Whats the difference between what happened with tax shelters in the 1990s vs. the 1970s and 1980s?
In the 1970s and 1980s, illegitimate tax shelters tended to be based on exploiting a specific loophole in the tax code. In the 1990s, however, as the bull market exploded, companies came under increasing pressure to keep their profits and stock prices up. One favored means was to drive down the tax line of their corporate returns. According to Harold Handler, former chair of the Tax Section of the New York State Bar, “What changed in the ’90s was that the tax line of the financial statement became a profit center for many corporations.” The other big change was in how tax shelters were marketed. Tax firms that previously responded to client needs, (i.e., reviewing business transactions to help minimize the tax implications) turned to pushing tax products that had no connection with the client’s business needs. “That’s bothersome,” says Handler, “because it changes the dynamic of what you’re doing. You’re no longer doing real things, but you’re doing artificial transactions for the purp
