not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim or documents. Shelters reduce the corporate tax base and thus raise the burden on other taxpayers. Shelters undermine the vitality of our voluntary tax system. Companies feel obliged to follow the lead of competitors who abuse the tax code in a "race to the bottom". The New York State Bar recently highlighted the "corrosive effect" of shelters, stating: "The constant promotion of these frequently artificial transactions breeds significant disrespect for the tax system, encouraging responsible corporate taxpayers to follow the lead of other taxpayers who have engaged in tax advantaged transactions." And shelters divert resources from productive investment in the real economy. As a former tax official, now a leading member of a well-known law firm has said, "You can't underestimate how many of America's greatest minds are being devoted to what economists would all say is totally useless economic activity." These evasion shelters include; Lease-In Lease-Out (LILO) shelters whereby companies attempted to avoid tax through circular transactions. In one extreme case, a company leased a town hall from a Swiss municipality and leased it back the same day. This measure saved the corporation $10.2 billion. Another type of shelter is the BOSS shelter where companies can generate an artificial tax loss that can be used to offset other income. This action can be expected to save billions of dollars form the tax system. Companys today also use what is called a "debt straddle". This is a shelter designed to create an artificial tax loss by setting up two debt instruments, the interest rate on one of which resets to zero, generating a loss, while the interest rate on the other doubles. The debt straddle is reminiscent of the old butterfly straddles in the commodity markets and is best described as "heads I...
