Look out Madoff victims, the government wants its share now

Discussion in 'Economics' started by texrex2002, Mar 15, 2009.

  1. Here's an article describing how the US Attorney, trustee and IRS are trying to make even more money off of the Madoff affair.


    Cliffs notes:

    - US attorney is looking to seize $170B of money and property traceable to the fraud.

    - IRS got a court to agree that there can't be "theft of something that never existed," which is somehow a legalistic near slam dunk for not having to return the taxes collected on profits that never existed (ok so I editorialized this part a little).

    - Trustee trying to claw back every penny, especially from those who "recouped" their entire investment or actually saw a gain on investment.

    To me the most interesting idea is that of the IRS not needing to refund the taxes paid. I obviously understand that there really isn't much that's "fair" about the IRS, but this instance stands out for me to be unusually blatant in it's percieved unfairness.

    Should I, in retrospect, discover that some past activity was actually more profitable than I'd realized at the time, for sure the IRS would be right there at my door to collect with penalties and interest. Clearly the opposite doesn't hold true, and in this instance it almost feels like the IRS is invoking the legal system as an insurmountable roadblock, in exactly the manner not attainable by the tax-payer.

    Anyway, nothing surprising or new. Just in this case the "unfairness" as percieved by the average person is less cloaked by IRS obfuscation than usual.

    btw, I'm indifferent to the fate of the Madoff "investors." I'm not trying to evoke sympathy on their behalf. I just felt compelled somehow to type out my (largely aesthetical) thoughts on the appearing hypocrisy of the IRS in this case.

    LOL, As I typed this last paragraph "this american life" just came on about madoff "investors."
  2. What is unfair? The govt made tax money and the govt is the same one backstopping everyone, including Madoff victims who can get up to $500,000 apiece or pensions backed by the PBGT (whatever)
  3. ^different buckets.

    that train of thought could be used to say all taxation is always more than fair, since tax $ go to sustain an evironement in which profits can ostensibly be made. The govt backstops that environment, and is therewith fairly entitled to any share it (capriciously) decides.