- Current Issue
SIGN IN to access the Harper’s archive
ALERT: Usernames and passwords from the old Harpers.org will no longer work. To create a new password and add or verify your email address, please sign in to customer care and select Email/Password Information. (To learn about the change, please read our FAQ.)
The financial world was fixated on Capitol Hill as Congress battled over the Bush administration’s request for a $700 billion bailout of the banking industry. In the midst of this late-September drama, the Treasury Department issued a five-sentence notice that attracted almost no public attention. But corporate tax lawyers quickly realized the enormous implications of the document: Administration officials had just given American banks a windfall of as much as $140 billion.
The sweeping change to two decades of tax policy escaped the notice of lawmakers for several days, as they remained consumed with the controversial bailout bill. When they found out, some legislators were furious. Some congressional staff members have privately concluded that the notice was illegal…The guidance issued from the IRS caught even some of the closest followers of tax law off guard because it seemed to come out of the blue when Treasury’s work seemed focused almost exclusively on the bailout.
“It was a shock to most of the tax law community. It was one of those things where it pops up on your screen and your jaw drops,” said Candace A. Ridgway, a partner at Jones Day, a law firm that represents banks that could benefit from the notice. “I’ve been in tax law for 20 years, and I’ve never seen anything like this.” More than a dozen tax lawyers interviewed for this story — including several representing banks that stand to reap billions from the change — said the Treasury had no authority to issue the notice.
More from Ken Silverstein:
Lucas Mann on hope and change in a minor-league-baseball city
Minimum number of baboons forced to smoke crack in a 1989 study testing the efficacy of cigarettes as a drug delivery device:
A reduction in distrust toward atheists was documented among pious Canadians who are reminded of the Vancouver police.
A Missouri cinema apologized for hiring an actor dressed in body armor and carrying a fake rifle to appear at a screening of Iron Man 3.
Subscribe to the Weekly Review newsletter. Don’t worry, we won’t sell your email address!
Winner of the 2012 Olivier Rebbot Award for best photographic reporting from abroad in magazines or books