Charity Begins At Home

Charity begins at home. I wonder sometimes how the Internal Revenue Service feels about that, but that is the conventional wisdom. Exhibiting their usual talent for taking things to the legal limit, the Clinton family obvious believes that charity should begin at home.

The Washington Free Beacon posted a story today about Hillary Clinton’s tax returns for 2014.

The article reports:

The Clintons earned more than $28 million in 2014 and claimed around $3 million in income as charitable tax deductions, according to tax returns released by Hillary Clinton’s campaign last Friday. The campaign emphasized Clinton’s charitable giving in a press statement, saying that it “represented 10.8 percent” of her income in 2014. But roughly half of that money—$1.8 million—appears to have been channeled to the Bill, Hillary, and Chelsea Clinton Foundation.

According to the tax returns, the Clintons gave $3 million in 2014 to the Clinton Family Foundation, a small private foundation that the family uses as a pass-through to other charities. Records show the CFF disbursed $3.7 million in 2014, including $1.8 million to the Bill, Hillary, and Chelsea Clinton Foundation.

Just for kicks, let’s look at how the Foundation spends its money. The Bill, Hillary, and Chelsea Clinton Foundation evidently funds a good deal of the travel expenses the Clintons generate. It must be nice to have a Foundation that helps with the expenses of your Presidential campaign.

The article further reports:

Americans for Tax Reform slammed Clinton on Tuesday for forming an “Article 4 trust,” which the group said appears to be a method to avoid paying estate taxes—a tax Clinton has supported.

“Clinton has consistently voted for the Death Tax throughout her time in public office and forcefully condemned attempts to lower it,” ATF said in a statement. “But when it comes to her own finances, it is a different story. The newly released tax returns buttress earlier reports outlining the ways Clinton uses financial planning strategies that shield her Death Tax liability.”

Another example of taxes for thee, but not for me.

One Of The Problems In Reforming The Tax Code

Yesterday the Wall Street Journal posted a story which might explain some of the difficulties Congress and the President are having in reaching a budget agreement before going over the fiscal cliff. The current American tax code is currently approximately 6,000 pages and 500 words. To say that it is difficult to navigate is a serious understatement.

One of Speaker of the House John Boehner‘s suggestions has been a limit on annual deductions. During the election campaign, Mitt Romney suggested a deduction cap somewhere between $17,000 and $50,000 a year.  Many liberal pundits supported the idea as representing equity. However, now that the election is over and the idea is examined more closely, there are serious consequences to this change–many of those consequences are political.

The article reports:

…For example, 44% of Connecticut filers itemize their deductions, but only some 21% of North and South Dakota residents do.

One tax writeoff in particular illustrates the point: the deduction for state and local income taxes. This allows a high-income tax filer who pays, say, $20,000 in state and local income taxes to deduct those payments from his federal taxable income.

Because the highest federal tax rate is 35%, the value of the state and local deduction is enormous for high-tax states. If President Obama succeeds in raising the federal tax rate to 39.6%, the value of those deductions rises to nearly 40 cents on the dollar. This deduction certainly eases the pain of New Jersey‘s 8.97% top tax rate, or Hawaii’s 11%.

The article explains that five states accounted for nearly half the tax revenue lost because of the state and local tax deduction–California, New York, New Jersey, Maryland and Massachusetts. California accounted for $51 billion of the writeoff due to state and local tax deductions. All of those five states can be found in the Democrat column during national elections.

The article explains:

To put it another way, when Californians voted to raise their top rate to 13.3% last month, they were voting to reduce revenue for the federal Treasury and thus increase the political pressure to raise tax rates on all Americans. The state and local tax loophole helps disperse and disguise the real cost of big government. As Mr. Obama likes to say, this is reverse Robin Hood.

The article concludes:

Mr. Obama wants to raise tax rates, rather than eliminate deductions, so his fellow Democrats can keep raising state and local taxes without bearing the full economic and political cost. Tax equity and economic growth are the big losers.

Because the current tax code is so politically loaded, I really don’t see Congress and the President agreeing to change it significantly. Unfortunately, it needs to be changed significantly.

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The Taxman Cometh (Again)

Investors.com posted an article about some of the ideas the government is considering in its search for increased revenue to close the budget deficit. It seems that the government is eyeing our 401(k) accounts.

The article states:

Rather than the current $50,000, Congress is considering limiting employer-employee 401(k) contributions to 20% of an employee’s salary up to a ceiling of $20,000, an idea dubbed the “20/20” plan. Even voters without 20/20 vision will quickly see it as another promise broken by a political culture whose spending has reached the level of insanity.

The Post (the New York Post) also interviewed Urban-Brookings Tax Policy Center co-director William Gale, whose idea of replacing all tax deductions on 401(k)s and IRAs with an 18% credit sent straight into everyone’s retirement account is also being considered within Congress.

This news comes as it was reported today that Social Security and Medicare will be out of money by 2033, three years earlier than last year’s estimate.

How about simply cutting the spending, ending GSA boondoggles, and making the first family pay for their own vacations?

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