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Corporate Scoundrels Get Away Tax-Free

February 18, 2003

John Balzar has outdone himself with "Gimme Shelter and, Oh, a Really Good Lawyer" (Commentary, Feb. 12). I failed the quiz, but I'll be able to write it off. Isn't it time we identify these corporate scoundrels for what they really are -- terrorists?

Are they not terrorizing the economy, and you and me, and our way of life? More than just a threat, they are actually affecting us adversely every day. And if King George has his way, that's the lay of the land.

Jerry Schaefer

Long Beach

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Balzar fails to mention that when stock options are exercised, the person recognizes no real income until shares are sold. But the "gains" are taxed as regular income. This means that to purchase the shares and satisfy the tax liability, often more than half of the shares must be sold. In many cases the person exercising the options believes in the company and wants to keep a stake in the future success of the company by not selling the stock. I can understand the motivations for legally avoiding this tax.

However, in the case Balzar writes about, the Sprint executives received bad advice from Ernst & Young accountants. Unfortunately, this bad advice cost both William Esrey and Ronald LeMay their jobs and will probably bankrupt both men. The stock in question has declined to about $6 per share and, even if all shares are sold, the proceeds will cover only a fraction of the tax bill and penalties.

David G. Sant

Saratoga, Calif.

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Balzar did a masterful job of illustrating the class bias of the tax system. The next step is to persuade many of those affected by this bias to direct their ire at these CEO tax dodgers. I'm referring to the types who deliver fire and brimstone about single mothers on welfare buying vodka with their groceries but are extremely indifferent toward the Esreys and Ken Lays of the world. This would represent a major step in changing the way we view wealth.

Steve Varalyay

Torrance

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