE BIPARTISAN POLICE STATE

Every year around this time, I find it worthwhile to reflect on the siege at Mt. Carmel, just outside of Waco, Texas, which began on February 28, 1993, when an ATF publicity stunt went awry, and ended 51 days later on April 19 with about 80 civilians killed. Waco is still important, because it illustrates the violent nature of the state, the fact that political power flows from the barrel of a gun, and the scary truth that the U.S. government is ultimately no different from all others in this respect. Many people, including many libertarians, would just as soon forget the debacle. But we must remember. 13 years ago the U.S. government ended its altercation it had initiated with a group of peaceful religious separatists by driving a tank through the Branch Davidians’ home and church, pumping the interior with poisonous gas, and keeping the fire engines at a distance while the building and the people inside burned.

For many Americans, Waco represented the nightmare their government had become. In those days, it was the right that spoke out against unchecked government power, erosions of the Bill of Rights, and the imperial executive. Such criticism was tempered in its radicalism over the next decade, for a variety of reasons. The most dramatic was probably the bombing of the Alfred P. Murrah building in Oklahoma City, which occurred on Waco’s two-year anniversary, saving the Clinton presidency from a populace becoming wary of government power as its partisans successfully blamed the terrorist attack on anti-government attitudes. We were to believe that even the mild criticism of government heard on mainstream conservative radio was aiding the terrorists. In more recent times, as I discussed a year ago in my article “Waco, Oklahoma City, and the Post-9/11 Left-Right Dynamic,” we have seen a similar trend going in the opposite direction, with the right siding with the omnipotent state and accusing the left of siding with those who want to destroy America.

Yet Waco is neither a leftwing nor rightwing issue. It is instead an issue that transcends such political categories and cuts to the most profound of questions as to what kind of country this is, what kind it should be, and the very meanings of liberty and tyranny. At Waco, the U.S. government treated the Branch Davidians as any total state might treat its most alienated subjects. It broke into their home aggressively, shot at them recklessly and mockingly defiled their graves. It blocked off their water and their communications with family, counsel and the press. It waged psychological warfare on them. It showed no mercy on the little children that it gassed. It imprisoned the survivors, including one man who was not even in the building during the siege. The Davidians were effectively dehumanized by the central state’s lapdog press, and so all too few voices, even on the hyper-sensitive left, came to their defense when Clinton and Reno’s federal police stampeded them under their weight.

A government than can get away with what it did at Waco is essentially unleashed, constrained only by its own whim. Waco is a reflection of a greater problem. Look at the many laws and policies in America leading up to Waco, and Waco should not be any surprise. Look at Waco, and Bush’s fascist policies all fall into place. The continuity between the Clinton and Bush presidencies on issues of civil liberties demonstrates something that many people do not want to wrap their minds around. America’s police state is utterly bipartisan. It is designed to persist and indeed extend its reach with each administration, no matter the party in charge. In fact, the political party illusion serves to distract people from the real issues, the state’s trampling of our liberties, and instead devote their hopeful attention and energy to getting one dictatorial gang elected rather than the other.

Both Clinton and Bush have gotten away with massive prosecutorial abuses, federal police brutality and dramatic attacks on due process for the accused, all while the people have argued over which side is the worse liar and central manager and not how best to restore liberty in America. How many times in the last four or five years have we heard Bush’s defenders cite something horrifying that Clinton did or said as evidence that Bush’s actions are not as beyond the pale as his critics claim, after all? This is a disingenuous line of argument coming from those who lambasted Clinton last decade. But it is effective so long as Americans care more about their team winning the electoral championship every four years than about the fact that the whole game is fixed.

America’s had this bipartisan police state for a long time. It was Republican Abraham Lincoln who waged war on half the country and suspended the Bill of Rights in the other half. It was Democrat Woodrow Wilson who really honed the art of imprisoning dissenters. The war on drugs has been advanced, expanded and internationalized by members of both parties. Both Republicans and Democrats are fervently pro-gun control. Neither party has ever done anything significant to rein in the IRS. And just as Clinton’s men helped to whitewash the massacre at Ruby Ridge, which occurred on Bush I’s watch, Republican fixers were eager to cover up the Clinton administration’s wrongdoing at Waco. The trend continues today. We can make a strong case that Bush and his cadre have set some precedents, but the Democratic opposition offers little hope. The idea that Hillary Clinton would be more sensitive to civil liberties if she were at the empire’s helm is too absurd for words.

Waco should remind us that Democrats are no more restrained than the Republicans when it comes to being “tough on crime”, if all that entails is using the bludgeon of state power against all social elements the ruling class has deemed less than human. This should really be obvious by now, as the Bush government has turned Iraq into one big Branch Davidian compound and now appears poised to give the Waco treatment to Tehran. If ever Americans are to have their rightful liberty, a political realignment must emerge that shatters the dishonest and distracting constructs of left and right, Democrat and Republican, and focuses instead on liberty versus the state. The atrocity apologists on left and right should be seen as on the same side on the general issue of absolute power. And those of us who oppose mass murder should work together against the bipartisan police state.

Link here.
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