DealBook: JPMorgan Case Tests U.S. Law on Buying Influence Abroad

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News Corporation’s Tight Grip and Outsize Influence in Australia

Since then, the chief executive of News Corporation Australia has resigned, Prime Minister Kevin Rudd was shown on the cover of Sydney’s leading tabloid in a Nazi uniform and the ruling Labor Party earned bipartisan jeers for accusing Mr. Murdoch of plotting to subvert the election.

It has been a busy three weeks.

News Corporation is the largest newspaper publisher in Australia, with a total audited circulation of 17.3 million newspapers, according to company figures — a 59 percent market share. (Its next closest competitor, Fairfax Media, had total audited distribution of 6.3 million papers for 22 percent of the market.) Given the reach of News Corporation papers — particularly The Daily Telegraph in Sydney and the flagship paper, The Australian — they are often credited with having an outsize role in the country’s politics.

They have been front-and-center in the current national election pitting Mr. Rudd and the Labor Party against the Liberal Party led by Tony Abbott. The papers have run a string of scathing front-page editorials since Mr. Rudd called for elections last month. The decision to portray Mr. Rudd on the front page of The Daily Telegraph as Colonel Klink from the 1965-71 television comedy “Hogan’s Heroes,” sporting a Nazi uniform and a monocle, raised eyebrows and led Mr. Rudd to publicly call out Mr. Murdoch over the coverage.

Mr. Murdoch has made it clear, Mr. Rudd told reporters last month, “that he doesn’t really like us, and would like to give us the old heave-ho,” adding that “I’m sure he sees it with crystal-clear clarity all the way from the United States.”

Although several Murdoch papers endorsed Mr. Rudd during his first successful run for the leadership in 2007, they quickly soured on his positions toward big business like a proposed tax on mining profits and an emissions trading scheme. The company was seen as instrumental in the media campaign that saw him ousted in a 2010 party coup amid record low approval ratings. Mr. Rudd returned to government in June after upheaval in the Labor Party.

One of the Labor government’s plans calls for a National Broadband Network that would deliver high-speed Internet access to wide swathes of the country, a service that would broadly compete with News Corporation’s subscription TV service, Foxtel, which remains the company’s most profitable Australian venture.

Polling data from a number of leading firms suggests that Mr. Rudd is trailing Mr. Abbott’s opposition Liberal-National coalition in the contest by a significant, but not overwhelming, margin.

Jonathan Holmes, a prominent media commentator on the Australian Broadcasting Corporation, says that the kind of tabloid treatment given to Mr. Rudd and the election has a greater impact because a single company’s papers are so dominant. They can effectively become, he said, a “political battering ram.”

“Behavior that would be completely O.K. in a genuinely pluralistic media environment is very much less O.K. in a market where you have such a dominant position,” he said in an interview.

But the politics are not restricted to the front pages of News Corporation’s papers. Less than two weeks after Mr. Allan arrived, Kim Williams, who was a senior executive at the Australian Broadcasting Corporation and Australian Film Commission before joining News more than a decade ago, resigned from his position as the company’s Australia chief executive after just 18 months.

In a statement, Robert Thomson, the global chief executive, said that “Kim feels now is the right moment to leave the company, which he has served for two decades, following the successful implementation of the first stage of News Corp. Australia’s strategy to drive integration and improve efficiency, to invest in its editorial products and publishing system, and secure a path of growth in a multiplatform world.”

Mr. Williams was widely seen as a smart executive but one whose emphasis on data put him at odds with the brash, tabloid style of Australia’s papers. “They’re all running around saying ‘This is a fantastic victory, we’ve saved newspapers,’ ” said a onetime News Corporation employee speaking under the condition of anonymity to avoid publicly criticizing former bosses. (News Corporation is so dominant in Australia’s newspapers that even some media analysts decline to speak publicly about the company.)

Wealth Matters: Taxes Influence Investment Strategy, and Not Always for the Better

That may not be a good thing for their portfolios.

“Clients are definitely asking, because it’s a real issue in today’s environment,” Michael N. Bapis, a managing director and partner with the Bapis Group at HighTower Advisors, said. “We try to keep them focused on the goals — preserving what they have, capturing some of the upside, limiting the downside. At the end of the day, we can’t change the tax laws.”

When asked about how tax rates would affect an investment, he said his advice was almost always the same. “If it doesn’t make sense for your portfolio, then it doesn’t make sense,” he said, even if there is tax savings. “If it does make sense, regardless of the tax consequences, we’re going to put it in your portfolio.”

Last week, I looked at how the changes to the tax code were affecting how people thought about their estate plan. This week, I’m looking at how tax increases can influence people’s investing behavior.

The tax rates on investments have increased significantly from last year. Depending on a person’s income, taxes on long-term capital gains and dividends are now as high as 23.8 percent, an increase of 59 percent over last year’s rate. Taxes on investments that are held for less than a year that incur short-term capital gains tax or investments subject to income tax rates have increased for top earners by 24 percent, to 43.4 percent (with the Medicare surtax included) from 35 percent.

Those are substantial increases, but focusing on them alone can obscure a fuller analysis of risk. Investors can end up paying no taxes on an investment, but that may be because they lost money on it, or they may pay lots of taxes on a large gain that they might not have achieved otherwise. This is why advisers stress that taxes should not be the first concern when deciding whether to buy — or not buy — an investment.

If there is one investment that has been promoted as great for minimizing taxes and achieving a large gain, it is master limited partnerships. Most are involved in the transportation or storage of oil and natural gas. What makes them appealing, from a tax perspective, is that a large portion of the dividend they pay is treated as a return of principal and is not taxed.

But in the rush for one type of tax savings, investors can end up paying other taxes. Master limited partnerships with pipelines that run through several states can incur state tax bills for investors, though usually only when the income goes above a certain threshold.

The bigger tax concern generally comes when investors sell their partnerships, since the part of the dividend that was not taxed for years reduces the original price of the investment. Greg Reid, a managing director at Salient Partners and chief executive of the firm’s $18 billion master limited partnership business, said an investor who bought a partnership and sold it five to 10 years later could be faced with two types of taxes. The first is income tax, because the original purchase price would have been reduced by the amount of principal returned in the dividends. The second is capital gains tax on the increase in the value of the investment itself.

Another way to look at these partnerships is to consider the solid and increasing dividends they have paid over the last 25 years, often 6 to 7 percent.

“The baby boomers are going to need a lot of income to live,” Mr. Reid said. “M.L.P.’s are particularly great for older people who are retiring. They have a growing income stream.”

As for avoiding high taxes, the solution is to give the partnership to charity or die with it in your estate. Both may be viable options for investors in their 70s and 80s but are probably less attractive to people in their 30s.

Municipal bonds, which have long been attractive to wealthier investors because the interest they pay is not taxed by the federal government, pose a different sort of risk.

Mr. Bapis said he was concerned that investors who were not paying attention to the broader economic news were not aware of the current risks of buying an existing municipal bond. With yields on many municipal bonds extremely low — around 0.75 percent for five-year bonds and 1.74 percent for 10-year bonds, according to Bloomberg — even a small increase in their price, which would cause the yield to go down, would cause a loss of principal.