IRS ISSUES

13. Aug 07    Flat Tax bringt Bureaukratie-Abbau, Lohnausweis das Gegenteil, ASDI, Umfrage
12. Aug 07    Hans-Rudolf Merz: Flat Rate auch bei Bundessteuer, SonntagsZeitung, Denis von Burg et al.
12. Aug 07    Genf verschlampt über 2000 Steuerreferendums-Unterschriften, NZZ am Sonntag, Heidi Gmür
29.Juli 07   Steuergerechtigkeit» - mit Fallstricken, NZZ, Leitartikel
15 Feb 07   KPMG: NARROW ESCAPE, WSJ, David Reilly
4 Feb 07   Gimme Tax Shelter - Stars Have Found A Dutch Home, NYT, LYNNLEY BROWNING
27 jan 07   Minimiser sa facture fiscale: le premier devoir citoyen, Le Temps, Pierre Bessard, commentaire
16 Nov 06   Milton Friedman Unraveled, J. of Libertarian Studies, Murray N. Rothbard, memorial update
17 July 06   For Tech Billionaire, Move to Nevada Proves Very Taxing, WSJ, George Anders
30 June 06   Border Crossing, Wall Street Journal, Carrick Mollenkamp and Glenn Simpson
30 June 06   Taxes hit squad: give fraudsters the Al Capone treatment, The Guardian, Phillip Inman
18. März 06   Keine Grenzen für den deutschen Fiskus, NZZ,  Leitartikel (G.S.)
4 Feb 06   Tax Talk Goes Orwellian, NYT, Editorial
3. Feb 06   Swiss encounter taxing talks in Brussels, nzz.ch, Swissinfo
16 jan 06   Comment les cantons rivalisent pour les bons contribuables, Le Temps, Cathrine Cossy
      Sous-enchère fiscale, «La classe moyenne est menacée», Gebhard Kirchgässner
15.Jan 06   Verschärfte Rechtshilfe-Auflagen empfohlen
5. Jan 06   Aufnahme des Bankgeheimnisses in der Verfassung?, Iconoclast
5 Jan 06   Thun bank collapse is finally settled, nzz.ch, Swissinfo with agencies
4. Jan.06   Aufnahme des Bankgeheimnisses in der Verfassung?, Iconoclast
3. Jan 06   Goldfragen in den eidgenössischen Räten
3. Jan 06   Wer verfügt über das "Eingemachte"?, Anton Keller
25 dec 05   Old/new human right to anonymous possession of gold, Anton Keller
13 déc 05  Impôts: la guerre fiscale fait rage en Suisse alémanique, Le Temps
      Zurich refuse de se soigner à la hausse d'impôts, Catherine Cossy
      L'impôt dégressif adopté par Obwald est juridiquement délicat, Denis Masmejan
6 déc 05  Le Parti socialiste & l'argent: rompre avec le pacte bourgeois, Le Courrier, Gian Trepp
5 Dec 05   Where they hide the cash, Guardian, Duncan Campbell
3. Dez 05   «Bürger hat Recht auf Privatsphäre», Finanz & Wirtschaft, A.Gurria, Thomas Wyss
30. Nov 05   Economic crime on the rise, Neue Zürcher Zeitung, Swissinfo
29 Nov 05    Turf Wars Hinder U.S. Attack on Terror Cash, Agency Says, NYT, Eric Lichtblau
29. Nov 05   OECD mission-creep, incarnation of bureaucratic lawmaking: no fatality!, Iconoclast
17. Nov 05   Wo Reiche gerne Steuern zahlen, Weltwoche, Markus Schneider
16 Nov 05   The profit motive may be universal but virtue is not, Financial Times, Martin Wolf
15 Nov 05   Gold possession: from the right to its anonymity to its criminalization
28 Oct 05   The lost trail - costly & ineffective efforts to combat terrorism financing, Economist
25 oct 05   Le système anti-blanchiment fonctionne-t-il correctement?, Le Temps, N. Gianakopoulos
25 Oct 05   Which fools follow the FATF Piper of Hamlin?, Iconoclast
24 Aug 05   It is not freaky for growth to follow tax cuts, Financial Times, Amity Shlaes
24 août 05  Patrimoine: Genève, centre d'expertise transnational, Le Temps, Myret Zaki
24 août 05  Toutes les grandes banques se précipitent vers la Chine, AGEFI, Christophe Roulet
7. Juli 05   Die SP und das Geld: Abschied vom Burgfrieden, WOZ,  Gian Trepp
25. April 05  Wo das Bankgeheimnis noch was wert ist, HANDELSBLATT, Oliver Stock
    (Steuerhinterziehung: Fiskus weitet Kontenabfragen massiv aus (30.11.05),
    Steuerspione auf der Jagd (06.05.), Zahlen über Kontoabfragen umstritten (25.04.))
25 Oct 04   Follow the Money - From St.Moritz to Singapore, WSJ, Anton Keller
10 Sep 04   Ten Economic Commandments, Iconoclast
2 Sep 04   Are Swiss Bankers Still Worth their Salt?, Iconoclast
11 Nov 03   Tax information exchange serves the spooks, Le Temps, Myret Zaki
11 nov 02   L'échange d'informations fiscales sert les services de renseignement, LT, Myret Zaki
11. Nov 02   Der Steuerdaten-Austausch dient den Geheimdiensten, LT, Myret Zaki
25. Aug 02   Unsere Schweiz auf schiefer Ebene, Anton Keller
17. Jun 02   Wahrung des Bankkundengeheimnisses, 02.432 - Parlamentarische Initiative.
1 April 00   PRIVACY in the year Orwell+16: Individual Privacy is illusory without wealth privacy
4 Jan 00   Luttons contre les forces hostiles au secret bancaire!, AGEFI, Richard Anderegg
9 May 1986   European Taxmen Plot an Orwellian Scheme, Wall Street Journal, Anton Keller

The Iconoclast's Ten Economic Commandments
(extract from: War on Economic Crime: Qualitative Cost-Benefit Considerations)

1.   The Citizen is the Sovereign, the source of all power and the ultimate arbiter of legitimacy.  No State power shall exist which has not been properly delegated, nor shall it be exercised unless this is in the citizen's and the people's service.
2. Individual freedom and privacy, including the right to undisclosed private property, are indispensable for the citizen's sense of responsibility to fully mature, for the citizen's rights and obligations to be exercised responsibly and in harmony with the common good.
3. Trial and error are key to both the individual's and society's evolution.  The right to error is a fundamental human right, but it is inseparably linked to its Siamese Twin, i.e. the obligation to admit error as a precondition for repairing its effects and for avoiding its recurrence.
4.   The right to tax is a sovereign right.  It has no other purpose than to provide for the common good.  And it implies no lesser obligation than to protect the taxpayer also against foreign snoops and taxmen.
5. Tax optimalization and tax avoidance are hallmarks of the market economy.  They are a free society's linchpin and each entrepreneur's mobility call; not only are they not crimes, they are part of each citizen's birth-rights, even his obligations which, of course, include the permanent radaring for "greener pastures", for opportunities to invest the fruits of one's labors and other resources with less administrative hassles and better returns.
6.   No taxpayer money shall go to international organizations whose brief it is to combat tax avoidance, or who infringe on the sovereign right to compete for foreign investments.
7. No tax or other burden shall be imposed on foreign investors or their investments which is not also exacted from local residents or on their investments, all based on a simple, understandable and effective a code as is feasible.
8.   No foreign investment should be liable to sequestration or confiscation unless the underlying information was obtained in strict respect of applicable treaties, dual criminality standards and specialty rules (and, for areas beyond the jurisdiction of the United States at least: notwithstanding contrary U.S. Supreme Court decisions and Federal Rules under whatever pretence).
9.   No law should prevail over better insights, no law should be applied beyond its intended purpose, and no law should be left in force beyond the duration of its public usefulness, particularly not if it discourages foreign investments.  For it is also in each nation's interest to create such conditions which are conducive to attract and keep foreign investments with minimum administrative and fiscal burdens which are competitive.
10.    The Emperor wears no cloth, regardless of universal contrary affirmations by default, and the Piper of Hamelin is neither a guide to a dignified and successful future nor an effective substitute for principled leadership to protect and bring to fruition the nationally available resources and productive forces, notwithstanding gunboat diplomacy, lex americana universalis (www.solami.com/lexamericana.htm) and the associated fiscal and other bounty-huntings and the paralysing compliance mechanisms.

(url: www.solami.com/oecdmandate.htm) - According to the Swiss Bankers Association press release of 29 April 2005, "Switzerland's plans to implement the FATF's revised recommendations go too far and they need to be reworked by financial professionals with practical experience." For The Economist though, mere corner cutting wont wash in light of the FATF's all-around failures & costs. It concluded: "...to curb terrorism by stopping the flows of money that sustain it, must be judged a failure. Complex and unwieldy regulations have been imposed, but are not working, indeed arguably were always misguided. They should be scrapped and resources concentrated more productively elsewhere." (see also: "Turf Wars Hinder U.S. Attack on Terror Cash, Agency Says", New York Times, 29.11.05). And if the even more fundamental question of why & on what basis is asked, the same answer becomes even more urgent. Following is the FATF's background & an outline of how best to stop this buraucratic wildcat train which is causing an unprecedented compliance pandemic.

    Dedicated to the market economy & to "the preservation of idividual liberty",  the Organization for Economic Cooperation and Development OECD, is "to reduce or abolish obstacles to the exchange of goods and services and current payments and maintain and extend the liberalisation of capital movements" (art.2, Convention). As pointed out earlier (.../hijack.htm), the OECD has evolved from a pro-market institution to an anti-competition, anti-sovereignty & anti-privacy instrument in the hands of unelected bureaucrats. Under US influence, though, its Council of Ministers, in 1971, explicitly prohibited it to engage in any work directed at social & economic engineering (i.e. in "work on the use of fiscal policy for demand management purposes", Res.C(71)41, §2). Yet ever since 1977, the secretive OECD Fiscal Committee & its Working Party #8 on Tax Avoidance and Evasion (WP8) have found themselves able & willing to pursue their self-fabricated mandate for "combating tax avoidance" (Res.C(77)149(Final)). Moreover, the WP8's French name is: "Group de travail sur l’évasion et la fraude fiscale". This is no accident. All related OECD publications in fact contain misrepresentations, i.e. "tax avoidance and evasion" is always translated into "évasion et fraude fiscale", thus persistently & self-servingly sowing confusion & pretexts for liberty-eroding initiatives & witchhunts.
    These, then, have been the hidden forces & methods behind the long-standing efforts at OECD and at the EU in Brussels to "harmonize" the tax regimes in the industrialized world.  This is being done by fighting such cleverly made-believe dangers as "harmful tax competition", by both fabricating & seeking to enforce anti-money laundering standards, and by deliberately confusing illicit activities with the very linchpin of entrepreneurial activities & the market system, i.e. tax avoidance.
    All of which calls into question the fiscal arm of the OECD - including the Financial Action Task Force FATF which was hastily set up in 1989 in the wake of the OECD's defeat on its project for an Orwellian INTERFIPOL (Convention on Mutual Administrative Assistance in Tax Matters). For in the case of the FATF in particular, we are not only faced with an uncontrolled, costly & ill-founded OECD outgrowth with its more than questionable aims, means & effects, as even The Economist found out belatedly (22-88 Oct. 2005). But it consists mostly of self-appointed, myopic & mutually back-scratching international taxmen causing significant damage to the world's productive forces & financial community, not least in the form of a compliance pandemic (see the self-fabricated "remit", i.e. mandate substitute?!, of the "beautifully dressed" but in fact naked Emperor). For the loosers of the INTERFIPOL battle, without a legal basis, initially had formulated 40 primarily self-serving recommendations on anti-money laundering measures reaching far beyond the original domain of drug crimes. And when they met no resistence, they extended their "remit" to mere civil "offenses that generate a significant amount of proceeds", shedding even the pretence of drug or other serious crimes (ATF IA.188/2005). This train of particularly harmful and objectionable aberrations of international bureaucratic lawmaking can and needs to be stopped in its track - lest it further inspire other international bodies in search for work & taxpayer money, and who have yet to be made appreciative of the true costs of the administrative hassles they cause!

Ergo: replace FATF & other bureaucratic lawmakings with self-regulatory measures!
1.  by encouraging US lawmakers to suspend the $70m/y US contribution to OECD budget until the OECD will have stopped, retracted & corrected all work, links & support which are not in line with the OCED's original intent & purpose and its Convention (notably its Fiscal Committee's mandate, its false translations of "tax avoidance", and its WG8's fixture on tax avoidance, harmonization & competition), and until the FATF will either have acquired treaty status with effects limited to members, or be shut down,
2.  by arming US & other, notably CH lawmakers with arguments & briefs for related work,
3.  by networking and publication of corresponding contributions in suitable journals, and
4.  by promoting and participating in suitable professional meetings, i.e. the Oxford and the Cambridge International Symposium on Economic Crime.

     The EU Commission made it clear that it would not tolerate such practices in talks on Thursday with Michael Ambühl, State Secretary in the Swiss foreign ministry. After a meeting in Brussels with Eneko Landaburu, director general of the commission's external relations, Ambühl said the commission had "expressed its concern". Landaburu from Spain appeared less diplomatic in an interview with French-language Swiss radio. "It's a political problem when we see practices which lead to very pronounced tax evasion and which penalise our member states." France and Germany are strong supporters of this view but the majority of EU members have not yet made their views known.

Unfair?
     The tax issue arose in September in a letter sent by the commission questioning whether the central Swiss cantons of Zug and Schwyz granted unfair tax advantages to foreign firms. Canton Obwalden has since joined their ranks by introducing at the beginning of the year similar tax breaks to attract companies and wealthy people. Ambühl reaffirmed the Swiss position that cantonal tax advantages granted to some companies do not violate the 1972 free trade agreement signed between Brussels and Bern, which cover trade in a certain number of goods.
     Switzerland, which is not a member of the EU, is to give Brussels a more detailed report on its views in the middle of this month. "It's therefore a legal question," Ambühl told Swiss journalists in the Belgian capital. He added that there was no talk of the issue having ramifications for bilateral relations.

On hold
    In a related issue, the process of ratification of the second set of bilateral accords between the EU and Switzerland and the extension of the free movement of people to the ten new EU members remains on hold.
     The delay has been caused by EU internal bickering over distribution of the planned Swiss contribution of SFr1 billion ($775 million) to the EU cohesion fund. The EU wants a binding agreement with the Swiss over their contribution, while Bern only wants a memorandum of understanding. The Swiss also want their contribution to go only to the ten new EU member states, but Greece, Spain and Portugal want a share of the funds.

swissinfo with agencies

    President Bush had it exactly backwards in his speech Tuesday night when he exhorted lawmakers to keep cutting taxes. He noted that when the going gets tough, leaders are tempted to take stands that are crowd pleasing yet counterproductive, like championing protectionism in the face of global competition. Fair enough.
    But then he warned that in today's uncertain times, lawmakers might even be tempted to do something as weak-kneed as "increasing taxes."
    If Mr. Bush is trying to say that tax cutting is politically courageous, that ignores reality. Politicians cut taxes to please the crowd, and they are always and understandably reluctant to vote against a cut or — gasp — vote for a tax increase because that could make them unpopular. Mr. Bush knows that. He was basically warning the assembled lawmakers, actually the Republicans, that they would never make the cheerleading squad if they didn't extend his temporary tax cuts.
    We hope Congress will realize that extending the tax cuts would be an act of political cowardice, not courage. The country is already deep in debt, and the tax cuts are largely to blame. In the next two weeks, the administration expects to hit the nation's legal debt limit — $8,184,000,000,000 — and has told Congress it needs to vote to raise the debt ceiling to nearly $9 trillion, a 51 percent increase since 2001, when Mr. Bush took office. Congress must raise the limit or the government will default. But Congressional leaders are looking for ways to downplay the vote, precisely because it's a disgrace.
    Casting the tax cuts in stone now would be particularly craven because they don't expire for another three to five years. But Mr. Bush and his supporters in Congress are hot to act now. That is because the cuts they want to extend the most — special low tax rates for investment income — overwhelmingly enrich the rich and will be even harder to justify in the years to come, when, by all reasonable estimates, the country's financial outlook will have deteriorated further. The tax cutters are not being brave. They are afraid they won't get their way if they wait.

    Das deutsche Bundesverfassungsgericht hat am Donnerstag eine Entscheidung veröffentlicht, die jedem Liberalen Sorge machen muss, Sorge, weil dadurch der Schutz des Eigentums vor dem Zugriff des Staates noch mehr aufgeweicht wird, und Sorge, weil dies ausgerechnet im grössten, auch ordnungspolitisch bedeutsamen Staat Europas geschieht. Die Karlsruher Richter haben mit ihrem Entscheid nämlich den sogenannten Halbteilungsgrundsatz, den sie im Jahre 1995 aufgestellt hatten, aufgehoben bzw. so weit relativiert, dass er als Sicherung gegen den fiskalischen Zugriff des Staates nicht mehr taugt.
     Das Urteil aus dem Jahre 1995, das damals pikanterweise vor allem dem von der CDU zuerst gefeierten und dann wie eine heisse Kartoffel fallen gelassenen Steuerrechtler Paul Kirchhoff zu verdanken war, hatte postuliert, dass der Staat dem Bürger nicht mehr als etwa die Hälfte seines Einkommens nehmen dürfe. Unter Berufung auf diesen Grundsatz klagte ein Gewerbetreibender aus Nordrhein-Westfalen, der 1994 bei einem versteuerbaren Einkommen von - gemäss heutigem Gegenwert - knapp 320 000 Euro mehr als 190 000 Euro oder rund 60% Einkommens- und Gewerbesteuer zu zahlen hatte, gegen diese Einschätzung - und ist nun gescheitert.
     In verschiedenen Reaktionen ist selbst von Unternehmerseite, etwa der Arbeitsgemeinschaft selbständiger Unternehmer (ASU), betont worden, dass das Gericht gleichzeitig mit seinem desaströsen Entscheid doch auch ein Verbot übermässiger Besteuerung ausgesprochen habe, weshalb der Abschied von der Kirchhoff-Regel nicht so schlimm sei.
     Tatsächlich mag die Forderung nach Verhältnismässigkeit ein Fortschritt sein gegenüber der Formulierung, die vor 1995 gegolten hatte, nämlich dass, abgesehen von «erdrosselnden Belastungen», jede Besteuerung erlaubt sei.
     Für Liberale aber ist das Urteil aus Karlsruhe ein Schlag ins Gesicht. Es setzt der Zudringlichkeit des Fiskus keinerlei Grenzen, sondern betont seine Gestaltungsfreiheit, die lediglich im Falle einer ungewöhnlichen Höhe der Steuerlast eine besondere Begründung verlange. Wenn es heisst, hohe Einkommen dürften auch hoch belastet werden, es müsse allerdings nach Bezahlung der Steuern noch ein hohes, frei verfügbares Einkommen übrig bleiben, öffnet das einer Steuerpolitik Tür und Tor, die höhere Einkommen auf einen willkürlich festgelegten Betrag zurückstutzt. Der Fiskus könnte ja etwa zum Schluss kommen, Einkommen nach Steuern von beispielsweise 500 000 Euro seien sowohl hoch als auch angemessen. Deshalb sei es mit Gerechtigkeits- und Leistungsfähigkeitsüberlegungen vereinbar, wenn man mittels Steuersätzen von 70% oder gar 90%
wesentlich höhere Primäreinkommen auf dieses Niveau herunterbringe.
     Wenn man bedenkt, dass der Zehnte einst als Knechtung der Bauern durch den Adel empfunden wurde und dass heute in Deutschland das Verfassungsgericht allen Ernstes den Grundsatz verteidigt, der Staat könne unter gewissen Bedingungen deutlich mehr als 50% des Einkommens seiner Bürger, und zwar einzelner seiner Bürger, beanspruchen, dann wird man das schwerlich als zivilisatorischen Fortschritt bezeichnen können. Statt dass der Staat das Eigentum seiner Bürger schützte, nimmt er es ihnen weg - nicht ganz, aber doch in beträchtlichem Ausmass. Wie kann so viel, nämlich mehr als 50%, jemals legitimerweise des Kaisers, aber auch einer demokratisch gewählten Regierung sein?    G. S.

Fraudsters and criminal gangs who escape prosecution by the police will face a hit squad of senior tax investigators ready to impose heavy fines and tax penalties, the government said yesterday. The Criminal Taxes Unit, which is due to begin operation by the end of the summer, will join forces with the police, the Serious Organised Crime Agency and the Assets Recovery Agency, to track down suspected criminals and strip them of their wealth.

Tax advisers said the new unit would aim to pursue criminals in the same way the US tax agency, the IRS, tracked down the infamous Chicago gangster Al Capone. Capone was wanted for murder and racketeering, but eventually went to prison in 1931 after several years on the police's most-wanted list when he was convicted for income tax evasion.

The announcement follows severe criticism of HMRC and other agencies for their failure to crack down on fraud and tax evasion by major criminal gangs. A slump in the number of prosecutions by HMRC was highlighted in a recent National Audit Office report. The tax agency also came under fire for allowing criminal gangs to defraud its own tax credit system of millions of pounds.

The Assets Recovery Agency has come under fire in its first year of operation for capturing £4.4m at a cost of almost £20m. Police prosecutions have also been hampered by a lack of specialist staff outside London, especially in anti-fraud units.

Ministers are understood to believe investigations by the new unit could tip the balance in favour of the state in its struggle to clamp down on criminal activity. Tax inspectors can impose penalties without needing to prove the guilt of suspected criminals. Individuals who fail to show their wealth has been properly taxed will be vulnerable to punitive penalties and prosecution for tax evasion.

Ministers are also preparing to allow tax inspectors extra powers to use sophisticated surveillance techniques and arrest suspected fraudsters. New "police" powers would allow them for the first time to enjoy the same ability as Customs officers to monitor suspects and arrest them.

Chas Roy-Chowdhury, head of taxation at the Association of Chartered Certified Accountants, said that while he applauded efforts to clamp down on crime, ministers needed to avoid a repeat of mistakes by the police in pursuing suspected terrorists. "Look what happened at Forest Gate," he said referring to the raid earlier this month on a home in east London by more than 230 officers. "We must make sure tax inspectors don't take the same heavy-handed approach when they go after suspected criminals."

The move is likely to heighten concerns that innocent individuals identified by the new unit would be unable to appeal to an independent watchdog. Currently taxpayers, including tax credit recipients, who appeal against HMRC judgments must complain to the adjudicator, Dame Barbara Mills QC. Critics have complained that her independence is compromised because her staff is largely made up of Inland Revenue employees.

LONDON -- At Barclays PLC, a British bank steeped in 300 years of tradition, the work of a team led by banker Roger Jenkins is far from traditional. For instance, in 2003 his team set up a company with no employees, no products and no customers -- just a mailing address in Delaware and a slate of British directors, mostly employees of his office. It was co-owned by Barclays and U.S. bank Wachovia Corp.

The following year, according to documents filed in the United Kingdom, the jointly owned company had $317 million in profits. It paid U.K. taxes on them. Barclays and Wachovia were both able to claim credit for paying all of the tax. This was one of at least nine such structures Mr. Jenkins and his team have set up involving U.S. banks, which also included Wells Fargo & Co. and Bank of America Corp. The complex transactions involve a strategy called tax arbitrage, which plays off one nation's tax system against another to reduce the banks' tax bills.

Barclays is the leader in this esoteric field. It collects hundreds of millions of dollars in revenue generated by Mr. Jenkins's group. His team of lawyers and bankers has helped turn Barclays from a sleepy Main Street lender into an investment-banking power.

Critics of tax arbitrage are blunt about it. "This is just a complete and utter construct to get around the rules at both ends," says Richard Murphy, an accountant and professor who works with a London nonprofit called Tax Justice Network and has consulted for the U.K. government on financing. The banks say the cross-border deals have been cleared by both U.S. and U.K. regulators and the regulatory review process is rigorous. Barclays says the transactions aren't designed mainly to reduce taxes. It says Mr. Jenkins's group generates a variety of strategies for corporate clients to lessen risk, maximize profits and fund balance sheets. Says Mr. Jenkins: "I run a structured capital-markets business which does a bunch of different things, and
in there is tax efficiency, as you would expect."

The U.S. and British governments have said that while they police their own home countries, they won't pursue companies for seeking to avoid taxes owed to other jurisdictions. There is no indication that any of the Barclays deals might need to be unwound.

The U.S. and U.K., along with Australia and Canada, have formed a body designed to combat cross-border tax abuses.
The British government took a step against tax arbitrage last year by adopting a law that disallowed certain strategies in the U.K. and gave regulators more time to rule on deals when proposed. In the U.S., Internal Revenue Service Commissioner Mark Everson told the Senate this month that his agency is focusing on ways that financial institutions are structuring deals abroad to avoid taxes.

Mr. Jenkins's success has made him one of the highest-paid executives at Barclays, which rewards him in unusual ways. Besides his salary and bonus, estimated to total in the millions of dollars annually, Barclays several years ago invested a total of about $40 million in two Jenkins personal holding companies, according to U.K. documents. One of Mr. Jenkins's companies bought a stake in a swimwear company his wife is involved in and also owns a warrant to invest in an energy-bar company run by his brother.

Mr. Jenkins, 50 years old, is known by people who work for him as relentless about the details of deals, with a competitive drive he showed early in life in Scotland. At Edinburgh Academy, he and his brother, David, put up school running records that still stand. "My brother and I are still, 40 years on, faster by about 10 yards than any other kid who has ever run there," Mr. Jenkins says. The school's alumni secretary confirms their track skills. David was the faster: He won a silver medal at the 1972 Olympics.

The son of an oil-refinery manager, Mr. Jenkins joined Barclays as a trainee in 1978, left for another bank, then returned in 1994 to set up a group to advise companies on tasks such as risk management and leasing.

It was a critical time at Barclays. Founded by Quakers in the 1600s, the bank had its headquarters on the same street in the City of London financial district for almost 300 years. But by the mid-1990s, change was sweeping through banking, with some competitors branching out broadly into financial and investment services. In 1996, Barclays's investment-banking unit hired an American executive of Credit Suisse, Robert Diamond Jr., who broadened the unit's horizons and has helped turn it into a major European investment bank. Meanwhile, Mr. Jenkins was assembling his group, known as Structured Capital Markets. Reaching beyond bankers, Mr. Jenkins also staffed this with people like Iain Abrahams, a London tax attorney who today is his chief lieutenant.

The investment-banking unit, Barclays Capital, soon faced a rough patch. It had an operating loss of $440 million in 1998, the year Russia devalued its currency and defaulted on part of its debt. But growing profits from Mr. Jenkins's team softened the blow. In 2000, Wells Fargo proposed a transaction to the U.S. Office of the Comptroller of the Currency that became the blueprint for the cross-border deals Barclays began to do.

Wells Fargo, based in San Francisco, sought the bank regulator's clearance to set up a unit in the Cayman Islands "to achieve further efficiency in funding." The OCC approved it. A spokesman for the agency says it was aware the transaction had tax implications but had no reason to think it was improper. To pass muster with the IRS, transactions must have a business purpose other than shaving taxes. At Wells Fargo, "all transactions serve a bona fide business purpose and benefit...," says the bank's controller, Richard Levy.

The financial filings of Wells Fargo, which has set up numerous cross-border structures including at least one with Barclays, disclose little about them. Mr. Levy says they weren't big enough to be material. Other banks involved in these deals also make little mention of them in their filings. When The Wall Street Journal asked the OCC for documents on the transactions, several banks opposed their release, citing client confidentiality and trade secrets.

Barclays doesn't trumpet the Jenkins team's success, beyond occasional mention in its annual reports. Mr. Jenkins says talking about it could tip off competitors and jeopardize client confidentiality. Barclays declined to give details on how the cross-border structures work. But some details of the 2003 Barclays-Wachovia transaction can be learned from U.S. and U.K. corporate and regulatory filings. These include OCC records, released in redacted form after an appeal by the Journal.

The structure at its heart was called Augustus Funding LLC. British records show that in May 2003, members of Mr. Jenkins's group incorporated Augustus in Delaware. Its U.S. address: the office of a Wilmington clerical firm that lets thousands of shell companies use its address.

Directors of Augustus were eight executives in Britain, six of them members of Mr. Jenkins's group and two of them Wachovia employees. Board meetings take place at Barclays offices in Canary Wharf, U.K. records show. Duplicate books and records are kept there and in Charlotte, N.C., Wachovia's base.

Incorporation in Delaware established a U.S. residency for Augustus. Having a London address as well, plus British directors, made the business the corporate equivalent of a dual passport holder: incorporated in the U.S., but a U.K. resident for tax purposes. Wachovia owns 49% of Augustus. Barclays owns 51%, via two intermediary companies that have no employees.

Wachovia's correspondence with the OCC to set up such an entity said the North Carolina bank could earn a higher return this way than through other investments with a similar level of risk. One document said the deal would provide its partner British bank "with certain tax benefits under United Kingdom law."

Augustus was funded with more than $6 billion, the bulk of it contributed by Wachovia. In its first full year, 2004, Augustus reported $317 million in pretax profits from assets such as Danish mortgage securities and U.S. Treasurys. Augustus had to pay U.K. taxes on this income because of its British tax residency. The tax was $94 million.

Augustus's owners, Barclays and Wachovia, both were able to claim credit at home for a tax payment. And thanks to the elaborate structure and cash flows involved in the deal, some of which remain undisclosed, each co-owner could take credit for a full $94 million payment, say people familiar with how such transactions work. In effect, the $94 million payment got claimed twice. When it brought its share of the profits back to the U.S., Wachovia paid an additional amount of tax -- about $16 million -- to the Internal Revenue Service to reflect the fact that U.S. corporate tax rates are slightly higher than U.K. tax rates. Wachovia noted that foreign-tax credits are common.

Barclays, asked about these accounts of the transaction, said they were "materially inaccurate," but declined to be specific, citing client confidentiality. At Wachovia, a spokeswoman said the bank has "complied with all applicable laws and regulations," including tax rules.

The outline for a similar, prospective Barclays deal with another U.S. bank estimated that it would produce savings of hundreds of millions of dollars over five years, after which it would end. In some deals, the Jenkins team has worked with a number of law and accounting firms, including KPMG LLP. The accounting firm says it submitted to the IRS all transactions involving U.S. banks and Barclays.

Barclays Capital, the investment-banking unit that includes Mr. Jenkins's team, now contributes about a quarter of its parent bank's pretax profit, up from 18% in 1999. In a move symbolic of the bank's shift away from tradition, it has moved from its longtime home in the City of London to the modern Canary Wharf complex east of London. And as Mr. Jenkins's team continued to do innovative deals, Barclays has augmented his compensation in a novel way.

A few years ago, the bank acquired about $9 million of preferred shares in a personal holding company of his. In another instance, it invested about $30 million in preferred shares in another Jenkins personal holding company. Barclays's board approved the purchases under a plan designed to retain key executives, said a bank spokesman. The arrangement was that if Mr. Jenkins stayed three years, Barclays's shares in the personal holding companies would become his.

One holding company, called D-Sol Systems Ltd., owns a warrant to buy shares in a California nutrition-bar maker owned by David Jenkins, the banker's Olympic-medalist brother. David Jenkins started the company, Next Proteins Inc., in 1989 after serving several months of a seven-year prison sentence for involvement in a steroid-smuggling ring. He didn't return calls seeking comment. D-Sol also bought 49% of a company that makes the Melissa Odabash line of women's swimwear, where Roger Jenkins's wife, Diana, is a partner and helps on public-relations and design. (See related document)

Mr. Jenkins declined to comment on D-Sol or Barclays's investment in it. Barclays said its investment in the Jenkins personal holding companies has ended, the bank's shares having been transferred to Mr. Jenkins in accordance with the three-year arrangement.

The Jenkinses have owned homes in Malibu, Calif., as well as London. The society magazine Tatler last year included them on a list of famous guests at an event. A New York Times Magazine feature last year about vacationing in Aspen, Colo., pictured Mrs. Jenkins, 35, adorned with what it said was a $12,000 mink.

Mrs. Jenkins appears to share with her husband an appreciation of tax issues. While at London's City University in 1999, school records show, she wrote a paper called "Minimizing Withholding Taxes in a Multinational Corporate Structure."

RELATED DOCUMENTS
Read the full-year 2004 financial statement from Augustus Funding, which was set up by Roger Jenkins's team; despite having no employees, products or customers, it posted a $317 million pre-tax profit for the year. Also, take a look at a D-Sol filing indicating Barclays PLC's investment, and D-Sol's report for fiscal year 2005, in which it reports on its stakes in Avalon Fashion and warrant in Next Nutrition. But regulators and politicians in both countries are paying greater attention to tax arbitrage.

INCLINE VILLAGE, Nev. -- California software entrepreneur David Duffield arrived in this Lake Tahoe resort a decade ago with big plans. He spent $50 million on a lakeshore estate and started a Nevada property-development business. What's more, by taking a big chunk of his wealth to Nevada, Mr. Duffield expected to save millions on taxes. Then California accused him of shuffling assets to evade taxes, sticking him with a $19 million tax bill -- one of the state's largest ever. The 65-year-old billionaire founder of PeopleSoft Inc. denies the charge and vows further appeals.

Scores of wealthy Californians "go Nevadan" each year, relocating to a neighboring state famous for its low taxes. Among the transplants are Pierre Omidyar, founder of eBay Inc., and Andreas Bechtolsheim, a co-founder of Sun Microsystems Corp. But as Mr. Duffield's experience shows, what looks appealing on paper can prove far messier in real life. Nevada transplants account for more than 20% of all tax disputes made public earlier this year by California tax authorities. Complex cases can take a decade or longer to sort out.

Brady Anderson, a native Californian who played center field for the Baltimore Orioles in the early 1990s, was dunned with a $322,410 California tax bill after claiming Nevada residency in 1993 and '94. The tax authorities "looked at where Brady was, every single day, and they subpoenaed credit-card receipts," recalled his accountant, Joseph Geier. Mr. Anderson settled earlier this year, paying much but not all of the contested amount, Mr. Geier said. The defense focused on 1994, a year when he bought a sizable Nevada home. He didn't fare as well for 1993, when his residency claim was based on a rented Nevada apartment used in the off-season.

"If you come here from California, you can expect to be audited," said Peggy Taylor, a former PeopleSoft executive who prevailed in her own tax dispute after leaving the San Francisco area and moving to Incline Village in the late '90s. "Audits are winnable, but it's grueling."

Officials of California's Franchise Tax Board say they don't begrudge anyone the right to move to low-tax states. But they want to ensure that existing Californians pay any taxes due on income or capital gains earned while in the state.

Mr. Duffield's Nevada saga started with a big party soon after PeopleSoft went public in 1992. He invited the company's entire work force, plus spouses, to an all-expenses-paid weekend at Lake Tahoe. "I decided on the spot: This could be a great vacation place. Let's go find a home," Mr. Duffield recently recalled. "My wife found one in Incline Village in a day. We signed the papers right away." Mr. Duffield was in his early 50s then, and he had waited a long time to celebrate. As an electrical-engineering major at Cornell, he struggled to pay tuition in the early 1960s after his father died. His early jobs at International Business Machines Corp. involved constant travel. When he started PeopleSoft in 1987, cash was so tight he took a potentially ruinous mortgage on his home to raise funds.

PeopleSoft proved to be his big break. Customers loved its software for handling employee benefits and personnel records. When the Pleasanton, Calif., company went public, Mr. Duffield's 50% stake was worth more than $150 million.

Soon afterward, Mr. Duffield turned to PricewaterhouseCoopers for advice on diversifying his wealth in a tax-efficient way. In an Oct. 28, 1994, memo, three officials at the accounting firm spelled out a way he could set up a Nevada investment company funded with PeopleSoft stock. They said it could minimize taxes by being treated as one kind of corporation for federal tax purposes and another kind for California tax filings.

The accounting firm acknowledged under the "risk factors" section that California authorities might view the new company as "a scheme to avoid California income tax." Mr. Duffield wasn't deterred. "I didn't think this was out of the ordinary," he explained. He set up Duffield Investment Group, a Nevada company funded with $65 million of PeopleSoft stock. Federal capital-gains tax wouldn't be due on those highly appreciated shares until the new company sold them. Nevada doesn't have a personal income tax. And if California signed off on the new company, it would be exempt from California taxes.

Mr. Duffield hired Nevada attorney Steve Grumer to snap up properties for the investment company to develop, including commercial sites in Reno and luxury residential property near Lake Tahoe. Its prize acquisition was a four-lot parcel, costing about $5 million, on the shores of Lake Tahoe, in Incline Village.

Mr. Duffield said the plan was to tear down the existing small houses and build something grander that a Silicon Valley tycoon or Hollywood mogul might want. When the 15,351-square-foot complex was nearly complete in 1998, it was listed for sale with Mr. Grumer's son-in-law, a real-estate agent, for $40 million. No firm offers emerged.

In March 1999, the Incline Village home finally did attract a high-tech titan: Mr. Duffield himself. He says he had decided to scale back his involvement at PeopleSoft and make Nevada his permanent home. So he bought the lake-shore property, paying $50 million for the estate and its contents. Mr. Duffield says it was quite late in the process, during a weekend visit in 1997 or 1998, that he first considered buying his own project. "It definitely wasn't intended to be our house," he said. "It wasn't until I was standing on this unfinished dock, in a hard hat, checking on construction, that I suddenly realized: 'I could retire here.'"

California tax officials scoff at that account. They began auditing his finances in late 1997 and eventually decided the investment company was a self-dealing vehicle he used to dodge California capital-gains taxes on appreciated PeopleSoft stock that was sold after he transferred it to the company. The board concluded he owed California $7.2 million in back taxes on the sold stock.

In a July 2003 memo reviewing his situation, the tax board's hearing officer, Renel Sapiandante, wrote that Mr. Duffield "never intended to develop a residential project for investment purposes to sell to third parties." Instead, she asserted, he used Duffield Investment to build an estate for himself and dodge tax. "I don't mind paying taxes. I've paid $260 million in taxes the past 15 years," Mr. Duffield said. As the inquiry continued, tax-board officials won access to old invoices, memos and planning documents associated with Duffield Investment -- now renamed Nevada Pacific Group -- as well as trading records from his Charles Schwab & Co. account. "It felt sneaky," Mr. Duffield complained.

The rest of his Nevada plans began losing momentum. He sacked Mr. Grumer over a real-estate-commission dispute. Many of the purchased lots were left unused as development plans languished. And the general contractor for the Incline Village mansion sued Mr. Duffield claiming he owed money for other mothballed projects. The suit eventually was settled for undisclosed terms.

Despite his troubles, Mr. Duffield had quickly become a popular figure after his 1999 move to Nevada, donating $1 million to help finance a private school, sponsoring a Beach Boys concert and helping fund squad cars, helicopters and boats for the police department. "He helped our community a lot and never wanted any recognition for it," said Washoe County, Nev., sheriff Dennis Balaam.

Mr. Duffield pumped $300 million into a charity, Maddie's Fund, that he created to help animal shelters find homes for stray cats and dogs, naming it for his miniature Schnauzer, which died in 1997.

California's tax board rejected Mr. Duffield's efforts to settle last year. Interest and penalties had swelled the state's original $7.2 million demand to $19 million. Mr. Duffield had to pay the entire bill after losing an appeal to California's Board of Equalization late in 2005. But he continues to press for a refund. If a refund isn't granted, he says, he will sue the tax board in California state court.

PeopleSoft in 2003 had become the target of a hostile takeover offer from a larger rival, Oracle Corp. As that battle played out, Mr. Duffield emerged from retirement to lead a doomed effort to keep his old company independent. When Oracle prevailed in early 2005, Mr. Duffield decided to launch a new software company, a decision that soon tugged him back to California. "My adopted children are 6 to 12 years old," he said. "They haven't ever really seen me working. I
don't think it's good for them to grow up with this sense that I just stay around the home all day."

Now Mr. Duffield works in Walnut Creek, Calif. -- within 10 miles of PeopleSoft's old offices -- seeking customers for Workday Inc., a business-software firm with about 60 employees. He is negotiating to build a new home in Alamo, Calif., near his new offices. Incline Village now is just a summer vacation home. "The winters were too cold for us anyway," Mr. Duffield said.

Mention “free-market economics” to a member of the lay public and chances are that if he has heard the term at all, he identifies it completely with the name Milton Friedman. For several years, Professor Friedman has won continuing honors from the press and the profession alike, and a school of Friedmanites and “monetarists” has arisen in seeming challenge to the Keynesian orthodoxy.
However, instead of the common response of reverence and awe for “one of our own who has made it,” libertarians should greet the whole affair with deep suspicion: “If he’s so devoted a libertarian, how come he’s a favorite of the Establishment?” An advisor of Richard Nixon and a friend and associate of most Administration economists, Friedman has, in fact, made his mark in current policy, and indeed reciprocates as a sort of leading unofficial apologist for Nixonite policy.
In fact, in this as in other such cases, suspicion is precisely the right response for the libertarian, for Professor Friedman’s particular brand of “free-market economics” is hardly calculated to ruffle the feathers of the powers-that-be. Milton Friedman is the Establishment’s Court Libertarian, and it is high time that libertarians awaken to this fact of life.

THE CHICAGO SCHOOL
Friedmanism can be fully understood only in the context of its historical roots, and these roots are the so-called “Chicago School” of
___________
*Murray N. Rothbard (1926–1995) was the founding editor of The Journal of
Libertarian Studies and long-time leader of the Austrian School of Economics.
[This article was first published in The Individualist in 1971. A few of its citations
have been updated, but all emphases are from the original article. The
argument itself is as cogent as ever.—Ed.]

...

    Payer le moins possible d'impôts serait-il un crime? La Suisse, moins pénalisante que les pays voisins, se retrouve accusée de faire de la «sous-enchère», tandis que les contribuables qui élisent domicile chez nous, à l'instar de Johnny Hallyday, failliraient à leur devoir citoyen. De même, les cantons les plus compétitifs et les Suisses, dont Marcel Ospel ou Daniel Vasella, qui profitent des opportunités qui en découlent font figure de profiteurs sans esprit civique. Or, ces assertions bénéficient d'une logique de surface qui s'écroule assez vite en y regardant de plus près.
    De manière générale, si la diversité fiscale et la concurrence qui s'ensuit étaient mauvaises, cela impliquerait nécessairement l'idéal d'un système fiscal unifié sur la surface géographique la plus étendue possible. Ceci afin d'éviter toute «évasion» fiscale de ce qui doit bien être, en poussant l'analogie, un Etat-prison. Cette vision correspond peut-être aux penchants politiques des opposants à la diversité fiscale, le plus souvent issus des rangs socialistes. Mais ce n'est guère une option si l'on considère l'expérience que l'humanité a accumulée avec les Etats totalitaires, ne serait-ce qu'au siècle dernier.
    Même démocratique, l'Etat ne reflète guère les préférences des résidents individuels. Au plus tard depuis l'école des choix publics développée par James Buchanan et Cordon Tullock, nous savons que l'Etat a sa propre dynamique et que sa structure de dépenses reflète avant tout les intérêts de ses agents - politiciens, bureaucrates, lobbies organisés ou majorités populaires - qui redistribuent en leur faveur ou à leurs clientèles le maximum qu'ils peuvent soutirer à «autrui», sans jamais assumer personnellement les conséquences de leurs actes. Frédéric Bastiat exagérait à peine lorsqu'il définit l'Etat, en 1850 déjà, comme «la grande fiction à travers laquelle tout le monde s'efforce de vivre aux dépens de tout le monde».
    Le «vote avec les pieds» reste ainsi souvent la seule issue pour un contribuable victime de ce qu'il faut bien nommer une spoliation légale. L'individu qui protège ce qui lui appartient à juste titre ne fait que défendre ses droits, et il ne saurait en aller autrement face aux impôts. En France, un quart des contribuables paie 84% de l'impôt sur le revenu. Et le premier pourcent paie le quart de l'impôt. Des proportions similaires, plus ou moins aggravées, se retrouvent dans tous les systèmes d'imposition progressive. Y compris en Suisse. En quoi un tel système serait-il légitime?
    Une des objections à l'évitement fiscal des personnes les plus prospères, bien sûr, met en évidence le report de la charge sur les contribuables moins fortunés et moins mobiles. Mais la responsabilité n'en incombe-t-elle pas plutôt à l'Etat? En quoi un citoyen qui vote pour une baisse ou contre une hausse de l'impôt, d'abord dans l'urne, puis «avec les pieds», cause-t-il un préjudice aux droits des autres? Seul l'Etat peut faire porter le fardeau fiscal à une catégorie de résidents ou à une autre. En aucun cas le contribuable qui se défend tant qu'il le peut contre les violations de ses droits ne peut être critiqué pour une injustice dont il n'est pas à l'origine.
    Une autre objection tenace à la minimisation des impôts se manifeste dans les craintes exprimées à propos du financement des «services publics»: la baisse des recettes fiscales ou du niveau d'imposition exigée par «l'évasion» des bons contribuables ne met-elle pas en danger les tâches de l'Etat?
    En réalité, comme l'a exprimé Pierre Joseph Proudhon dans sa célèbre Théorie de l'impôt, «si les milliards jetés à la gueule du fisc ne sont pas littéralement détruits, ils constituent trop souvent, par l'improductivité de ceux qui les mangent, un déficit réel». L'Etat, en effet, est par nature incapable d'évaluer correctement la demande de «biens publics». Il prend invariablement ses décisions selon des critères arbitraires, car il ne peut les fonder sur un marché ou sur un échange contractuel, mais uniquement sur la contrainte. L'Etat ne dispose ni de la mesure du profit ni du signal des prix, ni de la capacité de déterminer les mérites supposés de sa production, ni même de la possibilité d'établir le rendement de ses «investissements».
    Si l'Etat est contraint de revoir à la baisse ses prestations, il est probable que ce ne soit que bénéfice pour le citoyen. L'expérience montre de façon irréfutable que le coût fiscal dépasse les avantages présumés de l'activité étatique. Il ne fait d'ailleurs aucun doute que les institutions civiles, à but lucratif ou non, remplaceraient l'Etat dans une tâche jugée nécessaire et pour laquelle une demande existe. Car si les réalisations étatiques financées par la contrainte se voient, ce que l'on ne voit pas, ce sont précisément les investissements et les accom-plissements du secteur privé qui n'ont pu être réalisés en raison du prélèvement de l'impôt.
    Il est également probable que certaines fonctions réputées inhérentes à l'Etat, comme la sécurité, la défense ou l'administration de la justice, gagneraient à une refocalisation des pouvoirs publics. Or, nous en sommes loin. Il faut rappeler que tous les indicateurs du poids de l'Etat sont à la hausse et qu'aucune inversion de tendance n'est en vue.
    Ce qui est moins évident, mais tout aussi vrai, c'est qu'en retirant leurs ressources pour s'installer sous des deux plus cléments, ou en structurant légalement leurs affaires de manière à éviter le plus possible l'impôt, les «évadés» fiscaux rendent un service énorme à l'ensemble de la communauté. Non seulement ils préservent du capital précieux du gaspillage fiscal, mais ils contribuent à limiter la croissance de l'Etat. Et ainsi à préserver notre ordre libéral contre une institution qui, de plus en plus, prend des allures d'omnipotence.
    Minimiser sa facture fiscale fait figure de premier devoir de tout citoyen responsable, y compris en exploitant toutes les possibilités de planification fiscale nationales et internationales. Dans une Europe d'Etats hypertrophiés, la liberté et la prospérité ne peuvent pas faire l'économie de ce civisme bien compris.

Timothy Flynn, a top executive at KPMG LLP, was driving to a nephew's graduation in May 2005 when he got a phone call from the chairman: The firm faced imminent criminal indictment over tax shelters it used to sell.

Then a different sort of shock. One week later, the chairman, Eugene O'Kelly, learned he had a brain tumor that left him just months to live. Mr. Flynn, a down-to-earth accountant who once led KPMG's human-resources department, was suddenly thrust into its top job, where he faced an urgent task: to somehow persuade the government not to indict. He knew that criminal charges against the firm would probably kill it, as they did Arthur Andersen after the Enron scandal.

Mr. Flynn took a gamble. KPMG had for years stoutly denied any impropriety, calling its tax advice legal. But days after taking the helm, Mr. Flynn met with Justice Department officials and acknowledged that KPMG had engaged in wrongdoing.

He got no promises in return, and the admission could have sunk the firm. Instead, it provided flexibility to the prosecutors, who were aware that the collapse of one of only four remaining accounting giants could harm the financial markets. Two months later, the government gave KPMG a deferred-prosecution deal, holding off indicting if KPMG paid a $456 million penalty and met other conditions.

KPMG now is emerging from what some at the firm call a near-death experience. Last month a judge, satisfied with the firm's reforms so far, dismissed the deferred criminal charge. Mr. Flynn has put in place stronger controls, and a former federal judge now oversees KPMG's ethics and compliance efforts. Mr. Flynn also banned a type of incentive pay that many believe helped fuel the sale of improper tax shelters. For the most part, he has managed to retain partners and clients. In November, he was able to report that the firm's revenue had grown 2% in the fiscal year ended Sept. 30.

KPMG isn't out of the woods. It still faces lawsuits from tax-shelter clients. And though the firm hasn't been indicted, some of its former executives have, and their trial in September could cast the firm in a harsh light. Defense attorneys plan to argue that the shelters had approval from top management. KPMG says, "There's no evidence whatsoever to suggest that the management committee was aware that there was fraudulent conduct involved in the sale of tax shelters."

A government-appointed monitor of KPMG gives Mr. Flynn a vote of confidence. He has proved to be "the right person at the right time," says the monitor, Richard Breeden, a former chairman of the Securities and Exchange Commission.

Mr. Flynn grew up in a tightknit family with six children in the Minneapolis suburb of Bloomington. An Eagle Scout and high-school wrestler, he attended the nearby College of St. Thomas, his father's alma mater, and, along with two brothers, followed his father into accounting.

In 1979 he took a $13,700-a-year job in the local office of Peat Marwick & Co., a predecessor of KPMG, eventually impressing superiors with his technical accounting skills and management knack. Frequently described by those who meet him as earnest, Mr. Flynn, says former SEC Chairman Arthur Levitt, is like "the parish priest who became pope."

Test of Skills
A test of his skills came in 2002. As Arthur Andersen was imploding after an obstruction-of-justice indictment, accounting firms rushed to snap up its clients and partners. KPMG initially fell behind in this scramble. Mr. Flynn and Jack Taylor, then vice chairmen of KPMG's audit business, refocused the effort. First, they made a priority of signing up Andersen partners, figuring clients would follow their auditors. Then, dividing the country between them, they spent the next three months on the road, meeting with about 1,000 Andersen partners in all.

One, Dan Doherty, recalls the approach. While executives from other accounting firms simply left messages at his home, he says, Mr. Flynn took the time to talk to his wife and showed a "clear empathy for the circumstance we were in." It "wasn't just this mad rush of recruiting.... I never felt I was in the back of the line," he says.

Mr. Doherty joined KPMG. In all, about 200 Andersen partners did. KPMG snagged 395 Andersen clients, second only to Ernst & Young's haul, according to research firm AuditAnalytics Inc.

But soon, KPMG had troubles of its own. The once-staid accounting world had changed, with big firms using their audit relationships with companies to pitch more-lucrative services. Among them were tax shelters: elaborate sets of financial transactions designed to shield income from taxation.

For example, some shelters created paper losses on foreign currencies, which wealthy individuals who bought the shelters could use to offset taxable gains -- despite having never really put any money at risk. KPMG developed a sophisticated marketing operation, including a cold-call center in Fort Wayne, Ind., to push its tax products, according to a 2003 Senate report.

As the Internal Revenue Service stepped up probes of such shelters early in this decade, KPMG's accounting-firm rivals stopped offering them and settled with the government.

KPMG sold shelters longer than others and insisted there was nothing wrong with its products, a stance that angered the IRS, the Justice Department and some senators.

Shifting Strategy
KPMG began to shift strategy in early 2004. Under Justice Department investigation, it forced out people who worked on the shelters and started to work toward a resolution with the government. But as the process dragged on, in late May 2005 the U.S. attorney in Manhattan sent KPMG a letter saying an indictment was imminent.

Then came the shock of Mr. O'Kelly's tumor. He stepped down, and the firm promoted Mr. Flynn, now 50 years old. He took over as chairman just three days before a meeting with Justice Department officials set for Monday, June 13.

At 7 a.m. the Saturday before, executives huddled in the Washington offices of law firm Skadden, Arps, Slate, Meagher & Flom. Among those there to plot strategy were Mr. Flynn, new deputy chairman John Veihmeyer, and a former federal judge who'd recently joined KPMG, Sven Holmes. KPMG still hadn't made a final decision on whether to admit wrongdoing, or, if so, what form an admission would take.

One adviser, Mr. Flynn recalls, warned that an admission, once made, couldn't be rescinded. Others raised the risk of civil liability. But Mr. Holmes says he told Mr. Flynn bold action was called for, because "you only get one chance to make a first impression in a meeting like this."

All were aware Arthur Andersen had faced a similar decision in 2002. Andersen later had its conviction overturned -- in one sense, a vindication of its defiance. It was a Pyrrhic victory, as by then, partners and clients had fled and Andersen was out of business.

"I think we have to just admit wrongdoing and accept responsibility," Mr. Flynn says he finally told the KPMG group. The firm agreed that, as an executive with no direct involvement in the shelter sales, Mr. Flynn was the right person to deliver the message. Though he was on the management committee when KPMG was selling shelters, Mr. Flynn was at human resources during much of the period and was never a tax partner.

On Monday morning, he attended the meeting with the Justice officials and -- sharply changing KPMG's position -- admitted it had sold shelters that helped people evade taxes.

Justice officials basically just listened.
Later that week, after a Wall Street Journal report that the Justice Department was weighing an indictment, KPMG issued a statement taking "full responsibility" for "unlawful conduct by former KPMG partners" in offering tax services. Not long afterward, Justice Department lawyers let the KPMG side know they were willing to discuss a settlement.

Now KPMG had to fight to retain clients. Executives took to the road for long stretches. Mr. Veihmeyer's wife sent clothes to him by courier as he traveled. Over the summer of 2005, Messrs. Flynn and Holmes contacted more than 100 audit clients.

One was General Electric Co., KPMG's biggest audit client and one that paid it more than $109 million in fees that year, according to AuditAnalytics. Mr. Flynn met with GE directors. According to a person who attended, his message amounted to: "There's some stuff here, it's really ugly, it happened, and here's what we're going to try to do with this situation."

GE stuck with KPMG. A spokesman for GE says it is "pleased that KPMG and its leadership have aggressively addressed the compliance issues raised in the government's tax case."

KPMG was lucky in one way. Midsummer is late in the year for big companies to make auditor switches, because it can take months to negotiate terms of an audit engagement.

Clients weren't the only concern. Many KPMG partners were angry. Any exodus of partners would make it harder to keep audit clients.

Then in early August, a memo purporting to be from unnamed current and former KPMG board members circulated. Saying Mr. Flynn lacked "backbone," it blasted management for admitting wrongdoing and abandoning partners involved. "While the leadership may believe the path to pursue is the survival of the firm at all costs, we don't," the memo said. "The actions being taken will probably result in the demise of the firm anyway."

Mr. Flynn says the memo was "hurtful" and its claims were "lies." To calm partners, he personally reached out to hundreds of them, often singling out younger ones. Michael R. Gervasio, a young tax partner in Chicago, says he was impressed as much by Mr. Flynn's persistence as by what he said. Mr. Flynn phoned eight times over two days before finally connecting with Mr. Gervasio at home at 10 one night. "We really want you to stay," Mr. Gervasio recalls being told. He did.

Later that month, August 2005, KPMG won a new lease on life: The Justice Department announced a deferred-prosecution agreement. Besides the $456 million penalty, it required KPMG to stop selling prepackaged tax products, stop doing tax returns for most individuals, shed its benefits and compensation practice, and submit to federal monitoring through September 2008.

Special Meeting
Mr. Flynn called a special meeting of partners. Such sessions typically were staged. This time, Messrs. Flynn and Mr. Veihmeyer set up computer kiosks so people could submit questions anonymously. "Why should we trust you guys now?" asked one question at the meeting in Dallas, which had drawn nearly all of the then-1,607 partners. Others asked why the penalty shouldn't be paid just by tax partners. Mr. Flynn said they all had to "sink or swim" together, and a big fine was the price they must pay to "get their firm back."

The firm says that from June 1 to Sept. 30, 2005, just 18 partners left, excluding normal retirements and some forced out because of the tax shelters. One thing that helped keep people aboard was a post-Enron boom in auditing. Auditors now had to do more and take more responsibility -- and they demanded bigger fees to do it.

KPMG also kept most of its clients. From June 2005 through the end of the year, it lost just three companies with stock-market values above $1 billion, according to AuditAnalytics.

Mr. Flynn set about changing how the firm was run. He scrapped an incentive-pay system blamed for encouraging partners to push the tax shelters. In a two-day January 2006 board meeting, he urged directors to rethink KPMG's governance, and they crafted 14 changes. The head of legal and compliance, currently former Judge Holmes, is now one of the firm's top four executives. The chairman and deputy chairman no longer sit on the nominating committee, limiting their ability to fill the board with their allies. The board now has a lead director who is a counterweight to the chairman.

Mr. Breeden, the monitor, says KPMG has developed a good governance system, "but it needs more seasoning to be sure that it works as well in practice as it should in theory."

Although KPMG reached a $154 million settlement with investors it sold tax shelters to, it still faces suits from several dozen investors who opted out of the settlement. It has been quietly settling some of these.

KPMG remains in a wrangle over its refusal to pay legal fees for former executives who were indicted. In that and other cases, lawyers opposing KPMG say it is a sharp-elbowed litigator, as antagonistic as ever. Michael Avenatti, who represents tax-shelter investors suing KPMG, says, "They interpret court orders in the narrowest sense and to the utmost extreme to benefit their positions." KPMG says it defends itself "as appropriate and in a professional manner."

One former critic is impressed with changes at KPMG. Former SEC Chairman Levitt once called KPMG a "rogue operation." Mr. Levitt, who has offered informal counsel to Mr. Flynn, says that the chairman "stepped into a troubled situation and by sheer strength of personality and character saved that firm from destruction."

“It’s not the first brush with death I’ve had,” Mr. Richards later told Rolling Stone magazine. “I guess what I learned is, don’t sit in trees anymore.”

What two of the other three Rolling Stones apparently learned, including Mick Jagger and Charlie Watts, was that Mr. Richards’s near-death experience meant that it was time to think about their heirs. For that, the aging rockers turned to a reclusive Dutch accountant, Johannes Favie, whose company, Promogroup, has helped them minimize their tax bills for more than 30 years. (The fourth Rolling Stone, Ron Wood, handles his finances apart from Promogroup.)

And so, last August, according to details disclosed in documents maintained by the Handelsregister, the trade registry of the Netherlands, Promogroup helped the three performers set up a pair of private Dutch foundations that will allow them to transfer assets tax-free to heirs when they die. Other Dutch shelters that Promogroup has arranged for the three have already paid off handsomely; over the last 20 years, according to Dutch documents, the three musicians have paid just $7.2 million in taxes on earnings of $450 million that they have channeled through Amsterdam — a tax rate of about 1.5 percent, well below the British rate of 40 percent.

The Rolling Stones are not the only celebrities sheltering income in the land of tulips, windmills and Rembrandt. The rock powerhouse U2 has transferred lucrative assets to Amsterdam, as have other pop singers and well-known athletes, all of whom have used or continue to take advantage of the Netherlands’ tax shelters, according to a Dutch tax lawyer who requested anonymity because of client confidentiality agreements.

Entertainment companies and others that benefit handsomely from the Dutch shelters include EMI, the giant record label, and CKX Inc., the entertainment company that owns stakes in “American Idol,” the Elvis Presley estate and the soccer pin-up idol David Beckham.

When it comes to attracting celebrity wealth seeking shelter from taxes, the Cayman Islands and other classic Caribbean tax havens are receding in favor like so many waves on the beach, according to tax experts here and overseas. While old-school, offshore tax havens — the warm ones with tropical fish, off-the-shelf holding companies sporting post-office-box addresses, and scant regulation or transparency — still attract money, they are largely patronized, tax lawyers and entertainment bankers say, by hedge funds and private equity firms looking to protect lush trading profits from taxes.

But for earnings derived from intellectual property such as royalties, the Netherlands has become a tax shelter of choice. With celebrities lending their names and images to clothing lines, licensing their hit songs to corporate sponsors, seeking roles in Hollywood and engaging in other ventures that generate significant taxable income, the Dutch system, which does not tax royalties, offers a nifty shelter.

As they flock to Amsterdam, celebrities are taking a leaf out of the playbook of major corporations that also use Dutch tax shelters to help reduce or eliminate the royalty taxes on patents, another form of intellectual property.

“The Caribbeans are thinking about trading profits, not royalties, so the smaller European countries like Holland have had to be creative, tax-wise,” said David Pullman, an investment banker in New York who caters to entertainers and athletes. “They are going for the high-end stuff and don’t want to be seen as shady like some Caribbean haven.”

Many of the world’s multinational corporations, like Coca-Cola, Nike, Ikea and Gucci, have set up holding companies here in recent years to take advantage of tax shelters nearly identical to the ones that the Rolling Stones and U2 use. An additional draw is the Dutch Finance Ministry’s recent willingness to issue advance rulings that effectively bless the tax shelters, a fast-track process that has lured in companies and individuals seeking to use the Netherlands as a tax shelter.

Sun Microsystems, the giant American software and computer manufacturer, operates Dutch holding companies and is candid about why it does so. Until recently, on the Web site of the Netherlands Foreign Investment Agency, www.nfia.com, Sun offered the following blurb about the country’s accommodating tax laws: “Let’s face it: ask foreign companies why they’re really located here, and nearly everyone will reply that it’s because of the favorable tax ruling. The combination of this with the country’s political stability, well-trained labor force, their linguistic skills and international attitude as well as the stable infrastructure for roads and telecommunications — this is why we’re here.” (A Sun spokeswoman declined to comment.)

The Netherlands is home to almost 20,000 “mailbox companies,” Dutch shorthand for corporate shells set up by foreign companies and wealthy foreigners who use them to relieve taxes on royalties, dividends and interest payments, according to a report last November by SOMO, the Center for Research on Multinational Corporations, a nonprofit group in Amsterdam that monitors the business practices of large companies. Globally, some 1,165 companies use Dutch tax shelters to reduce or eliminate taxes on royalties and patents, according to SOMO.

The report, which is critical of the emergence of the Netherlands as a tax haven, says that the number of mailbox companies “has been increasing rapidly in recent years” and that the shelters undermine efforts by governments worldwide to “ensure that a level playing field is created where each country receives the fair taxation due to it as a result of the commercial activities undertaken within its borders.”

OFTEN mentioned as a candidate to receive the Nobel Peace Prize, or, perhaps less seriously, to run the World Bank, U2’s 46-year-old lead singer, Bono, has toured Africa with senior American officials to campaign against AIDS, and hobnobbed with financiers and policymakers while speaking out on global poverty issues at the World Economic Forum in Davos, Switzerland. He even mugged for the cameras in 2000 with Pope John Paul II, who tried on his sunglasses.

U2’s riches are equally well-traveled and, like the Rolling Stones, the band has become sophisticated about finding overseas shelters for its money. When Ireland announced last spring that it would sharply curtail a lucrative tax break for musicians, painters, writers and sculptors, the shift posed a financial threat to U2, which has made the Emerald Isle its financial power base for nearly three decades. The Dublin-born-and-bred rockers built their fortune on hit songs and, in part, on Irish laws that forgive taxes due on royalties.

As of last year, U2 had amassed a net worth of 629 million euros — around $908 million — according to the annual “Rich List” of top earners in The Sunday Times of Britain. Royalties are the income that artists and athletes earn from recordings, performances, trademarks, brands, patents, copyrights, film rights, product endorsements, videos, films and the ever-extending commercialization of those assets — in short, the major portion of an artist’s or an athlete’s income.

Last June, with the Irish tax break about to shrink, U2 heeded the advice of its longtime business manager, Paul McGuinness, and moved its most lucrative asset — a song-publishing catalog with hits like “Where the Streets Have No Name” and “It’s A Beautiful Day” — from Mr. McGuinness’s firm, located near the Liffey River in Dublin, to Promogroup, which operates beside the elegant Herengracht canal in the heart of elegant, old Amsterdam.

Promogroup’s headquarters are in a maroon-brick town house built four centuries ago for slave traders and spice merchants. Mr. Favie did not respond to repeated requests for an interview. To date, his company has not filed any information on funds flowing through U2 Ltd., the Dutch entity that holds U2’s song catalog.

In another Amsterdam neighborhood known as the Financial Mile, not far from Promogroup’s headquarters, Dutch firms like TMF, EQ Management Services, and Fortis Intertrust also cater to this high-end niche of tax-shelter devotees.

On its Web site, Fortis boasts that its clients are “the world’s top composers, performing artists and personalities such as classical musicians, pop artists, DJs, and fashion models.” The firm says it specializes in offering the “tax efficient exploitation of image rights,” among other things.

“A lot of sponsor-sensitive sports people are also doing this — tennis players, golf players, soccer players,” said Frank Lhoëst, an intellectual-property specialist at Fortis. The Dutch government is also in on the act, drafting an extensive network of tax treaties with countries worldwide that make it easy to shuffle money from Dutch companies to foreign subsidiaries, and creating other tax incentives.

“For non-U.S. musicians that receive a substantial portion of their income from non-U.S. source royalties, the use of a back-to-back licensing arrangement in the Netherlands provides significant tax savings,” said Jeffrey L. Rubinger, a tax lawyer in Fort Lauderdale, Fla., at Holland & Knight.

The Dutch shelter is simple: royalties that flow into or out of a Dutch holding company are exempt from taxes. Although the nominal corporate tax rate in the Netherlands is around 30 percent, analysts say that domestic tax shelters bring that rate down substantially.

“For 90 percent of the people who do this, the motivation for using these structures is tax minimization, or avoidance,” said Ton Smit, a tax lawyer at Tax Consultants International in Rotterdam, a firm that caters to celebrities, athletes and multinational corporations seeking to minimize their taxes.

HISTORICALLY, of course, the Netherlands has always looked outward, building global trading links and establishing the world’s first stock exchange in the 17th century. That outlook has spawned legendary leniency, generosity and openness. Prostitution and some drugs are regulated but legal. State-funded benefits are substantial. Even witches are treated well: the government offers tax breaks to students studying witchcraft.

“It’s not only tax-motivated, it’s our culture — Dutch people are traders all over the world,” Mr. Smit said.

Some experts see a darker side to the emergence of the Netherlands as a sought-after tax shelter. In 2000, the Organization for Economic Cooperation and Development, based in Paris, black-marked the country as one of the world’s top five industrialized tax havens for promoting “treaty shopping” for low-tax jurisdictions. The Netherlands tightened certain rules, requiring more substance for Dutch companies set up solely to reduce or eliminate taxes. But some analysts say that troubles persist.

In its report last fall, SOMO, the research group, said the Dutch shelters affect “both the capacity of developing-country governments to supply essential services to their populations and the capacity of developed-country governments to provide finance for development in the form of debt relief and official development aid.” The report also said that “tax haven features of the Netherlands also facilitate money laundering and attract companies with a dubious reputation.”

While no one has suggested that any of the entertainers, athletes or celebrities making use of Dutch shelters are laundering illicit funds or engaging in illegal acts, the fact that some of them are gaming the tax system has invited criticism.

When news of the Rolling Stones’ Dutch tax shelter first emerged last summer in Dutch and German newspapers, it did not particularly roil fans or the British tax authorities. After all, the Rolling Stones are widely regarded as one of the world’s most commercial bands, with hundreds of officially licensed products ranging from Mick Jagger “quality resin” bobble-head dolls, Rolling Stones “Classic Rock” twin-bell alarm clocks, and “It’s Only Rock and Roll” lava lamps to Rolling Stones Zippo lighters, Rolling Stones lounge pants and lingerie, leather jackets, diamond-encrusted gold and silver jewelry, and the band’s ubiquitous trademark and calling card, the thick red Rolling Stones tongue.

But critics say that U2’s tax move to Holland is threatening to tarnish the halo surrounding the well-regarded, affable and articulate Bono, by lending him a whiff of hypocrisy. After all, unlike Bono, Mr. Jagger is not out campaigning against third-world debt, or writing a foreword for “The End of Poverty,” the most recent book by the prominent economist Jeffrey D. Sachs.

“Bono is a worldwide advocate for greater aid to the developing world, and I applaud him for that,” said Joan Burton, the spokesperson for the Irish Labor Party’s finance unit and a former cabinet minister, in a telephone interview. “But obviously the money for that comes from taxation, so it’s very difficult to ask other people to pay tax to contribute to something very worthwhile while at the same time not paying taxes in a very modest environment.”

IRELAND’S taxation of artists is, indeed, modest. Ireland currently allows unlimited tax-free earnings for artists from the sale of their work, but not from licensing or merchandising deals. The government set it up in 1969 to benefit resident struggling artists for whom books like “Blessed Art Thou a Monk Swimming” and “The Wild Red Deer of Killarney” — to name just two titles protected under the exemption — are unlikely to generate big licensing deals.

Next January, Ireland will cap the benefit at 250,000 euros, or around $319,000, after which a sliding tax scale sets in. The country already has a low corporate income tax rate of 12.5 percent.

Some tax advisers in Holland relish extolling the benefits of their service when compared with classic Caribbean tax regimes. In a pitch for the merits of the Dutch tax system, Gerwin de Widle, a tax lawyer at Greenberg Traurig in Amsterdam, observed that “it’s better to be here than sit on an island, where they don’t even take euros.”

Amid such jousting, the fact that U2 is financially decamping to Holland has raised some eyebrows.

Jeff Swystun, a global director at Interbrand, a brand consulting firm based in New York, said that “the Stones will always be credible because of a very simple proposition: we want to have a great party.” But U2, he said, “almost project themselves as a nonprofit, so the tax move doesn’t really fit with the brand values that they’re trying to communicate.”

Not so, says U2.

“U2 is a global business and it pays taxes globally,” said Mr. McGuinness, the band’s business manager, who, in an unusual arrangement, shares equally in the band’s earnings. “At least 95 percent of U2’s business — including record and ticket sales — takes place outside of Ireland and as a result the band pays many different kinds of taxes all over the world. U2 is fully compliant with all Irish tax laws.”

Mr. McGuinness said that Bono and U2 “continue to remain Ireland-based and are personal investors and employers in the country.”

“Innovative tax policies have been the bedrock of Ireland’s current prosperity,” he added. “Like any other business, U2 operates in a tax-efficient manner.”

A spokeswoman for the Rolling Stones, Fran Curtis, declined to comment, other than to say that the band members “don’t like to talk about their business.” But Mr. Jagger, in a declaration filed last June in a civil lawsuit against his band in an unrelated matter, offered a glimpse of some of the machinery that supports the Rolling Stones’ money machine.

In the declaration, Mr. Jagger noted that some of the revenue from his group’s recordings flows through the Netherlands. He pointed out that “the recording services of the Rolling Stones are provided by companies that have the right to such services to Promotone B.V., which in turn owns the recordings of the Rolling Stones. My understanding is that Promotone licenses exploitation of those recordings to EMI Music Netherlands B.V., which releases and distributes those recordings through other companies in the United States.”

A spokeswoman for EMI declined requests for comment.

According to documents from the Dutch trade registry, Promogroup’s Mr. Favie, the principal director of the Stones’ holdings in the Netherlands, is now also the main director of U2 Ltd., the Dutch-based entity that holds the lucrative master tapes to U2’s song library. Song catalogs typically account for a large portion of successful band’s royalty income, so U2 Ltd. is likely to be the recipient of a major piece of U2’s income, analysts say. Likewise, U2’s financial move to the Netherlands is likely to save it substantial sums it might otherwise have paid in royalty taxes.

Not everyone has access to Dutch shelters. Dutch tax benefits are typically available only to artists who are not citizens of the United States. While the Netherlands does not tax royalties going in or out of a Dutch company, the Treasury Department in the United States typically levies its standard corporate income tax rate of 35 percent on royalties coming into America from a Dutch entity.

Dutch holding companies set up to protect royalties often work in tandem with offshore Caribbean companies, shuffling money around to escape taxes, analysts say. For example, part of the Rolling Stones’ Dutch-run assets are funneled through the Netherlands Antilles, a Dutch protectorate and a classic Caribbean tax haven, according to company registration documents.

“Ethically in my opinion, Bono’s tax arrangements are entirely inconsistent with his calls upon government to support anti-poverty drives,” said Richard Murphy, who runs Tax Research LLC, a research institute based in Norfolk, England, and was one of three co-authors of the SOMO report on Dutch tax shelters. “You cannot be demanding that resources be allocated to anti-poverty drives and then deny those resources to government.”

Other tax experts say that such views are overly prim and that rock stars are simply following the leads of some of the world’s biggest companies. U2 and the Stones “are taking advantage of this in the same way that all the drug companies are putting all their patents in favorable tax jurisdictions,” said Prof. Michael J. Graetz of Yale, an authority on tax shelters and a self-described die-hard Rolling Stones fan. “I wouldn’t go so far as to say it’s fair, but it’s not shocking either.”

     Die Steuerpolitik sei eine einzige Dauerbaustelle, pflegt Finanzminister Hans-Rudolf Merz zu sagen. Und das müsse auch so sein. In der Tat: Mit den Reformen der Mehrwertsteuer, der Paarbesteuerung und der Unternehmenssteuer befinden sich allein auf Bundesebene gleich mehrere Projekte in der Pipeline (oder sind, wie das Letztere, die sogenannte USTR II, vom Parlament verabschiedet, müssen sich aber noch dem Referendum stellen). Das Bundesgerichtsurteil vom 1. Juni zum degressiven Einkommenssteuertarif des Kantons Obwalden und die im letzten Herbst von der SP lancierte «Steuergerechtigkeilsiniliative» haben den Diskussionsbedarf zum Generalthema Fiskus weiter in die Höhe getrieben, in Vorwahlzeiten zumal.

«Was Genf sich da geleistet hat, das ist ein Skandal», sagt Hans-Urs Wili, Leiter der Abteilung Politische Rechte bei der Bundeskanzlei. «Ja», sagt er, «das dürfen Sie  ruhig so schreiben.» Nicht nur Wili ist empört. Auch bei der SP reibt man sich die Augen. Der Grund: Der Kanton Genf hat es versäumt, die über 2000 Unterschriften,  die das linke Referendumskomitee gegen die Unternehmenssteuerreform in der Stadt Genf gesammelt hatte, rechtzeitig offiziell zu bescheinigen und zu retournieren.  Die Stiftung Gewa im bernischen Zollikofen, die im Auftrag des Referendumskomitees das Beglaubigungsverfahren durchgeführt hat, bestätigt, dass der Kanton Genf  das Paket mit 2070 beglaubigten Unterschriften erst mit Poststempel vom 17. Juli zurückgeschickt hat. Die Frist für die Einreichung des Referendums aber war bereits  am 12. Juli abgelaufen.

Die Unterschriften konnten folglich nicht mehr berücksichtigt werden. Die Aktivisten des Referendumskomitees, angeführt von der SP, haben in Genf für die Katz  gesammelt und die Gegner der Steuerreform vergeblich unterschrieben. «Sie sind die Geprellten», sagt SP-Generalsekretär Thomas Christen.

Freilich: Das Referendum kam auch ohne die Unterschriften aus Genf zustande. «Aber man stelle sich vor, wir hätten nur 49 500 gültige Unterschriften gehabt und die  Bundeskanzlei hätte das Referendum für gescheitert erklärt», sagt Christen. 2000 Unterschriften, das sei «enorm viel». Bereits wenige hundert könnten über Sein oder  Nichtsein eines Referendums entscheiden. Parteien und Organisationen seien darauf angewiesen, dass die Gemeinden ihre Aufgaben machten, «sonst verkommt das  Initiativ- und Referendumsrecht zur Farce». Christen fordert, dass der Bund die Gemeinden an die kürzere Leine nimmt. Zu prüfen sei auch, ob künftig Unterschriften,  die bei Ablauf der Sammelfrist bei einer Gemeinde liegen, nicht nachträglich noch berücksichtigt werden müssten.

Der Genfer Fall ist ein Extremfall. «Ich kann mich in meinen 32 Dienstjahren keines derart massiven Falles entsinnen», sagt Wili. Wenn eine Gemeinde einmal 10 bis 15  Unterschriften nicht rechtzeitig bescheinigen könne, weil diese erst kurz vor Ablauf der Sammelfrist eingetroffen seien, sei dies entschuldbar, sagt er. «Aber wenn man  es nicht schafft, über 2000 Unterschriften mit Stimmrechtsbescheinigungen zu versehen, obwohl die meisten lange vor Fristablauf eingegangen sind, dann ist das wirklich  ein starkes Stück.» Immerhin sei es die Pflicht des Staates, zu gewährleisten, dass die Bürger ihre politischen Rechte wahrnehmen könnten. Im Bundesgesetz über die  politischen Rechte heisst es, dass die Amtsstellen die Unterschriften «unverzüglich» zurückschicken müssten. Das Argument, man habe keine Zeit gehabt, lässt Wili im  Genfer Fall nicht gelten.

Just darauf beruft sich das kantonale Einwohneramt, das für die Stadt Genf die Bescheinigungen der Unterschriften vornimmt und – pikanterweise – SP-Staatsrat  Laurent Moutinot unterstellt ist. «Wir hatten halt keine Zeit», sagt der stellvertretende Amtsleiter Jean-Félix Christin. Man habe noch anderes zu tun, zudem seien  auch noch Ferien gewesen und habe man soeben erst gez