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Samsung Group Chairman Lee Kun-hee  (Source: AP)
Nine Samsung executives indicted on tax evasion charges

Samsung Group Chairman Lee Kun-hee announced today that he would step down from his post after being indicted on tax evasion charges in Korea. Lee Kun-hee wasn’t the only Samsung executive that stepped down stemming from the tax evasion charges.

Vice Chairman Lee Hak-soo also announced his resignation, followed by Lee Kun-hee’s son and Samsung heir Lee Jae-yong. Lee Soo-bin, chairman of Samsung Life Insurance, will now represent the Samsung Group.  The Associated Press notes that it is unknown if the group chairman vacancy would be filled or remain vacant in the wake of the scandal.

The indictments for the executives came after a raid on Samsung’s corporate headquarters in January 2008.

Lee Kun-hee was indicted for evading 112.8 billion won or about $113 million USD in taxes. The investigation that ultimately resulted in the indictment stemmed from a former Samsung lawyer alleging in late 2007 that Samsung had a large slush fund that it used to bribe influential South Koreans. Charges on the bribery counts were dismissed due to lack of evidence.

Lee Kun-hee was indicted without arrest with officials saying the arrest would pose too big a risk to the South Korean economy. In total nine Samsung executives were indicted.

Lee Kun-hee said at a news conference, "I today have decided to resign from the post of chairman of Samsung Group. We, including myself, have caused troubles to the nation with the special probe. I deeply apologize for that, and I'll take full responsibility for everything, both legally and morally."

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Why?
By Polynikes on 4/22/2008 12:05:57 PM , Rating: 5
Why do ridiculously rich people feel the need to evade taxes? It's not like you're short on money. I understand they take a higher percentage of income the higher it is, but the government is pretty good about keeping track of this stuff.




RE: Why?
By vtohthree on 4/22/2008 12:16:59 PM , Rating: 3
I'd say in this case it was just money unaccounted for, for of course, the alleged slush fund. It was used to be tactical in the sense that, he evaded tax because he wasn't going to say what it was going to be used for. Otherwise he'd set an immediate red alert.

As to your question, beats me, celebs do it too, namely the recent case involving Wesley Snipes. Guess you can never have enough...or you just don't believe the government should get it's fareshare.


RE: Why?
By KristopherKubicki (blog) on 4/22/2008 12:21:33 PM , Rating: 4
quote:
I'd say in this case it was just money unaccounted for, for of course, the alleged slush fund. It was used to be tactical in the sense that, he evaded tax because he wasn't going to say what it was going to be used for. Otherwise he'd set an immediate red alert.

That's my analysis too. Rather than admit to what that fund was probably used for, just admitting to tax evasion (what money?) is the graceful bow out.

Sort of like how they busted the old gangsters for tax evasion rather than the crimes they couldn't prove.


RE: Why?
By FITCamaro on 4/22/2008 1:18:10 PM , Rating: 4
Fair share is relative. How is it fair that just because you're successful, you have to pay a significantly higher percentage than someone who isn't? I mean we're taught that a rich person isn't any better than a poor person. Yet we act like rich people are somehow more responsible with supporting the country than a poor person.

Taking 40% of a persons income because we've decided they can afford it is hardly fair. 50% of people in the US pay 97% of the income taxes(http://money.cnn.com/2008/03/31/news/economy/tax_d... How is that fair? So basically we have pretty much half the country now either not paying any taxes or actually getting more back than they pay. I don't know about you, but thats downright unfair to me. Especially considering that the nearly 50% that don't pay any taxes or get more back than they pay, are the ones who are likely to be drawing from social welfare programs that are funded by.......tax dollars!


RE: Why?
By Connoisseur on 4/22/2008 1:42:19 PM , Rating: 3
Agree with you 100%. Back in the days when I had summer jobs in HS/College i didn't pay taxes so all the money went into my pocket. Now that i'm actually doing all my own taxes and my income is significantly higher, i've realized how much the government is actually me for cash and how much of it i'll never benefit from myself. To add insult to injury they have capital gains tax... they actually tax you for making money with cash you've already paid taxes on... makes perfect sense.

My boss put it perfectly. Rather than automatically deducting taxes from your paycheck before you even get the money, the government should let you get the money up front but force you to write a check every two weeks equal to the tax amount. That way, most people (especially those in middle to upper incomes) will realize how much they're getting reamed.

Sorry to rant, but it really annoys me when people whine that rich people should pay more just because they have more money. That's borderline communism.


RE: Why?
By FITCamaro on 4/22/2008 2:19:18 PM , Rating: 2
quote:
Rather than automatically deducting taxes from your paycheck before you even get the money, the government should let you get the money up front but force you to write a check every two weeks equal to the tax amount


You can already do this if you wish.


RE: Why?
By FITCamaro on 4/22/2008 2:25:14 PM , Rating: 2
Besides I don't need to do that to realize I'm getting screwed. I just look at the amount going into my bank account vs. the amount my gross pay was. And it's f*ing depressing.


RE: Why?
By FITCamaro on 4/22/2008 2:28:44 PM , Rating: 2
As far as the capitol gains tax, the Democrats are talking about raising it. Regardless of the fact that in the past, every time the capitol gains tax has gone up, they've collected less in taxes than when it was lower. And every time its gone down, they collected more in taxes than when it was higher.

What's that spell? Lower taxes = higher tax revenues.

And nevermind that both Democratic presidential candidates paid a lower percentage of their income to taxes in 2007 than I did.


RE: Why?
By Connoisseur on 4/22/2008 4:29:00 PM , Rating: 2
I'm curious. How do they manage that? Does it have to do with contributing to their own campaigns? How do the wealthy (smart wealthy) avoid taxes and how can the average person take advantage of the same process?

Sounds like an infomercial but I'm damn pissed seeing something like 33-35% of my money going to taxes, social security, and insurance when (except for medical insurance) I'll most likely never see a dime of it put to my own personal use.


RE: Why?
By FITCamaro on 4/22/2008 4:35:57 PM , Rating: 3
Some of it is because they get deductions from contributing to charities. The rest of it is from tax loopholes.

John Kerry made far more in 2004 than Bush. But he paid less in taxes than Bush did.


RE: Why?
By maverick85wd on 4/22/2008 5:03:45 PM , Rating: 2
quote:
I'll most likely never see a dime of it put to my own personal use.


enter the military, the most inefficient beast the world has ever seen. I'm not at all saying it's not necessary, I'm just saying they need to get people that better understand how to spend money... like on equipment we need and not paying civilian contractors a hundred grand to put flowers around a base every year. Makes me sick.


RE: Why?
By nolisi on 4/22/2008 4:03:39 PM , Rating: 2
It's because the United States has the most unequal distribution of wealth of any other nation, period. The richest usually are making money based on the work of many others under their employ. In Making Globalization Work , Stiglitz says that the disparity of pay of senior management can be several hundred times that of regular workers. Japan, in comparison, the disparity is only 10x at most.

Further, Senior Management up the Executive level get all sorts of benefits from the company, better stock options, expense accounts, larger vacation allotments, better health care, complete retirement packages, and can negotiate other company paid perks too, such as transportation and even housing in some cases. This allows them to supplement their incomes tax free while the company bears the burden, and subsequently, the employees.

If ordinary workers got these kinds of perks, then I might agree with your stance. Also if more of these people were independently wealthy, and their own work alone translated into their wealth, then I might agree. At many companies, you're lucky if you get a bus pass as a regular employee.

And guess what, if the people who controlled that wealth started to move some of it to the ordinary workers they would probably see a smaller tax burden at the upper income level, because the bottom end would start paying the higher tax rates. Funny how that might work.

So I'm sorry, given these facts, my opinion is that the rich are still paying too little.

And I challenge you to show me any substantial percentage of the American population who get more back than they put in. You'll find that its mostly the unemployed, and that number is small to begin with. And even still, taxes can be paid on unemployment benefits. Percentage wise, they may get more- but this "more" that they get is only really an idea. They're not living better than the executive.


RE: Why?
By nolisi on 4/22/2008 4:14:01 PM , Rating: 2
Oh, and in case I didn't make this point clear- these people at the upper level are benefitting from the work of everyone below them. In some cases, a VP can have hundreds to thousands of people doing work that he's benefitting from. If a VP did work proportional to the work from which they benefit, again, I might agree with you. But I dare you to show me any executive of a company who makes money proportional to the value he actually brings to the company.

This debate really depends on how much value you put on the work of the executive level. But when you look at industries like the software industry- it's painfully obvious that the programmer is smarter and works harder than a VP or CEO. It's not that difficult to make sound business decisions and have others meet deadlines.


RE: Why?
By FITCamaro on 4/22/2008 4:39:44 PM , Rating: 2
I won't deny that executive level salaries are out of control in this country. But those people are the minority. And if you read that article I linked to, the top 1% of America's earners pay 40% of the taxes. So roughly 3 million people pay around $400 billion in taxes. I'd say that's plenty.


RE: Why?
By rsmech on 4/22/2008 7:52:34 PM , Rating: 2
quote:
This allows them to supplement their incomes tax free while the company bears the burden, and subsequently, the employees.


How do the employees bear the burden, they have a job. If you are jealous of your boss try starting a company yourself and see how much work it takes to survive. So yes if my business ever survives you better believe I'll take every perk I sacrificed for. It isn't the employees & i certainly isn't the gov'ts to take more of.

quote:
If ordinary workers got these kinds of perks

Then the person sitting next to you wouldn't have a job & it would be your fault, not the employers.

quote:
Also if more of these people were independently wealthy, and their own work alone translated into their wealth, then I might agree.

If I were one of these so called wealthy I'd take my ball and go home. Where would you be than, no ball (job). You act as if your job spontaneously appeared. If it is so horrible start a company & overpay EVERYONE. Let me know how it works.


RE: Why?
By Omega215D on 4/23/2008 3:20:36 AM , Rating: 1
Just something I've seen elsewhere:

One myth that people keep repeating is that the wealthy don't pay tax.

And it would be a myth if it weren't true...

http://www.nytimes.com/2005/07/03/business/03tax.h... [nytimes.com]

"About one in every 436 high-income Americans paid no taxes in 2002, up from one in 531 in 2001 and one in 1,010 in 2000."

the fact is this is total bullshit, the top 1% in america pay almost 50% of the tax

Actually, its the two 2% paying 53% (which is also in the cite I provided). But close enough.

The trouble however, is that a middle class american pays 30-35% in taxes, while a high-income american pays, on average only 18%.

So sure, if you make 146M bucks, yeah, your paying $26M in taxes. But if you take 1460 families that each make $100,000, that's the same 146 million in aggregate, but they each pay ~33k in taxes on average,... or 48M in aggregate.

Why do they pay 48M when you only pay 26M?

The high-income earners have considerable income from 'investments' not just 'wage/salary' which is taxed differently and wage income has far fewer loopholes and options than investment income, and there are countless more ways to leverage your money too the more you've got to shuffle around to maximize tax savings.

They're more likely to be 'self employed' at least with respect to some investment or other and suddenly that trip to the bahamas is a tax deductible 'annual meeting' instead of a 'vacation', and the twice yearly jaunts to Mexico? Tax deductable trips to inspect their investment rental properties....

Their car? Tax deductible lease payments, maintenance, and fuel... Their mortgage? Bah, who are we kidding they don't have a mortgage, but they do have a HELOC to buy even more investments, and the interest on the HELOC? Because its being used to buy goverment approved investments...you guessed it... tax deductible. The tax savings more than offset the interest, meanwhile the investments themselves can make money too.

The wealthy pay more taxes than the middle in total, but its the ones in the middle who see the largest chunk of each dollar bitten off by the IRS never to be seen again.


RE: Why?
By FITCamaro on 4/23/2008 8:50:24 AM , Rating: 2
I agree with you. That's why whenever I see Democrats trying to raise taxes, I get upset. Because its the middle income earners who get hit the hardest. Not the rich. You might say "You make $100,000 a year, you have plenty of money." Who are you to say that? Sure thats a lot to a single person but for a family of 5, thats enough to pay the bills, put food on the table, clothe yourself, and maybe take a vacation.


RE: Why?
By Omega215D on 4/25/2008 4:00:04 AM , Rating: 2
Does someone here got one stuck in his/ her arse? I just thought I'd share something that I thought was interesting and someone just thinks I'm not worth reading?


RE: Why?
By P4blo on 4/24/2008 11:14:53 AM , Rating: 2
In this whole fairness deal you're missing something though and this seems to be a theme in American politics when it comes to stuff like healthcare and fairness to the 'have nots'.

Not everyone can be a 'have'. Simple as that. There are only so many millionaires any economy can support. Only so many high paid jobs etc. The reason most countries have a sliding tax scale is because if we didn't the rich would become even more rich and the gap to the poor widen even further. It's not necessarily to cream as much off top earners as poss. The 40% tax bracket becomes like a ceiling to many companies. Other than execs and top staff the majority are going to get put under the 40% bracket. Otherwise the company will be throwing too much money at the tax man.

So it literally sets the income bands for many countries.

The other thing is the gene pool. What you're born with is a lottery in many respects. For every clever and able person there will be someone who is less capable and less able. That's an inescapable fact about human biology. Perfection doesn't exist and it never will. Now rewind your life to just before your birth and replay it with your 'lot in life' being a crappy hand. Something like a 7 high.

Then how would you feel about the clever, capable people getting it all their way? That's what a fair society is, one were the basics are considered. We cant all be brilliant.


RE: Why?
By onwisconsin on 4/22/2008 1:01:48 PM , Rating: 2
quote:
Why do ridiculously rich people feel the need to evade taxes?


Either:
a) Human nature of greed and drive to profit (eg the rich want to get richer)
b) Because they can
or c) all of the above


RE: Why?
By omnicronx on 4/22/2008 1:15:37 PM , Rating: 2
quote:
Why do ridiculously rich people feel the need to evade taxes?
You don't get rich playing by the rules =D


RE: Why?
By FITCamaro on 4/22/2008 1:39:08 PM , Rating: 2
Sure you can. You just probably can't be a nice guy while following the rules. One of the hottest markets to make money is real estate. Especially now. You can buy someone's foreclosed home for very little and sell it for a lot more. Following the rules? Yes. Makes you a good person? No. You profited on someone else's misfortune (even if that misfortune was their own damn fault).


RE: Why?
By Bioniccrackmonk on 4/22/2008 3:10:10 PM , Rating: 2
Baer Sterns anyone?


You're guilty, but please, keep the money
By Baked on 4/22/2008 12:04:10 PM , Rating: 2
cliff of his apology:

Suck it, you can't touch me, I quit.




RE: You're guilty, but please, keep the money
By vtohthree on 4/22/2008 12:11:17 PM , Rating: 5
Actually I take it as good sportsmanship, yes what he did was wrong, but he admitted to it and apologized. Rather nobel of him if you ask me, shows class to take responsibility for your own actions.

Unlike other CEO's we have here, IE: Enron, Tyco("oh, I didn't know it was wrong") They denied wrong doing or tried to shift blame to others in circles.

So I commend his actions and attitude compared to other CEO's, "I'm responsible...for everything...my apologies." Big conscience to take on that kind of charge. If you read the other headlines and press releases from yesterday, you'll get a better picture. He's stepping down and has stated big changes for Samsung, with new commitments.


By KristopherKubicki (blog) on 4/22/2008 12:18:21 PM , Rating: 2
quote:
Rather nobel of him if you ask me, shows class to take responsibility for your own actions.

Nobel would be not stealing from a country when you're already part of the corporate aristocracy -- but that's just me :)


RE: You're guilty, but please, keep the money
By vtohthree on 4/22/2008 2:21:36 PM , Rating: 2
quote:
Nobel would be not stealing from a country when you're already part of the corporate aristocracy -- but that's just me :)<quote\>

I totally agree with you, =](in my initial post):

"yes what he did was wrong"

What he did was very unjust and wrong. However I do give him some credit for admitting and apologizing, you don't see that very often in people these days, especially people with power.

This is quoted from him(Lee),

``I will assume full legal and moral responsibility.''

as well as him saying "truly sorry" a bunch of times. Again, what he did was wrong, but his response compared to other CEO's in similar situations(alluding to Tyco and Enron, among others) was of a more commendable(again, not saying he's a good guy) attitude.


By KristopherKubicki (blog) on 4/22/2008 3:25:00 PM , Rating: 2
Very true.


Maybe I dont think globally but..
By zombiexl on 4/22/2008 1:02:57 PM , Rating: 2
Is every one at samsung named Lee? Cant imagine trying to get someone's attention.
:)




RE: Maybe I dont think globally but..
By KristopherKubicki (blog) on 4/22/2008 1:17:03 PM , Rating: 2
Lee is their last name.


RE: Maybe I dont think globally but..
By exno on 4/22/2008 1:55:30 PM , Rating: 2
yes. one of most common one...


By Yongsta on 4/22/2008 1:59:53 PM , Rating: 2
Samsung is basically a family business and their last name is Lee. Lee & Kim are the most common last names.


the unaccounted money.
By exno on 4/22/2008 1:08:17 PM , Rating: 3
quote:
I'd say in this case it was just money unaccounted for, for of course, the alleged slush fund. It was used to be tactical in the sense that, he evaded tax because he wasn't going to say what it was going to be used for. Otherwise he'd set an immediate red alert.


After the announcement, unaccounted money found were donated to social services. for that, I feel greatful about him even though he did thing wrong at first place. unlike most CEOs here.




"When an individual makes a copy of a song for himself, I suppose we can say he stole a song." -- Sony BMG attorney Jennifer Pariser











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