Race Car Champs, Prostitutes, Biden, Palin, and Other Tax Miscreants

Today’s taxosphere is still busy digesting the new bailout, but there’s plenty of other business to discuss. A pair of high-profile tax evasion cases have gotten some attention, the credit crisis is considered in more detail, and the Biden/Palin vice-presidential debate features some gaffes on both sides.

• A the California Tax Attorney Blog, blogger Mitchell A. Port talks up the IRS’s increasing efficiency. Surprisingly, the big gains aren’t just in audits — the IRS has also gotten much better at providing easy online help for average users.
• James Edward Maule, proprietor of MauledAgain asks who is to blame for the subprime meltdown and the bailout, and argues that the answer is much more complicated than we’d like it to be. It’s a decent post, but the anti-greed argument doesn’t fly. Fannie and Freddie tried very hard to increase loans to poor people with poor credit, for what may well have been altruistic reasons. And John Paulson, whose financial strategies helped prick the bubble and cushion the crash, was presumably motivated by all the money he could make for himself and his investors. Greed is too versatile to take all the blame, and too ubiquitous to be eradicated. A better answer is to build a system that accepts greed, and turns it to good purposes.
• Via MarketWatch, we find the story of Helio Castroneves, two-time Indianapolis 500 winner, and his indictment for tax evasion. His fairly simplistic kickback scheme had lots of money sloshing back and forth from domestic to international accounts — not the best way to keep things secret. Paul Caron at TaxProf has more.
• On a related note, and again from the indefatigable TaxProf, a Stanford Law grad and wife of the cofounder of AskJeeves.com has been busted for avoiding taxes on the money she earned as a prostitute. Her ‘client nine’ ponied up six figures, but after deductions for travel and other expenses, she only owed taxes of about $25,000. While her husband is probably able to make good on the debt, one wonders how he’d feel about spending his AskJeeves.com fortune on covering up for the TouchofBrazil.net mistakes.
• Kay Bell at Don’t Mess With Taxes wonders how the bailout bill developed an interest in wooden arrowheads. This is one of those classic laws that ends up getting passed because 434 members of the House think it’s slightly ridiculous, and one member clearly thinks it’s incredibly important. Think of it as the Toy Arrowhead theorem of democracy. Wink News has more — the other tacked-on tax changes involve wool research, rum, and racetracks.
• A Taxing Matter’s Linda Beale has a nice list of links on the credit crisis and bailout, tackling the various regulatory changes that made the recent financial mess possible.
• Finally, TaxProf is back with a list of tax gaffes from the Vice Presidential debate. It looks like lots of them were fudges and misphrasings — you can read each one and see how it might have started as a legitimate point, but gradually mutated into something deceptive but compelling

Lots of the latest tax stories revolve around political issues — the Presidential campaign, Congress’ giant new bailout package — but most of the compelling tax issues are still in the background. Let’s hope more attention is paid to the minor things that add up (arrowheads, rum, and frequent audits), rather than just the attention-grabbing headlines. Barring that, I’m hoping for some more entertaining tax evaders.