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According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

Friday, January 11, 2013

Goldman Sachs Revels in Its "Exceptionalism"

The following article points out some of the advantages that CEOs have over ordinary citizens:

Shared sacrifice -- except for CEOs
By Matt Stoller - Reuters

The hypocrisy over deficits and calls for shared sacrifice can be illustrated with one simple statistic. According to the Institute for Policy Studies, 25 of the most-well-paid chief executives got higher compensation than their companies paid in federal taxes.  There’s a class war on, as Warren Buffett has noted, and his class is winning it.

The drive for austerity, with its attendant manufactured crises, carries with it a host of mini-outrages making this point. Americans learned after the fiscal cliff negotiations ended that the final agreement, ostensibly to pass “tax hikes for the wealthy,” extended huge corporate handouts. These included special breaks for NASCAR, help for Hollywood movie studios, $3 billion a year for General Electric, support for mining and railroad companies, and even a push for electric scooters.

Outrage over this story flamed everywhere, from the floor of the House of Representatives to cable news networks, including ESPN. The anger at these corporate subsidies was justified because breaks like these are a symbol of a budget process designed to shift money and power to people who already have too much of it.

Read the article here

The first link above takes you to Executive Excess 2012:  The CEO hands in Uncle Sam's Pocket where we find the following excerpt:
 . . . .
But companies do not take any deduction for executive stock options on their tax returns
until their executives exercise the options, usually years later. The amount of compensation the executive receives on the exercise date can be substantially higher than the book expense originally estimated for the options. That gives the executive’s corporation a larger option value to deduct off its taxes. Corporations do not report this larger value to shareholders.

The result: earnings reported to shareholders end up overstated, a neat twist that allows executives to grab more in “performance-based” pay, and the corporate tax bill ends up reduced. A win-win for everyone except the average American taxpayer.

For many companies, the numbers involved here can be significant. In 2010, Apple deducted $742 million in “excess stock compensation” expenses from its income and slashed its federal and state tax bills by $260 million, while Goldman Sachs shaved $123 million from its taxes, according to a 2011 report by Citizens for Tax Justice.53 
(From page 16 of The CEO Hand in Uncle Sam's Pocket by Anderson, Collins, Klinger and Pizzigati at Executive Excess 2012: The CEO Hands in Uncle Sam's Pocket (PDF)


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