NORMAN OK (September 26, 2008) - OK's secret state income tax avoidance scheme, for the wealthy and corporations!

Nick Baker
Fax: 214-572-7260
Contact Email: nite@prowlingowl.com

The same issues behind the national financial crisis has created a looming crisis in Oklahoma by secretly eliminating state income tax for the wealthy and corporation. Which is just now starting to show up. Back around June, state finance officials quietly revised their estimate for FY2008 corporate income taxes for FY 2008 down from previous estimates of $450 million to less than $284 million, and even less for 2009. Essentially, cut in half!

These huge revenue cuts are a direct result of Oklahoma's flawed economic development program which has only created one new industry, capital companies (CAPCOs). CAPCOs serve no value other than to launder money for the wealthy and corporations to obtain tax credits and avoid paying state income taxes. In the process CAPCOs reap their own sinful profits by taking 7 to 10 times the tax credit stated in the law. These they sell to other wealthy and corporations for cash. Example, a company claiming to invest $10 million in new business can cost the public $20 million. Mostly going to CAPCO profits. See a partial list of CAPCOs below.

These CAPCOs forced upon the public, by law that requires - investors to invest through a CAPCOs to receive tax credits. Then the CAPCOs invest in the new business. The law also requires all information about this program be withheld from the public. Thus, allowing state officials to own part of a CAPCO and hide their identity while profiting at the public expense. The law is so replete with different loopholes is allows a variety of schemes.

One scheme is where a CAPCO does some financial shell gaming and loophole magic to take tax credits worth as much as 700 to 1000% of the 20 to 30% stated in the law. Resulting in the CAPCO receiving as much as twice the actual investment. Enough to fund the entire investment give the investors all their money back, plus share a 100% profit. Extra tax credits can be sold for cash to anyone needing to reduce state income taxes.

Another variation allows taking tax credits with an investment only on paper. In this case the so called investors' simple cycle money, through the CAPCO, back to themselves. This can be done by setting up LLCs (to hide who is involved). The investors' move money to the LLC then on to the CAPCO where the money is laundered to obtain the tax credits the same as above. In this case the original amount keeps flowing until it returns to the original source, either individual investors or a company.

So far this scheme has diverted potentially billions of future tax revenue into private pockets with nothing in return. The remaining middle and lower income taxpayers will have to make up.

This program operates in total secrecy without oversight or accountability, and no means to limit how much CAPCOs take.

We have learned of at least 12 CAPCOs. All LLCs. Three we have discussed include Altus Ventures (owned by First State Bank Altus); REI New Markets Investment (owned by Rural Enterprises of Oklahoma, Inc.) and MetaMarkets OK (whose hidden owner is MetaFund)

Visit our blog to leave your comments at Clubcrony.com