Life as a Spectator Sport

No, just sex, lies and more lies.

I've haven't commented on political issues in a while. I get so angry I want to throw something when I even think about the lies we've been told, and the ones we're being told, much less try to write about them. But the whackjob being performed on Senate Minority Leader Harry Reid is so blatant that I can't keep quiet about it.

According to an AP article by John Solomon, Reid violated Senate ethics rules by not disclosing his sale of land to another person, and then later collecting a large "windfall" profit.

WASHINGTON - Senate Democratic leader Harry Reid collected a $1.1 million windfall on a Las Vegas land sale even though he hadn't personally owned the property for three years, property deeds show.

Not true. Harry Reid paid $400,000 for the property, so his profit was not $1.1 million, but $700,000. Not a bad profit, to be sure, but it isn't against the law to sell something for more than you paid for it. Secondly, that phrase "he hadn't personally owned the property . . . " is deliberately misleading. No, he didn't personally own the property any more at the time it was sold. He and his partner had set up a limited liability corporation and transferred each man's share of the property to the corporation.

The important point here is that for legal and tax purposes, a multi-shareholder LLC is treated just like a partnership. So nothing about the tax liability or the transparency of ownership changed when the LLC was formed. Reid and his partner owned exactly the same share of the property (approximately 75 percent for Reid and 25 percent for his partner) as before and owed the same taxes on it.

The article goes on to say:

_In 2001, Reid sold the land for the same price to a limited liability corporation created by [Jay] Brown. The senator didn't disclose the sale on his annual public ethics report or tell Congress he had any stake in Brown's company. He continued to report to Congress that he personally owned the land.

More lies. Reid didn't sell the land. He and his partner transferred the land to the LLC in exactly the same percentage of ownership as they had held separately. No money changed hands, and there was no change in the amount of property that Reid owned. Moreover, it was not Brown's company. If anything, it was more Reid's company than Brown's, because he held three times greater a share of the assets than Brown.

The only difference between Reid's ownership before the LLC was set up, and after it was set up, is that instead of wholly owning one plot, and partially owning another, he now owned an equal percentage of the combined property. Anyone who has ever owned multiple small plots of land will tell you that it's far easier to manage ownership, and perhaps eventual sale, of that property if you aren't coping with mutiple tax payments and surveys and deeds. Reid and his partner made the logical decision that it was to their benefit to combine the separate properties into one piece that was owned by one entity in which they had the same percentage of ownership that they had previously held separately.

_After getting local officials to rezone the property for a shopping center, Brown's company sold the land in 2004 to other developers and Reid took $1.1 million of the proceeds, nearly tripling the senator's investment. Reid reported it to Congress as a personal land sale.

More lies again. The corporation was NOT Brown's company. It was a multi-owner LLC in which Reid was the primary shareholder. Reid reported the sale to Congress, as he was required to do. Failing to specify that the land had been transferred to an LLC before the sale made no difference whatsoever to the amount of tax he had to pay on the profits, or to any other legal technicality. He owned 75 percent of a piece of land, he reported the sale of the land, and he paid the taxes on his profit from the sale.

The wording of the article suggests that there might have been some impropriety in the rezoning. But much farther along, buried in a lengthy and obscure section about the details of government land transfers, the article admits that such rezoning decisions were "common at the time." Many readers will never get far enough to see that.

The complex dealings allowed Reid to transfer ownership, legal liability and some tax consequences to Brown's company without public knowledge, but still collect a seven-figure payoff nearly three years later.

Does no editor at AP read this stuff before they publish it? Nothing about the deal was complex. It was a simple transfer of land from two individuals to a limited liability corporation in which they had the same percentage of ownership as the land they had owned separately. It was not Brown's company; it was Reid's and Brown's company, with Reid being by far the major partner.

Certainly there were changes in legal liability. That's the whole point of forming a corporation.

Yes, there were some tax consequences (that's an interesting phrase, by the way--it suggests all kinds of possible malfeasance while it specifies exactly nothing). The tax consequences were that instead of Reid having to pay all the property tax on one piece of land, and a portion of the property tax on another piece of land, he now had to pay 75 percent of the combined property tax owed by the LLC. Same property, same amount of money, and the article makes it clear that both Reid and Brown continued to pay each man's share of the taxes with personal checks, as though they still owned the land separately. Doing it that way was perfectly legal, and it meant they didn't have to set up a bank account for the LLC, pay their share of the taxes into that account, and then write a corporation check for the total. Keeping the bookkeeping simple has never been against the law.

Finally, the article implies some shady dealings on the part of Jay Brown. But only a thorough muckraker could make it sound improper that Brown donated to "Democrats, Republicans and charities." AP should be ashamed of letting something like this be published under the guise of "journalism," and John Solomon should be out looking for an ad copywriter's job. That's where this kind of manipulative, misleading and emotionally charged writing belongs, not in a supposedly factual news column.

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