In fact, I agree with the KPMG representative - this is an appalling violation of taxpayer privacy. At this point, the matter is between KPMG and the IRS. KPMG packaged the product and represented it as a tax shelter; Simon and friends bought it. There is nothing at all illegal or unethical about it.
Tax shelters exist because the government wants to encourage people to do certain things, such as build affordable housing. In the aggregate they are probably bad for the economy because they distract taxpayer attention from earning as much of a return as humanly possible. But if you feel they are morally questionable, talk to Congress about it.
I might add that many of you enjoy the best tax shelter at my expense: You own a home and deduct mortgage interest. This is because many people in the government feel - quite reasonably, in my opinon - that citizens should be encouraged to own their homes. Since I live in one of the most expensive housing markets in the nation, I can't afford a home, so I am helping to subsidize yours. This is no different than what Simon did.
D