Democratic presidential candidate Barack Obama has released seven years of his tax individual returns this week.
The Obama family reported income of $1.65 million in 2005 and nearly $1 million in 2006. During that same period, the family made $137,622 in charitable donations.
Prior to 2005, the family seems to have a different financial picture. The increase in income is apparently tied to book deals signed by Obama. In one of those books, The Audacity of Hope, Obama said that his campaign for the Senate “had left me more or less broke,” and he described difficulty renting a car when in Los Angeles for the 2000 Democratic National Convention because his credit card was initially rejected. Apparently, things turned around.
Following the release of the returns, Obama has challenged Clinton to release her tax returns. The Clintons are believed to have earned tens of millions of dollars since leaving the White House due to book deals and appearance fees.
While in my home state of Pennsylvania, Clinton said, “I am pleased that Sen. Obama has released his tax returns. I think that’s a good first step. Now he should release his records from being in the state Senate and any other information that the public and press need to know from his prior experience.”
All of this makes me wonder. Is a politician’s income – or wealth – a relevant factor in your decision to elect or not?
It seems to. In the last presidential campaign, Senator Kerry was painted as a blueblood who had lost touch with reality. However, his tax returns reported less than 1/4 of the income reported by Cheney in that same period.
And of course, taxable income does not equal wealth. Funds held in trusts like those for the Heinz children and Vice President Cheney may not be considered taxable to the beneficiaries, even when distributed. The income may be taxed at the trust level. Additionally, some assets may not produce income – family homes, for example – and would not appear on a tax return.
So, maybe even if a politician’s wealth is important to you, tax returns may not be the best measure of that wealth. What do you think? More disclosure? Less disclosure? Or is it not relevant at all?
I know, it’s a cheesy title, but I’m banging this out in the middle of a really busy day. Notwithstanding the Philadelphia primaries yesterday (for which I fully intend to follow-up with some en pointe tax questions), I was on the phone this morning with Governor Huckabee’s office getting some good feedback on his tax policy. It was very gracious of him to have me, and I will be sharing his thoughts on tax policy and tax implementation later in the week.
Also on tap are interviews from several candidates. First up later today is Tommy Thompson, since his staff was so wildly punctual in returning my request last week.
Stay tuned all week for lots of tax and politics. Ooh, I love this time of year!
It’s easy to listen to a few quick sound bytes from the presidential candidates and get confused. It’s also understandable – they have a lot to say and not a lot of time to say it.
Following my review of the debates for the GOP and the Dems, I thought I would offer each of the presidential candidates the opportunity to tell us what they really think, with no artificial time restraints. So, I asked each of them to respond in writing to six tax-related questions.
I’ve received responses or promises to respond by a number of the candidates. I will begin posting those responses in the next few days, so keep watching. And please, let me know what you think. If you have any follow-up questions, feel free to post those in the comments. I will pass them along, if appropriate and see what happens.
This is a great opportunity to find out where the candidates really stand on tax issues. So tune in and find out what they have to say!
Nobody wants a partisan tax blogger. It’s so… impolitic, if you will. So, I’m not going to offer any real commentary about the election on yesterday in terms of winners and losers. You can do your own Wednesday morning quarterbacking.
That said, the face of the House has changed drastically with the loss of 27 seats by the GOP and a pickup of 28 seats by the Dems (the Independents lost a seat). The House now has its first female House Speaker, Nancy Pelosi of California, and she vows that things are going to be different. And what kind of “things” is she talking about? Well, taxes, for one. With a nod to the tax cuts passed under a GOP Congress a few years ago, she said, “We will revisit the tax cuts at the high end in order to give tax cuts to the middle class.”
Yeah, yeah, yeah. But you’re wondering, “what does it mean for me?”
Well, with the understanding that politics are often inexplicable, I offer my quick observations and predictions about what will and will not change under the Tax Code with a Democratic House:
* The federal estate tax will not be repealed.
* The feds will offer tax incentives to automobile manufacturers to raise fuel economy levels.
* Tax breaks previously granted to oil companies will be rolled back though I do not expect a “windfall” tax on record-breaking profits from those companies.
* Offshore tax shelters for corporations will be given special attention; I anticipate some kind of excise tax on corporations which create these entities in an effort to avoid taxation.
* Gradual tax cuts will be enacted for the middle class. The previous tax cuts were found to benefit the top earners in the US: 54% of those tax cut benefits went to households with incomes of more than $1 million, the top 0.2% of households. Another 43% of benefits went to 3.5% of households with incomes between $200,000 and $1 million. Yeah, that math (as reported by the Urban Institute-Brookings Institution Tax Policy Center) means that 97% of the recently enacted tax-cut benefits went to the 3.7% percent of households. My guess is that the remaining 96.3% of households showed up at the polls on Tueday.
* The Alternate Minimum Tax Relief cuts will not be made permanent nor extended.
* The increase in the child tax credit will be affirmatively made permanent rather than a mix of WFTRA and EGTRRA provisions.
* Dividend and capital gains reductions will sunset.
* Talk of a flat tax will, well, fall flat.
Of course, if the House does introduce any of these scenarios, it would likely face a veto from President Bush and an uphill battle in a relatively evenly divided Senate. Fasten your seatbelts ladies and gentlemen, we’re in for an interesting two years!
