Debate Prep: The Candidates’ Estate Tax Plans

By David Herzig

With the first Presidential debate tonight, we are sure (or at least I hope) to hear about various tax plans. I would expect that the estate tax would be a topic of conversation since there is such a sharp contrast between the candidates. The current reporting spins that Donald Trump wants to eliminate the estate tax; while, Hillary Clinton wants to tax the rich through a two-prong increase on the estate tax. I thought it would be useful in advance of the debate to discuss the candidates’ actual estate tax plans. (If there is a PA for Lester Holt looking for some last minute questions for the candidates – scroll to the bottom and steal away no attribution needed!)

Currently, there is an estate (or death) tax. Unfortunately for the fisc, the tax accounts for less than 1 percent of federal revenue. (See, Tax Foundation). What is amazing is that at other points in time, the tax actually raised revenue and effected many estates. The primary reason for the drop in revenues even though overall net worth has increased, is related to the exemption amount available for taxpayers. In 1976, the exemption amount per estate was $60,000 while today it is $5.45 million. (I tackle a lot of these issues in my upcoming University of Southern California Law Review article).

Continue reading “Debate Prep: The Candidates’ Estate Tax Plans” →

Child Care in the Presidential Campaign

CCA-IG-CostsCompared_v1b Today, Donald Trump laid out a series of economic proposals. Included, naturally, were a series of tax proposals, which I assume we’ll address on this blog as time goes on. For now, I want to focus on just one of his proposals: easing the cost of child care.

While the cost of child care varies, it has risen dramatically, nearly doubling over the last 25 years. And although the cost of child care varies from state to state—and even from city to city—the numbers can be eye-opening. In Illinois, the average annual cost of child care for an infant and a 4-year-old is more than $22,000. At the same time, the median income for a single parent is about $24,000, and the median household income for married parents is about $88,000.[fn1] That means that the cost of child care for two children represents 25 percent of the median Illinois married couple’s household income, and fully 94 percent of the median income of a single parent.

Clearly, using averages and medians doesn’t paint an accurate picture of any given family’s situation. But in no state would child care costs make up less than 30 percent of a minimum wage-earner’s income. That’s a pretty dire picture. Dire enough, in fact, that the cost of child care is keeping women out of the workforce. (And note that it’s not just women who can afford to stay out of the workforce because of a spouse’s or partner’s income: 34 percent of stay-at-home mothers live in poverty, as opposed to 12 percent of mothers in the workforce.) Continue reading “Child Care in the Presidential Campaign” →

Examination of Allegations Against Clinton Foundation Part II

By: Philip Hackney

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A week ago I considered one of three allegations Rep. Marsha Blackburn made against the Bill, Hillary & Chelsea Clinton Foundation in a letter Blackburn sent to the IRS, FBI, and FTC. I found the first allegation stated nothing of significance to the IRS. I now look at the other two and find them significantly wanting as well. Recently, IRS Commissioner Koskinen sent a letter indicating the IRS would investigate these complaints. I conclude they fail to state any complaint actionable by the IRS.

The second and third Blackburn allegations seem to come from a book by Peter Schweizer called Clinton Cash. Both allegations suggest that Sec. Clinton provided large governmental benefits in exchange for donations to the Clinton Foundation and payments to Bill Clinton. Both of the claims, already made by Presidential candidate Donald Trump, regarding Laureate University and Uranium One have been rated False and Mostly False by Politifact. Thus, it is difficult to take these allegations seriously.

Nevertheless, there are two things I do in this post. First. I discuss the factual conclusions of others regarding whether there was a quid pro quo arrangement associated with the second and third allegations. Then, I look at how the tax law might treat such arrangements were they true. Continue reading “Examination of Allegations Against Clinton Foundation Part II” →

Examination of Allegations Against the Clinton Foundation

By: Philip Hackney

book-863418_1280 Back in June I wrote disapprovingly of some actions of the Donald J. Trump Foundation. In that piece I promised to write about the Bill, Hillary & Chelsea Clinton Foundation too. Recently, Rep. Marsha Blackburn sent a letter that was scheduled to be sent to the FBI, the FTC, and the IRS. That letter makes a number of allegations about the misuse of the Clinton Foundation, and I figured these allegations would be a good place to analyze the performance of the Foundation that I had promised.

Blackburn alleges a number of things, but I am going to focus on her first allegation in this post because it is the only one that is a pure tax exemption question. She alleges that the Foundation is illegally operating outside the scope of its initial application for tax exemption to the IRS. For reasons explained in the post below, I conclude there is very little involved in this claim and it is a misunderstanding of the law. There could be problems with the Foundation but this is not one of them.

UPDATE: I look at the remaining two Rep. Blackburn allegations here.

Continue reading “Examination of Allegations Against the Clinton Foundation” →

Trump Claims $557 Million in Income in 2015

By: David J. Herzig

Yesterday, Donald Trump filed his personal financial disclosure with the Federal Election Commission. This updated his initial financial disclosures. On his web site he claimed the disclosures were “the largest in the history of the FEC.” Unfortunately, he did not file his disclosures on-line like Hillary Clinton. Alas, we will have to wait a little bit to get to the details.

Nonetheless, according to Mr. Trump’s website he made $557 million in income in 2015. That number does not include “dividends, interest, capital gains, rents and royalties.” So, his real income should be substantially higher.

I have been writing about why a disclosure of Mr. Trump’s tax returns are necessary (at Forbes and the Wall Street Journal). Once I have a copy of the disclosures, I will give some updates (hopefully shortly) about various items that raise some red flags. From what I gather in innuendo and rumor about his disclosure, the calls for full disclosure of his tax returns to sort out facts from fiction will continue to gain steam.

The key reason the tax returns are needed is to permit a thoughtful discussion (hopefully more global tax policy discussions) between the relationship between his over $557 million in gross income and his taxable income.

[QUICK UPDATE: I was amazed how ABC, NBC, FOX, CBS, The Wall Street Journal and the New York Times all seemed to know what was in the not yet public disclosure. The rule according to the FEC is that the return is not public until they have approved it. However, despite the non-public disclosure, the FEC has apparently sent the disclosure out to certain news sources. It is amazing how a governmental agency can partake in such mishegoss!]

[UPDATE 7:45 pm] The Wall Street Journal put up Trump’s FEC disclosure. Available at: http://www.wsj.com/public/resources/documents/TrumpdisclosureMay2016.pdf?mod=e2twp