A Wall Street tycoon accused in the 1980s of cheating thousands of investors out of their savings in one of the biggest financial scandals in history now says the state of California cheated him.
So he has launched a campaign to change the state tax code — retroactive to 1992 — in hopes of getting $5 million back.
Peter Ackerman, who worked for "junk bond king" Michael Milken, walked away from the Drexel Burnham Lambert scandal with what financial experts say was hundreds of millions of dollars. Now a lobbyist for Ackerman has crafted a bill in the Legislature that would permit the refund — one of several measures apparently written with a single taxpayer in mind.
Another is a push by Microsoft co-founder Paul Allen, one of the world's richest people, to restore a tax break that would benefit his company. And a Central Valley container maker is making a bid for millions more in state subsidies for its manufacturing equipment.
Large-scale across-the-board tax breaks may be out of the question as long as California has multibillion-dollar budget shortfalls. But some businesses and wealthy individuals hope that a few million in specific breaks here and there — amounting to "budget dust" in a state that spends more than $100 billion a year — will sneak through.
Some budget experts and advocates for the poor find such moves worrisome.
"This kind of thing breaks down the integrity of the tax system," said Lenny Goldberg, president of the union-backed California Tax Reform Assn. "You have well-connected taxpayers hiring a lobbyist to change the law retroactively. No ordinary taxpayer can do that."
These are just a couple of reasons to keep an eye on your state legislature.
The problem is that when this stuff sneaks through, it's always the working class that ends up getting screwed to make up the difference, or part of the difference. Take the Ackerman request:
The $5 million was income taxes that Ackerman paid on the $73 million. His refund request has been rejected by the state tax board and a state court.
California law did entitle him to some relief; he would have been permitted to subtract the $5 million from his state taxes. But Ackerman had left the state by the time he paid the settlement in 1992, and his California tax bill then was only a few thousand dollars.
Ackerman, who declined to be interviewed, wants a technicality in the law changed. A victory would force the state to write him a check.
It's stories like this that should wake one up to keep an eye on our what people and businesses want from our states.