The quiet force of Frontline II


By G.W. Schulz

I mentioned yesterday that I’d been downloading older episodes of Frontline from the PBS Web site. The show has three major new episodes coming out next month. But yesterday I didn’t get a chance to summarize what I felt were some of the better pieces they’d done over the last few years that contained some cool local angles.

On Sunday night I went back and watched 2004’s “Tax Me if You Can,” which appears to have been inspired at least in part by David Cay Johston’s spectacular tax-beat reporting for The New York Times. Johnston made popular what was long considered a dreadful area of government to cover as a Times reporter – the IRS. We localized some of his more recent reporting for the Times on big IRS layoffs and the estate tax a while back.

Frontline opens its show on tax cheats by focusing on one popular corporate tax-avoidance scheme that’s been around for nearly 30 years: li-los, or “lease-in, lease-outs.” Major corporate banks like North Carolina-based First Union will approach a small foreign town and say the following: “Hello, small town in Germany. We’d like to make you a deal. We understand you own a train system. We’d like you to lease that train system to us, but only on paper. We’re not actually going to touch it. But we’re going to tell the IRS that we own it. That way, we can get tax credits for our ‘depreciated assets.’ What does ‘depreciated assets’ mean, oh little town in Germany? That means for every year our stuff ages – our trains, our offices, our auto fleet – we’re going to ask for a tax break from the IRS. We’ll pay you $20 million to ‘lease’ your train system, but we’ll get to write off millions of more dollars in taxes meaning you get some new revenue and we get to post big profits in the form of tax breaks.”

Now for the local angle: The same thing happened right here in San Francisco during an attempt a few years ago to generate new revenue for the city. Matt Smith at the Weekly deserves the credit for breaking this meaty story back in 2002 when he disclosed that MUNI had sold one of these “lease-back” agreements to a group of private investors.

Elsewhere, Frontline has nailed a lot of stories covering the war on terror including Cheney’s power inside the Bush White House, private contractors in Iraq, the man who knew about 9/11 (produced well before ABC put together their recent controversial miniseries “The Path to 9/11”), run amok drug companies, unbridled corporate greed, the Iraq insurgency, and one of my personal favorites, predatory marketing consultants.

That last episode I listed, 2001’s “The Merchants of Cool,” is an incredibly insightful look at how corporate marketing and advertising firms price tag abstract concepts like “rebellion” and sell them to young people eager to feel like they're a part of something. (We’re all aware of how corporations target youth with their products, but Frontline does an exceptional job explaining exactly how far MTV is willing to go to climb inside the minds of teenagers.)

Frontline has deftly covered several subjects long before some of Hollywood’s more popular documentary filmmakers caught up to the issues. But they just don’t seem to have the publicity machine possessed by someone like Robert Greenwald.

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