Madoff scandal could lead to tax losses nationwide - 17 billion!

[Liberal_in_LA]

http://www.google.com/hostednews/ap/article/ALeqM5htToJ-erfh-gRbTAAUj7B0Km9pKAD955FAO80

Madoff scandal could lead to tax losses nationwide
By RACHEL BECK – 2 days ago

NEW YORK (AP) — Even Uncle Sam may get burned by Bernard Madoff.

Investors who lost their fortunes in Madoff's alleged Ponzi scheme will end up paying far less in taxes and may even be eligible for refunds, according to accounting experts.

By some estimates, the Internal Revenue Service could be out as much as $17 billion in lost tax revenue.

"This is one more thing federal, state and local officials will have to deal with," said John Berrie, a tax partner at the law firm Bryan Cave in New York City. "It's another heavy box on their back."

In addition, investors may be counting on a federally mandated insurance fund to bail them out, but that program lacks the money to pay for all the claims that are likely to come.

[Uben]

1. Not just the Madoff investors....

....but just think of all the revenue that will be lost due to all the losses on Wall St. There will be a shortfall of billions more, and those losses will have to be accounted for by cuts in spending or raised taxes.

[depakid]

2. Yet another self-destructive result from deregulation and lack of oversight

Of course, the reverse is also true- revenue gains to the federal government more than justify appropriations to regulatory agencies.

[Hannah Bell]

3. It's my understanding that there's no federal "insurance fund" for hedge fund losses.

Because, for one thing, they were allowed to operate outside the regulatory structure for more traditional investments. Indeed, I seem to recall reading something about the "sophistication" of hedge fund investors being a justification for the exemption from regulatory requirements.

[Historic NY]

4. Just think of all the taxes they paid or writeoffs they made.....

its going to be interesting to see just what this con man actually did.

[Liberal_in_LA]

5. Agreed. I foresee a few Enron style books.