I recall reading that the Helmsley's paid over $500 million in taxes during the year in question, and that the dispute was over a couple of hundred thousand in deductions.
Very good point and absolutely correct. This is exactly why so many wealthy people are leaving the US for more wealth friendly climates. Countries like Bermuda and Cayman Islands are drawing our corporations, while countries like Belize, Panama and Ireland are drawing wealthy individuals. As the Helmsleys found out, if you are a US citizen, even your legally earned wealth is not safe from the US government. Furthermore, it wasn't even the couple of hundred thousand in deductions that they were after. They just needed a poster child for their latest scare campaign and the Helmsleys happened to hold the short straw.
With our lawmakers writing increasingly wealth punitive laws, is it any wonder that wealth is leaving this country at such an alarming rate? And, when the citizens and companies are not leaving on their own, foreign companies are coming in and buying up distressed US companies at bargain basement prices. Most people don't have any idea how many traditional US companies are now owned by foreign corporations or how many more are close to being absorbed by their foreign competition. But, a lot of former employees of those companies are all too aware of it. That's because, when a foreign company buys a US company, two things happen. 1) A good portion of the US jobs are sent overseas and 2) A good portion of the profits of the US company is shipped overseas.
Every time the IRS targets someone like the Helmsleys, to use as a poster child, it has exactly opposite the desired effect. They want to scare citizens into obediently bending over for them. But, what happens is that they scare more wealthy Americans into leaving, thus reducing the tax base and investment base in this country. Then, they have to raise taxes on the rest of us, just to stay even.
Take a look at the US government's official quarterly lists of expatriates. The US government has been keeping those lists since 1996. There is no reason for those lists, other than a vain attempt to scare Americans into staying. As you scan those lists, keep in mind that less than one in ten expats ever takes the formal step of renouncing their citizenship. After all, when you flee a tyrant, why would you tell him where you are going?
More and more wealthy Americans are being forced to leave, rather than risk becoming the next poster child for yet another IRS scare campaign.