In his weekly “Stories I’d Like to See” column, journalist and entrepreneur Steven Brill spotlights topics that, in his opinion, have received insufficient media attention. This article was originally published on Reuters.com.
1. An underground economy in the Gulf?
I was interested to read these paragraphs in a recent New York Times story about the processing of claims being made by victims of the oil spill in the Gulf of Mexico; pay special attention to the part I have underlined:
Glenn Poche, a shrimper, said he had lost 90 percent of his retail business. Despite official assurances that seafood pulled from the Gulf of Mexico is safe, many of his customers “want to wait a couple more years” to be sure .
Diane Poche, Glenn Poche’s wife, said she had received $30,000 from the fund — “just a little drop in the bucket of what we’ve lost” — but her claims for more had been refused, she said, her voice rising. “I sent in paperwork over two inches thick!”
In his response, Mr. Feinberg [the celebrated arbitrator hired by British Petroleum to process the claims] said that the Poches’ claim was for more than twice the annual gross income Mr. Poche had reported before the oil spill and that Mrs. Poche was listed as a housewife, not a business partner, on the family’s tax forms. Mr. Feinberg has said that thousands of claims have been rejected because of inadequate documentation.
So, here’s the possible story: Without drawing any conclusions from this brief description of the Poche family’s dispute with Mr. Feinberg, it may be that much of the economy in the Gulf—small-business shrimping and other fishing, chartering boats, waiting on tables in restaurants, small retailing—is a cash economy, in which some people may make more money than they report to the IRS.
Comparing claims about lost earnings with what people tell the tax man they earned—which could probably be done on a macro basis using government data about the Gulf economy—might be an eye-opener, as would asking people about possible differences in their claims of lost income versus their reported earnings. So would checking with the IRS to see if it ever compares claims for lost income in tort suits (which are public) with plaintiffs’ tax filings.
With that in mind, maybe Times reporter John Schwartz, who wrote this otherwise comprehensive piece, could go back to the Poches and ask them to comment on Mr. Feinberg’s response: that he found a 100 percent difference between what the Poches claim they lost and what he says they told the IRS.
2. Romney’s prior returns:
Why haven’t reporters pushed Mitt Romney to release more than his most recent two years of tax returns? Or at least asked him if he paid more or less than the combined 13.8% he reported paying for those two years when he released his 2010 return? Wouldn’t he have released returns for those earlier years if the rate had been higher? Which means that it was likely lower—perhaps much lower—for years when he wasn’t thinking about running for president and was probably making more money and taking advantage of the tax breaks available to people with his sources of income.
3. Patent wars:
It seems that every day we read another story about patent litigation threatening to upset some company’s marketing of a key product. The most ubiquitous of these stories involve patent wars being fought around the world by heavy hitters like Apple, Google, Samsung, Amazon, and Microsoft. But as this story from PaidContent illustrates, there is patent litigation surrounding almost every high-tech product we use; and, as this article highlights, the plaintiffs are now often investment firms that have been formed for the sole purpose of buying up relatively obscure patents and then suing deep pockets (in this case, AT&T, Sprint, and T-Mobile) for infringing them.
I vaguely remember from law school that you can be sued successfully for infringing a patent even if you didn’t know about it, let alone copied it. And I remember that when my partners and I sold our technology company (Press+) last year, the biggest legal hang-up in an otherwise quick and simple deal was over whether we would promise to pay the buyer’s legal fees and damages if they were ever sued, even unsuccessfully, for patent infringement. I thought that shouldn’t be a problem, because I knew how we had created what we created, but our lawyers told us we couldn’t agree to something that broad because they were so many “patent trolls” out there ready to sue anybody for almost anything, especially once a company had succeeded and developed those deep pockets.