Thursday, May 15, 2003

More on the banning of the tax book.

I have to paste a large part of a piece by Leonard Post in the National Law Journal on the recent banning of a tax book because the circumstances are fascinating.

A suit brought by the Tax Division of the Justice Department has won a temporary restraining order that enjoins Irwin Schiff and two co-workers from 13 specific activities, such as holding seminars that promote any false or fictitious tax schemes. U.S. v. Schiff, No. CV-S-03-0281-LDG-RJJ (D. Nev.).

While the government's complaint is thick with details and weighted by exhibits, the allegations boil down to this: Schiff and his associates are tax cheats.

The government also alleges that they sell books, tapes and CDs on three Web sites that urge others fraudulently to declare zero tax. They instruct people not to withhold taxes from their pay, no matter what their income or deductions have been or are projected to be.

To government lawyers, this is a tax case and nothing more. But aspects of the case fly in the face of the First Amendment, according to Schiff's lawyer, the American Civil Liberties Union of Nevada and some legal scholars.

The ACLU's involvement concerns three components of the injunction that it says violate First Amendment protections. The components are:
1. An order that the defendants not make statements regarding the excludability of income that they know or have reason to know is false or fraudulent as to any material matter.
2. A prohibition on the sale or distribution of the book, titled The Federal Mafia: How The Government Illegally Imposes and Unlawfully Collects Income Taxes.
3. A requirement that defendants post the restraining order in its entirety on their Web sites.

The first two, the ACLU alleges in an amicus brief, enjoin fully protected noncommercial speech. The third is impermissible forced speech.

"Their speech is political," said Robert Nersesian of Nersesian & Sankiewicz in Las Vegas, who is assisting the ACLU. "The whole book is a political message with just a couple of passages that are not. We're not arguing legality or illegality. There is restraint-prosecuting him if they think he committed a crime, which is lawful-and there is prior restraint, which is not." A U.S. Department of Justice attorney declined to comment.

Historically, the U.S. Supreme Court has narrowly crafted limitations to the First Amendment rights of freedom of expression when it is content-based, and only in a few areas areas, such as obscenity, defamation and fighting words. To date, though, the court has placed no restriction on speech it deemed foolish or absurd.

Judge Lloyd George banned the book on March 19, and extended the ban after a hearing on April 11. Written by Schiff and self-published by Freedom Books, it describes in detail how to file a zero-tax return. It also includes a legal-theory form to attach to the zero-tax return.

This, of course, shouts "tax resister" to the IRS. The book warns readers that getting sued or arrested for filing such a return is possible and describes how to resist IRS attempts at collection if an audit finds the filer's legal theories wanting.

Schiff admits in his legal papers that he has been convicted twice for tax crimes, has been sanctioned by the Tax Court and has never found a judicial authority to side with him on any of his anti-tax theories. Those consequences were for earlier theories, he swore at the hearing that extended the injunction. He said he had never been prosecuted for his zero-tax theory.

At this second hearing, Schiff was still represented by Del Mar, Calif., solo practitioner Noel Spaid, who argued the merits of Schiff's defense until it got down to the specifics of his tax theories.

Spaid said she could not speak to those because "his theories have...been sanctioned by the courts...[and] I do not want to incur the many thousands of dollars that the court could put on my head for even arguing his theories, because that's what the courts are doing."

The judge agreed that she faced a Hobson's choice-that espousing her client's views would likely get her sanctioned. He agreed to "allow Irwin Schiff to represent himself with respect to his theories." Justice Department attorney Evan Davis interjected: "Well, I object to having both an attorney represent someone and having them represent themselves." Schiff: "I'm firing her at this time," which the court allowed. Schiff spent about an hour espousing his theories to the court.

The judge's refrain: nonsense.

Schiff called witnesses who testified that they had purchased books from him but didn't take his word for everything. They'd been inspired to research the law themselves and had been filing zero-income tax returns for years, had not had tax withheld and had been unlawfully hounded by the IRS, according to a transcript of the proceedings.

The government's problem is that despite the fact that Schiff's theories are allegedly "nonsense," people buy them along with his books. The government estimates, as best it can, that Schiff's identifiable customers have evaded or attempted to evade $56 million in taxes for 1999 through 2001. It alleges that these bogus returns have wasted seven employees' time, in the Las Vegas IRS office alone, over the past two years.

To call the case adversarial would be an understatement. Before the first hearing, Freedom Books' office was raided by special agents, with "tax police" stenciled across the backs of their jackets, according to Schiff.

He said that they took all of his records and copied three hard drives with the names and addresses of people who have bought items from Freedom Books, which also sells copies of the Constitution and the IRS Code. Schiff said that he'd been read his rights and was not allowed to enter the office as it was being searched.

I fear the tax police more than I ever feared Saddam.

Wednesday, May 14, 2003

Politics is bad when the run-of-the-mill is disgrace.

Alas, the noble Rumsfeld has been linked to the sale of nuclear reactors to North Korea. And no, Rumsfeld, you can't point a finger at the French to get yourself out of every moral dilemma. Everyone knows the French aren't too morally trustworthy. Remember Vichy?

Meanwhile, the new American administrator of Iraq has outlined his tough approach to ending vandalization and looting. Patrick Tyler reports on the US policy which allows American GIs to shoot looters. In comparison, the Southeast Asian practice of cutting off the hands for theft seems generous.

Wednesday, May 14, 2003

NATO: Is it still growing?

The Central Europe Review has an excerpt from Opening NATO's Door, the new book by Ronald Asmus which supposedly provides an insider's perspective on the course of NATO enlargement. Asmus served as a top aide to U.S. Secretary of State Madeleine Albright and Deputy Secretary Strobe Talbott during President Bill Clinton's second term.

Wednesday, May 14, 2003

In the legal arena...

It looks like the legal battle with fast-food chains and restaurants is not over. How can something which so clearly boils down to personal choice become a litigation hot-spot?

Wednesday, May 14, 2003

Something to smile about.

Baba Wawa has finally met her match. John Stossel sent out an email today announcing that ABC just made him co-anchor of 20/20! Stossel says that he will keep doing his "Give Me a Break" columns and pieces, but now he gets to run the show with Barbara Walters.

Tuesday, May 13, 2003

$20 encore.

Just when you thought Bush had run out of ideas to stimulate the economy, he comes up with a home-runner! Today, at the Bureau of Engraving and Printing Conferencing Arena, John W. Snow, Secretary of the Treasury, Alan Greenspan, Chairman of the Federal Reserve, Rosario Marin, United States Treasurer, Thomas A. Ferguson, Director of the Bureau of Engraving & Printing, and W. Ralph Basham, Director of the U.S. Secret Service, will unveil the new model of the $20 bill. A bureaucratic work of art, to say the least. I think I'll stay right here in my humble office and wait for it to hit the streets.

Tuesday, May 13, 2003

No surprise.

According to The Seattle Times, and keeping with its freedom-loving tradition, the IRS is trying to ban an anti-tax book.

Tuesday, May 13, 2003

French fries and Brie.

An article in The Wall Street Journal suggests that Americans may have as must to lose from the anti-French tariffs and trade boycotts as the Frenchmen themselves. Case in point:

A number of House Members recently sent a letter to the Pentagon demanding that the U.S. Marines end a contract with the French-owned catering firm Sodexho Alliance. But then Representative Chris Van Hollen pointed out that Sodexho's U.S. unit was based in his home state of Maryland, has 110,000 American employees (in all 50 states) and pays $646 million in U.S. taxes.

Albeit, anger motivates quick and decisive action. But who can prove that decisive action is necessarily correlated to wise action? Tariffs and boycotts are the typical political and economic boomerangs. Heads up in the heartland.

Wednesday, April 23, 2003

Parting by Bertolt Brecht.

We embrace.
Rich cloth under my fingers
While yours touch poor fabric.
A quick embrace
You were invited for dinner
While the minions of law are after me.
We talk about the weather and our
Lasting friendship. Anything else
Would be too bitter.

Wednesday, April 23, 2003

A nightmare for college students.

Four students battle the recording industry in recently filed lawsuits against music file-sharing. The students have been accused of enabling large-scale copyright infringement. Perhaps the industry lawyers forget that they are not dealing with deep pockets here. It seem to me that asking for billions of dollars in damages reveals more about corporate naivete than it does their readiness to do battle with music-loving Americans.

Wednesday, April 23, 2003

The voucher experiment continues.

According to a report released by The Manhattan Institute's Education Research Office, Colorado's school voucher law sets some novel and particular limits and boundaries for application of the program.

“Colorado’s new school voucher law provides students with a voucher worth 75% of their local schools’ operating costs per student (85% for high school students, 37.5% for kindergarteners). Religious schools are permitted to participate. However, there are strict limits on which students can participate: vouchers will only be available in eleven “failing” districts, only to students on the free and reduced lunch program, and only to students who are failing the statewide exam (or, for students below 4th grade, those whose schools are failing the exam).

Most importantly, total participation is limited to no more than 500 students in each district. This cap will rise each year to a maximum of 6% in the fourth year. Thus, these failing school districts are assured that they will not lose large numbers of students to private schools, so we should not expect to see much overall change in their performance as a reaction to the presence of vouchers. The program also limits the total size of all participating private schools to no more than 3% of all Colorado students, and empowers school districts to require that students using vouchers must continue to take the statewide exam.”

Does this mean that school voucher programs are evolving to absorb the lessons of other state-based voucher programs in addition to accomodating particular local needs? The battle rages on, but the scoreboard looks good for voucher advocates.

Tuesday, April 22, 2003

Your paradise is not for me.

Madonna's song comes to mind when I read things like this. It seems the President of the Free World and I differ on our view of ideal outcomes.

Tuesday, April 22, 2003

From a very interesting email I recieved...

Four years ago, I alerted the US Department of Defense about $20M grossly mismanaged and/or stolen from Defense Enterprise Fund (DEF), a US-financed program to convert the former Russian producers of weapons of mass destruction (anthrax, nuclear, etc). A Department of Defense Audit proved the theft, but the guilty American managers were not even reprimanded.

When Vector Plant of Novossibirsk, the Soviet Army's prime facility for producing militarized anthrax and smallpox spores, asked for just $1M to convert itself -- DEF did not have the money. When DEF COO was purchasing his private apartment in Moscow, DEF did have a million dollars to finance it.

Just recently, I caused Defense Threat Reduction Agency to lower the number former Soviet WMD scientists said to be converted by DEF from 3370 to 1250, a 66% reduction! But the real figure is no more than 200 scientists, not a good result for a $67M program.

After my letter of concern I was immediately blacklisted for US-financed assistance jobs in the NIS which was a professional and financial catastrophe for me. I am extremely frustrated that there has been four (!) intentionally inconclusive investigations of DEF, each refusing to look into my allegations. The Pentagon admits that the money is gone and that a $67M program is dead, victim of gross mismanagement, they do not disprove my letter, but they do not remove my name from the blacklist either.

Here is something that surprised me, sociologically speaking. I write a letter to the US Ambassador saying "Here is a list of 200 job applications I filed for jobs I am very well qualified for. Please remove my name from the blacklist, my family is starving." The Ambassador replies, "You can't claim that you were blacklisted if you only applied twice." I complain to the State Department. Their investigative agent replies, "You sent so much information it'd take me four months to investigate your claim". Fine, I wait. In four months, I receive a reply, "There will be no investigation since you never sent the information we requested". Fine, I resent all the information -- and then there is no reply, ever.

My letter has cost me my profession, and how am I to live now?Still not enough? Here is how my book was published and then shredded by USAID and then reprinted to become famous. The Nazis were burning books, while mine was shredded -- a fine distinction.

A more complete description of DEF story is available. The full story can be found by going here and then clicking on "DEF". A special thanks to Matthew for filling me in.

CASTIGAT RIDENDO MORES.

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