Perfectly Legal by David Cay Johnston

I've finally finished reading David Cay Johnston's Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else!

I have also read Free Lunch (click here to read my entries on that book) and I felt like while I preferred Free Lunch, I really think the preference was mostly due to the order in which I read these books.

Had I read Perfectly Legal first, I think I would have liked Perfectly Legal more than I liked Free Lunch. (Sorta how I felt about Dan Brown's The Da Vinci Code versus Angels & Demons having read The Da Vinci Code first.)

Funny how that works huh?

Still I like how David Cay Johnston concludes both books with calls for action and discussion of some potential solutions -- he actually ends both books with "Reform begins with you."

I particularly like this story from the conclusion of Perfectly Legal:

There is a fable of a village in wine country where each fall, after the grapes have been crushed and the vintage bottled, a bacchanal is held. Each vinter climbs a ladder in the town square and pours into a common cask a jug of his wine. One year the last vinter making the climb had fallen on hard times. The weather had not been kind to his grapes and he felt pinched. He decided that no one would notice if he thinned the wine with a jug of water. When he came down from the ladder, everyone applauded and the mayor swung a mallet to knock the cork from the base of the cask, out of which flowed clear water.

The moral is that when one person cheats, no one but the cheat notices. But when everyone cheats, there is no party for anyone.

Now on to cheerier books, I hope.

Perfectly Legal by David Cay Johnston

I've been very slowly reading David Cay Johnston's Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else!

I really enjoyed reading Johnson's 2007 Free Lunch (click here to read my entries on that book) but have had a much harder time getting through Perfectly Legal; while the material in each book is different, they book have the same feel and I guess I've had enough of hearing about how the super-rich are profiting from ordinary middle class and lower class Americans.


To find out more, click here to read James K. Galbraith's New York Times review of this book titled " Nothing Is Certain but Death" and published in February 2004 or click here to read an excerpt from the author's website for this book.

Click here to read Johnston's articles published in the New York Times.

Free Lunch by David Cay Johnston

I stayed up late last night to finish reading David Cay Johnston's eye-opening Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) (click here to read my other entries on this book).

I've never considered myself a populist but reading this book made me feel outraged at the rising income inequality in our country and the government's role in increasing this tragedy.

In Chapter 26, Not Since Hoover, Johnston expands on the income inequality data that was first discussed in Chapter 2, Mr. Reagan’s Question, and finally answers my question about whether those numbers quoted are for individuals or families. The answer, "A single person and a family are each counted as one unit. For simplicity we will treat each unit as having an equal share of the population."

Having grown up in the 80s, I remember my parent's admiration for President Reagan and his tax cuts. I didn't know until now that the top income tax rate was 70% before Reagan's presidency (today the top tax rate is just 35% and people balk at that).

Shockingly, Johnston's data shows that for the top 400 "very-highest-income taxpayers" (about 1,200 people), "Under Clinton, their effective tax rate fell by almost eight cents on the dollar; under Bush, it fell only five." And people always say that it's just Republicans who give tax cuts!

And about those 400 "very-highest-income taxpayers," in 2000 each one had an income of at least $88 million with an average of almost $174 million each.

What I really liked was Johnston's call to action. His proposal to extend the franking privilege (allowing every Congressman to send out all the mail they want for free) to expenses is not one I'd heard before. But it seems like a viable solution to cutting out the influence of lobbyists. Johnston's proposal is this:

Let each member of Congress spend however much he or she deems necessary to do his or her job. . . .

This would come at a price: No more free trips, no more free meals, and no more gifts. Senator, if you need to inspect the cleanliness of the sink behind the bar at a resort in Tahiti, go right ahead, just give us the receipts with an explanation of the costs. We will collect the receipts from every elected representative monthly and post it all on the Internet in a format that makes for easy analysis.

Every dollar, and every meeting, must be disclosed. And we will pay for it all, subject only to the usual penalties for embezzling, the punishments accorded by the full House or Senate because of their exclusive right to judge the fitness of members, or the decision by voters to oust a spendthrift.

. . .

Let us also pay the real cost of maintaining two households, one back home and one in Washington, as well as going back and forth as often as the lawmaker chooses. Sure the Congresswoman from Hawaii will spend more on travel than the one from Northern Virginia, but people are smart enough to figure that out.

. . .

Reform begins with you.

I can't say that I'll go out and get involved in politics. But I'm glad to have read this book and learned about some of the ways that the rich are getting richer with the government's help at the expense of the average American.

If you want to hear more, click here to visit NPR and listen to Johnston speak about Free Lunch.



I'm looking forward to reading Johnston's Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich - and Cheat Everybody Else!

I hate tax time not because I don't want to pay taxes but simply because it seems so confusing.

I certainly believe Johnston's premise that the "Super Rich" benefit from such a complicated tax system and I'm curious to read Johnston's proposal to fix the broken tax system.

And I may just have to track down a copy of Johnston's Temples of Chance: How America Inc. Bought Out Murder Inc. to Win Control of the Casino Business, a New Jersey casino industry expose (published in 1992).

Free Lunch by David Cay Johnston - Student Loans

I've been reading Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) by David Cay Johnston (click here to read my other entry on this book) and just got through Chapter 14, Indentured Scholars

.Reading this chapter made me feel very thankful that I do not have student loans. Johnston tells readers that about two-thirds of college students who graduate are in debt, and many owe more than their parents make in one or even several years!

Did you know that students borrow about $85 billion each year with repayment guaranteed by the federal government? Even if you go bankrupt, federal law prohibits clearing student loans!

In 2003, I was fortunate to hear Noam Chomsky give a talk at MIT. I don't recall the topic of his speech, but I clearly remember his argument that the purpose of student loans is to make young adults functional members of society. It does this by saddling students with debt that requires them to earn a decent salary, thus preventing them from protesting or other activities that students in the 1960s and 1970s did instead of working.

While Johnston doesn't explicitly state this conspiracy theory as Chomsky did back in 2003, he is equally harsh in his criticisms of the student loan industry (which has come under fire recently for kickbacks paid to universities).

Personally, I think the whole college / university system has gone mad. In recent years, tuition has skyrocketed at most colleges and admission rates have plummeted. Parents are grooming their kids at ever younger ages to get them into the "right" college.

It all seems crazy to me.

Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) by David Cay Johnston

I've just started reading Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense (and Stick You with the Bill) by David Cay Johnston (click here to read Jonathan Chait's New York Times review of this book titled "Other People's Money" and published in February 2008).

Johnston is a Pulitzer Prize-winning investigative journalist for the New York Times whose best seller Perfectly Legal won the 2004 Investigative Book of the Year award (I've checked that out of the library as well but haven't started it yet).

Free Lunch is really a fascinating book!

I didn't know that the average income of the bottom 90% of Americans (what Johnston calls the "vast manjority") was just $29,000 in 2005 (down from $33,000 in 1973). To be in the top 10% of Americans in 2005, you only had to make $100,000 per year and to be in the top 0.1% just $1.7 million per year. Johnston wrote about this and more about income inequality in Chapter 2, Mr. Reagan's Question, named for Ronald Reagan's famous campaign question from nearly 30 years ago "Are you better off now than you were four years ago?" [Corrected May 27, 2008.]

I'm in the middle of Chapter 9, Goin' Fishin, which describes the subsidies that Cabelas, Bass Pro Shops, Wal-Mart and other large national chains receive from local governments. I'd heard much about the sins of Wal-Mart and reading this book finally made those comments hit home.

Most distressing was Chapter 3, Trust and Consequences, in which I learned that Amtrak -- while government owned -- uses privately owned tracks and has signed contracts to be financially responsible for all claims arising from Amtrak passengers, even if CSX or other parties are at fault for negligence. Since Amtrak is owned by the government, that results in taxpayers paying for all such claims even if a private company is at fault.

I will write more when I finish this shocking book!

Click here to view the table of contents and read a few excerpts from the author's website for this book.