Word: taxed
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Dates: during 2000-2009
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...convoluted from the start, but it offered oodles of money to the participants. An American investor agreed to lease tram and subway cars from BVG, Berlin's mass-transit company. And BVG, in turn, leased them back for terms ranging from 12 to 30 years. Under U.S. tax law at the time, the American investor was able to take a depreciation tax benefit on the equipment because it was held on a long-term lease - a financial benefit the investor shared with BVG. (Read about Paris' public bicycle system...
...they quickly paid off. Over the many deals, BVG received cash payments from the American investors totaling €68.9 million, or about $90.6 million at current exchange rates. BVG in turn paid the American investors monthly rent to use the equipment, a return the Americans enhanced with that big tax break. For its part, BVG used the money it derived from the deals to pay down debt, which has saved it €35 million ($46 million) in interest payments. It was a shell game of sorts, but everyone made out - except, of course, the U.S. taxpayers, who were unwittingly subsidizing...
Most of the CBL contracts with German municipal authorities were concluded in the late '90s. After a while, the IRS caught on to what was clearly a tax scam on the part of the American investors. The tax write-off applied to purchases of foreign infrastructure assets. But the German assets were not purchased; they were being leased. So in 2004 the loophole was closed...
...worst economic downturn since the 1930s, the moment of reckoning is already almost here: according to both the budget proposed by the White House in February and projections issued by the Congressional Budget Office (CBO) in March, Social Security benefits ($659 billion, according to the CBO) will exceed payroll taxes ($653 billion) in fiscal 2009 for the first time since 1984. Payroll-tax receipts generally hold up much better in recessions than do income taxes, but job losses have been so severe that the CBO expects them to decline slightly from 2008, while benefits rise almost 9% because of cost...
...Back in 1983, when Social Security last faced deficits, Congress approved a set of Social Security reforms that included a graduated hike in the payroll tax and an increase in the retirement age. Thanks to those changes, payroll-tax receipts surpassed benefits in 1985, and the system has been operating at a surplus ever since. The money has been invested in Treasury securities that the Social Security system is supposed to live off in the future. In the meantime, it has provided a significant boost to the federal bottom line for almost 25 years. No more...