Is it really fair to allow tax deductions for those wealthy enough to
have been targeted by the amoral Madoff while allowing nothing for the
millions of Americans who saw their retirement accounts and stock
portfolios diminish by more than half?
Couldn't one argue that anyone who lost money in the stock market was
also victim of a Ponzi scheme? Certainly one could make the point that
the irresponsible leaders of the banking industries who brought our
financial markets down like a house of cards were perpetuating a Ponzi
scheme -- using the money of new investors to pay high returns to
earlier investors.
The credit derivative swaps that brought down AIG and ultimately many
other companies may not meet the legal definition of a Ponzi scheme but
certainly define the spirit of what such a scheme does. Credit
derivative swaps are bundles of bad or dicey mortgages that financiers
bought and sold and gambled on -- using them to bulk up assets --
knowing full well they were toxic.
Not to belittle the trauma for the 13,000 Madoff victims, but who will
assuage the trauma and the financial loss of the millions of Americans
who cannot retire now? Who will provide a tax deduction for those whose
IRA values fell by half? Why should only those wealthy enough to be
targeted by a high roller like Madoff get any tax relief?
And whose taxes will make up the missing revenue due to the Madoff
victims' tax deduction? Yours and mine of course -- every American
including all those who lost money in the stock market and in their
retirement accounts. If the doctrine of <MI>caveat
emptor<D> applies to all who lost money in the current financial
crisis, how does it not apply to the Madoff victims?
The irresponsibility of the unregulated financiers makes them as
culpable as Madoff in the defrauding of the American investor and
ultimately of the American taxpayer. Will they suffer a tax penalty for
their ill-gotten gains?
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