Transcript: Need to Know Rochester for July 2, 2010
By jparker ~ Posted Tue, 07/13/2010 - 4:00pm
Coming up on Need to Know Rochester. Rochester's Pulitzer Prize-Winning Reporter David Cay Johnston is gaining national attention for a report on how big oil is using a tax loophole to dig deeper into your pocket. Also, she's an East Rochester native who's coming home for Nazareth College's Dance Festival, where she and her extreme action heroes will premiere a new show. And, who will be the next leader of the Rochester Philharmonic Orchestra?
(ANNCR) Rochester's news magazine since 1997. This is Need To Know Rochester.
Thanks for joining me on this holiday weekend, I'm Julie Philipp. We begin with David Cay Johnston, currently living in Brighton, lecturing at Syracuse University, and working on a variety of projects. This former New York Times tax reporter recently uncovered a tax loophole that he says ius unfairly lining the pockets of some of the richest people in the country. He wrote about this on Tax.com and he stopped by our studios to explain.
(Julie) This is pretty complex, so I want you to walk us through it one step at a time, starting with the oil and natural gas companies.
(David Cay Johnston) Well, people who drill for oil and natural gas have to get it to your local gas station, or your kitchen stove and they move oil and gas through pipelines. Pipelines are monopolies and their prices are regulated by the government. The government has always included the cost of the corporate income tax on pipelines profits, its one of the things you have to pay for. Now you don't see that bill, but when you pay for gasoline, when your fill your tank, or your utility bill, its built in.
(Julie) So the gas companies are getting charged a corporate tax on the pipeline, and they're passing that on to consumers.
(DCJ) That's exactly right.
(Julie) That sounds reasonable. Now what?
(DCJ) Well, this was based on the fact that their is a two-tax system in America. Corporate profits are taxed, and then the owners of the corporation are taxed on the money they take from the companies. The pipelines, since 1986, have mostly been reorganized as partnerships; corporations pay corporate income taxes, partnerships do not. So instead of having two tiers of tax, you have one tier.
(Julie) So they're just paying now, the tax on their income that they get.
(DCJ) From the business.
(DCJ) And the business itself is not taxed. But the Federal Energy Regulatory Commission, in 2007, decided to include this tax in the rates pipelines charge. The result is, the owners of the pipelines, for every dollar they used to collect, now collect as much as a dollar and 75 cents, after taxes. They get a 75% boost in their income.
(Julie) Ok, so the customer, the consumer is taking, is absorbing the cost of the two taxes, but the pipeline is only paying one of those taxes.
(DCJ) But there is only one tax being paid and that makes the owner's profits, or the money they put in their pockets after tax, go up as much as 75%.
(Julie) So in essence, you and I are paying their tax.
(DCJ) We're paying the personal taxes of the pipeline owners, instead of seeing rates reduced, and the math is, 75% increase, that's quite stunning.
(Julie) Yeah, lets put that into context. How many pipelines are out there doing this, and whats it costing regular people like you and me?
(DCJ) Well, first of all, I think this is amazing. The Federal Energy Regulatory Commission could not tell me how many pipelines are doing this and how much money is involved. They don't even analyze their own data, they rely on a private newsletters to do it for them. Secondly, how much does it cost you and me? Well, it looks like, from my calculations, about 3 cents per person, per day. That's not a lot of money, you'd never notice, except if you're the receipients of this, that's about 3 billion dollars a year, that is a lot of money to the people who are having their taxes paid by you and me. That's 3 billion dollars out of your and mine and everybody watching this show's pockets to the people who own these pipelines.
(Julie) Why does the government let them get away with this?
(DCJ) Well, I think that's one of the great fascinating questions here. With all the rhetoric about taxes and all the problems with taxes, I sent a copy of this to all the leading republicans and democrats on tax issues, not a word from anybody about this. And yet this is a clear example where you and I are paying the burden of someone else, and generally it means someone who is dramatically richer than you and I are.
(Julie) Is it the influence of lobbyists, is it that its too complex of an issue to handle, is that its not sexy when you're campaigning, is it 'its just three cents?' What is.....?
(DCJ) Well, part of it is that its an agency that almost no one covers. I mean, whens the last time you did a story abuot the Federal Energy Regulatory Commission, its this little tiny agency with enourmous power over the economy, that almost never makes the news. And secondly, it is very complex, and its done at the pipeline level. Here's the danger however: Congress would have to do less than add one sentence to the tax code to apply this principal to electric utilities, gas utilities, telephone companies, cable tv systems, and now you're talking every family in America paying hundreds of billions of dollars, Americans all over overall, hundreds of billions of dollars a year to those companies to cover the taxes of the people who own them.
(Julie) Your concern then, this is, this could be the tip of the iceberg if this practice is not stopped at this level?
(DCJ) I think it needs to be stopped and I think it needs to be reversed. You know, originally, this issue was brought to three federal judges, six years ago. And they said, no way, you can't do this. So the Federal Energy Regulatory Commission in 2005, decided to review the issue, and they did it outside of normal regulatory law, they did something they called a policy statement. What that meant was, they could meet privately, since there was no litigation, no regulatory case, with the lobbyists of the pipeline companies, and they did. And then they did what the pipeline companies wanted. And the case came back to these judges, and what did they say? 'Oh well, now that you've explained your reasoning for doing this, we're gonna let you do it.' That's nonsense. There is a concept called just and reasonable. Prices to consumers should be just and reasonable, and the return of the owner should be just and reasonable. What could be just and reasonable about you and I paying the personal income taxes of pipeline owners, as opposed to the taxes of the pipeline company.
(Julie) On the flip side, is this a good time for investors, looking for something to invest in, to go look for these master limited partnerships?
(DCJ) Well, Barrens and Forbes and other publications like that have been touting these master limited partnerships because they pay out 8 to 10 percent a year. So if you bought a $1,000 unit, you'd get back 80 to 100 dollars a year. And when banks are paying virtually no interest, that sounds like a great deal, the problem is, they're not giving you a return on your capital, they're giving you a return of your capital. Down the road, I have reasons to believe that they're going to bankrupt a bunch of these pipelines, the parent companies. They would continue to run them, they'd be whats called a debtor-in-possession, and people who invested in this would get wiped out. And the reason is that, for every dollar these companies are taking in to improve and maintain the pipelines in capital, they're paying out ten dollars. They're stripping these things of their assets, and I think this will prove in another, three, five, ten years to have been another Wall Street game to fleece un-wary investors.
(Julie) So you can'twin either way?
(DCJ) I don't think so, unless we go back to the sound principals of regulation that we had for about 70 years in this country.
(Julie) What kind of buzz are you getting from this report that was in Tax.com?
(DCJ) Well, at first, it didn't get any reaction at all, and I was a little surprised, but it is a complicated issue, but its now been picked up by a number of places, from the Huffington Post to various blogs that follow this, and people are beginning to look at this issue. The important matter will be, will either the anti-tax republicans or the tax reform democrats take up this issue? It will be interesting to see, given the enormous influence that the oil and gas industry has in Washington, and let me just give you one hint of how influencial they are. If you have two equally profitable companies, but one's an independent oil and gas company, and one is in any other business, for every dollar you as an investor will earn, if you own the company in a regular business, in oil and gas business, the subsidies will bring you a dollar and forty cents. The whole oil and gas industry is based on taxpayer subsidies.
(Julie) So there's a lot more for you to cover out there.
(DCJ) Oh yeah! There's a lot more and I'll keep digging.
(Julie) Thank you so much for coming in today.
Its the first Friday of the month and that means Arts Friday at WXXI. A double feature today, we begin with a woman named Elizabeth Streb. She grew up in East Rochester and studied dance at the State University of New York at Brockport. Now she's got her own progressive dance company called, Streb Extreme Action, the name says it all. Don't expect too many point shoes or pleaes. WXXI's Zach Seward spent some time at her studio in Brooklyn, and filed this report.
(Elizabeth Streb) For me, I'm questioning all the time, and I have not come to a conclusion yet, what is the content of motion? I want to understand, I think we have call more cues. Every move has to be called. Maybe you have to say, its not good enough to say, how many are you doing, because you go faster, that movement, what I really want is for the movement to go.....
(Elizabeth) The only way we can access what I feel is truly the complexity of space, and therefore time, and the generation of forces, is to build action gizmos. They have hardware.
All of the things about our hardware, all of the notions imbedded in what piece of equipment we invent next, has everything to do with places we haven't been to yet. And that's our job.
People like go, well Streb's not dance cause she has all that hardware, and what's she doing and anyway, I'm saying the harshest critics say that. But for me, the music industry started really early on deciding that the human voice is not suffucient to express all that they wanted to express, so they made a harpsicord or they made a flute, or they have a series of string instruments. That's exactly what I think Streb does. I need to get higher, I need to go faster, I need to deal with what it is to turn and what that means.
So is what we do just a question of physics? Of space, time, mass and gravity? Or more state of mind? Of will, pain, and nerves? What does it mean to take a hit? What are all of our physical limits how much can are bodies take and what can literaly make are hearts skip a beat.
(Elizabeth) To do some of these movements and be willing to defy gravity, you have to have a certain state of mind. and a certain level of curiousity. And deffinately you can not be to concerned of your well being. You have to agree to walk into the room and get a little hurt.
(V.O) I describe Elizabeth Streb as a fantastic artsit and some kind of mas scientist. Who is working great to create something completely new.
(Elizabeth) In 1976 I picked up a bunch of sticks and started to do dances with sticks and ropes and I made a big hill that I ran up and down after a half an hour. Right away I wanted to creat a utilitarean vocabulary. And it came from me believing that it had to be collosal and that I needed to do something besides whip my arms and legs around.
For those of you in the first row that have been supplied with the proper head gear please put it on now.
(Elizabeth) And I started to ask what was my civic duty.
(Elizabeth) If this can't bleed into the general public into the the United states well then I am not specifically happy at what the elitist arts are like in the United States I am much more interested in the ground swell movement. Even this is a micro spot. The cube is 100 by 30 by 50. But I believe it is the right size for the cause and effect in a ten block area.....
...I think it is a single second where a child is sitting there watching someone fly. They have seen what this is about and they want to provoke it in their own bodies. And maybe adults should take that on a little themselves.
(Julie) Elizabeth Streb returns to Rochester for Nazerath Colleges upcoming dance festival you can find more about that festival at our website www.wxxi.org. Finnally tonight top restauraunts have celebrity chefs baseball teams have star pitchers and Orchestra's have music directors more than anyone else the music director shapes the present and future of a cities Orchestra. When the Rochester Philharmonic musical director Christopher Semen announced he will be leaving at the end of next season the Orchestra began a search for a new leader. How is that search going Wxxi's Brenda Tremblay interviews the head of the RPO Charles Owens.
(Brenda) How is the Rochester Philharmonic ever going to replace Christopher Semen?
(Charles) Well that's a great question I have heard it and answered it hundreds of times myself. And the fact is we will never replace him exactly. You know I said to our board I said to our church commitee were not looking for a clone of Christopher Semen or Christopher the second. What were looking on or looking for someone to build on the great artistic legacy that he has left here. After ultamately 13 seasons as the longest serving musical director of the RPO.
(Brenda) How is the search process going?
(Charles) I have to say its going extremely well, we have just completed are first full year of the formal process, we had indications several years ago that Christopher might be thinking of moving in some point in the future. So we had begun very quietly to lining up perspective candidates over the last three seasons. And as we sit here in the summer of 2010 there is a high probability that we will make a decision by the end of the calender if not sooner.
(Brenda) Who is making that decision, who is on the commitee?
(Charles) We put together an elevn person search committe. Composed of five muscians of the RPO. Are board chair Suzan Welch and myself. Jeff Tiezig are principal pop conductor. And Christian Tiagnorishon are director of artistic operations. As well as Doug Lowery the dean of the Eastman school.
(Brenda) And why, well this might seem like an obvious question but why is it so important who is the new musical director of the Rochester Philharmonic Orchestra why do you get eleven people to invest in that decision.
(Charles) Well in our bussiness the musical director is the public face of the institution well atleast for our classical programming. But it is reall that person too shape the sound and the artistic vision of this organization. Really the whole direction of the RPO in its next era so its, as I often say were not hiring a principal conductor were hiring a music director and all that brings with it is not only rehearsals and performances but in an all important role as an ambassodoral in our community.
(Brenda) What kind of person are you looking for>
(Charles) Well let me tell you a little about the process so this is not juast Charlie Owens for you, this is really an institution wide process. So we began with the musicians there was a full meeting with the orchestra where they gave a lot of thought to the attributes that they would like to see in their next leader. And we had a similar process to derive input from the board and staff of the RPO. The beauty of that process is that the attributes aligned perfectly. Not only what those attributes were but in the ranked order of priorty. So both for the management teamthe musicians artistic considerations come first. A bold and inspiring artistic vision is nuber one followed very closely by just terrific skills in everything that it means to be a great conductor. You know clarity of beat efficiency of rehearsal process. Abilities to grow the Orchestra in areas that we need to grow. A sensitivity to an acompanist to visiting soloist and after those artistic considerations there is the very important community rule and a familarity with the American model for music directors. Which even more in this country then Europe where Orchestras are heavily subsidized by governments for example. The music director of the Philharmonic has to be deeply engaged in the community in fundraising working with children working with community groups. The chicken dinner circut the luncheon circut. It is so important because we rely so heavily on the support of this community. Corporate leaders foundation leaders as well as thousands of people on an individual basis every year. The music director has a vitale role of inspiring the community through his or her vision.
(Brenda) And your hoping this person exists.
(Charles) We realize its a tall order but the RPO has a long and proud history in some of the greatest names in Conductors of the twentieth century were here as music directors at one point. Eric Linzdorf, David Zinmen for example and Christopher Semen has been a worthy succesor to them and were looking for a worthy successor to him.
(Brenda) Many top American Orchestras have hired man young dynamic conductors in the past few years I am thinking of Gustavo Dudamel in Las angeles, he is 29. Allen Gilbert in the New York Philharmonic Orchestra and the Philidelphia Orchestra just hired a young Canadien Yannick Nezet-Seguin whos is only 35 years old. How omuch do youth and energy play a role in the person your looking for?
(Charles) You know we thought a lot about that and though there is something apealling about that we did not make that one of the top criteria's. Nor did we make a criteria previous experience as a music director. I think we will know who the right person is when they are talking to us when they are standing in front of the Orchestra. And I am happy to say there are a lot of young fresh faces in the field. A lot of fresh face conductors in there thirties and forties and there are some more long tenured much more experienced vetran conductors in the field. So it is more about the individual attributes, not necessarily an age advantage on one side or the other.
(Brenda) Are you looking at any woman candidates?
(Charles) There are Woman candidates in are prospect field at this point yes there are woman candidates.
(Brenda) How important is star power to the whole process? Someone who will get people out of there homes and into Kodak hall Eastman theatre.
(Charles) Well that is crucial charaisma, I think is the word we most often use. Within the confide of the search commitee to as another euphenism fr star power. Because as classical musical has become more marginalized in our society it is more important then ever. I talked about the community role and the ambassadorl role. We need a conductor with charisma. And certainly Christopher has exemplified to inspire people through his or her vision for the future. There programing ideas there ideas for maybe shaking up the concert experience. Sometimes alternate venues There are so many ideas that Orchestras have all around the country and the world that they are experimenting with. To make an Orchestra more relevant and to make the whole night experince at a symphony. But having a charimatic star we often use Michael Tilkentomas for example in San Fransico as maybe the archetype for the Amercian meastro because he has become such an iconic figure in that community. That he can program virtually anything and still attract a large and enthusiastic audience. Based on his charisma and his trust that he has developed with music lovers in his city.
(Brenda) To follow up on the idea of the ambassador. Would you consider a candidate that was a brilliant muscian who had a lot of charisma but very poor english skills?
(Charles) That's a very good question, Some of the greatest conductors in the world have come from other placesin the world and although English has become somewhat of a universal language not everyone speaks it as comfertably particulary in front of large audience and so forth. Its a good question but I think great music caledy muscianship the conert itself and passion can be communicated through an orchestrate to a community beyond words. You know to some extent the music will speak for itself. Well I think fluency in english is not one of our top three attributes.
(Brenda) Christopher is going to be a tough act to follow like we said, he really left the Orchestra in top shape with new recordings a newly renovated concert hall. Do you imangine the new music director will change the direction of the music hall?
(Charles) I imangine that the new music director will put his or her own imprint on the sound of the Orchestra based on there experiences and what they precieve the RPO needs to improve there sound. And there own experience for example if it is a conductor that has a lot of experience maybe they started there training as a violinist. They may devote a lot of time to burnishing shaping balancing the sound of our strings.
(Brenda) Charles when do you think you will be making the announcement of the new music director of the RPO?
(Charles) Certainly by the next 12 months and ideally before the end of the calender year 2010.
(Brenda) Well thank you for coming in.
(Charles) It has been a great pleasure. Thanks for having me.
(Julie) That was Wxxi's Brenda Tremblay this month Wxxi's center for public affairs is launching a new series called MusEconomy it takes a look at how music flows into the regions economy. Go to wxxi.org to listen to a report from senior reporter Peter Iglinski about how free concerts in the area mean money for some. That's it for this edition of Need to Know Rochester I am Julie Philipp have a great fourth of July and I will see you back here next week.
(ANNCR) Previous Need To Know Rochester broadcasts can be seen if you have Time Warner's on demand service. Go to Rochester On Demand channel 111. Then look for WXXI news. There you'll find a selection of recent Need To Know Rochester Programs.