Kerry's Heinz 57 tax loophole

[madape]

Kerry and Me

Noone understood why Kerry would propose a tax plan that would crush the profits of multinational corporations, like his sugar mamma's company Heinz. He just didn't seem like someone who would be willing to give up his own multi-million dollar fortune for the sake of keeping a few America factory jobs from going overseas. But lo and behold! Economist Kevin Hasset has discovered that our confusion was unneccesary! The Kerry tax plan is neither good for job creation (as most of us were able to figure out immediately), NOR bad for Kerry's pocketbook. The slimeball has included a loophole in which US multinationals which operate smaller facilities in the same countries, in which they make their sales wouldn't have to pay American taxes at all!! I'll give you three guesses which company is already positioned to reap almost a billion dollars worth of tax breaks thanks to the Kerry plan... no, not Haliburton. No, not Enron... If you guessed Heinz, you've won a free Botox session.

Because of local food regulations, and concerns about spoilage, it is often the case that food companies locate a separate plant in each country that they serve. Chief among these is Heinz, which owns 57 plants outside of North America that, as the company states, "provide products to consumers in those markets."

Heinz is so successful at capturing local markets that, according to form 10-K, almost 84 percent of its income from continuing operations came from foreign markets in 2003. Accordingly, the impact of the Kerry plan on that company's value would be tremendous. If we assume that deferring U.S. tax on their foreign income saves them the difference between the U.S. tax and the average foreign tax, then that adds up to annual savings of about $43 million. With a P/E ratio of 19.35, that means that absent the loophole, the firm's market value would drop by about $832 million upon passage of the Kerry tax plan. Assuming that the Kerry-Heinz family's share of the company is four percent, which is the upper limit of what has been reported, then this loophole saves Mr. Kerry's family around $33 million. It is easy to see why they might support this loophole, but hard to see why anyone else would.

So while the rest of the corporate world gets a good kick in the balls by Kerry's plan, Heinz ( and Kerry's bank account ) will see thier valuations skyrocket.

Did we expect any less from this opportunist?

[EricaLubarsky]

I think it's funny how partisan debate tends to miss the cronyism, hypocricy and sleaziness of their own party. As far as Im concerned they are all sleaze-bags-- both Democrat and Republican.

I'll just keep voting based on the promises the candidates give and on tradition knowing full well that both candidates are crappy individuals.

[madape]

Originally posted by: EricaLubarsky
I think it's funny how partisan debate tends to miss the cronyism, hypocricy and sleaziness of their own party. As far as Im concerned they are all sleaze-bags-- both Democrat and Republican.

I'll just keep voting based on the promises the candidates give and on tradition knowing full well that both candidates are crappy individuals.

as always... this must be Bush's fault.

You get an A+ for effort. It takes a lot of creativity to find a way to slam Bush when the topic is Kerry's corrupt tax policy.

[EricaLubarsky]

You are way off on this one buddy or at least way too sensitive.

Where did I bag on Bush?

I wasnt trying to "creatively" bring Bush into the fray. Iwas only pointing out that both sides point to scandals in the other party. Kerry points at Bush's scandals and Bush points at Kerry's and no one sees that they are all corrupt. If that is a fancy way of bashing Bush so be it but I did not bring any attacks into this thread.

Read what I said again please.

[madape]

both candidates are crappy individuals.

were you talking about Nader? If so, I apologize.

[EricaLubarsky]

Originally posted by: madape

were you talking about Nader? If so, I apologize.

All three candidates are crappy individuals. Can I not say that about Bush? I would argue that anyone who can argue that one candidate has the moral ground is blocking out half of the story. I can admit that Clinton F@cked up. After seeing the evidence on Bush I think he has too. Not in the same ways, but he's not any better as far as moral ground than Kerry- politics aside.

Political watch dog groups are for the most part ways of making partisan politics more entrenched and nasty. They make republicans like you hate Kerry and Democrats like me hate Bush which makes divides in our country. I dont want to argue with you- we are all Mavs fans but because the cost of the game has been elevated, the old political debates on the best way to handle things have turned into name calling and fights between good and evil. That is not what politics is about. Period. Bush is not evil. Kerry is not evil. No party (except maybe the Satanist party) is evil.

there is no moral high ground. Every party has it's nastiness. Thats what I was trying to argue above.

Partisan watchdog groups do some good in our country, though because they bring out the dirt on both parties that would have otherwise been invisible to the common person.

[Mavdog]

First, John Kerry does not own any interest in Heinz Corp., and from the info in his tax filings he doesn't get a dime from Heinz.

Kerry pays his taxes

On the other hand, our current Vice President was paid $178,437 in 2003 by Halliburton, a company that has received over $6 BILLION in payments by the US Government. Kinda ironic that the AEP would target Kerry about Heinz, who pays him NOTHING, but fails to target Cheney about Halliburton. hmm, something stinks here, and it smells like dishonesty over at the AEP.

Second, the AEP article you linked to is wrong. It states:

"The other factor that harms U.S. competitiveness is the very high rate of U.S. corporate tax. Most other countries have reduced their corporate tax rates sharply in recent years. The U.S. has not, and the result is that we are now one of the highest tax countries on earth. In a recent paper I coauthored with my colleague Eric Engen, for example, we found that the U.S. corporate tax rate was 18 percent higher than the non-U.S. average in 2001"

Odd then that here is a factoid from a news editorial:
"According to recent reports, nearly 2 out of 3 U.S. companies paid no income taxes durng the five years ending in 2000"

So how can it be true that the United States is "one of the highest tax countries on earth"? Because it is not. Canada (and about a dozen others that I could find with a simple google search) has a higher corporate tax than the USA, but that must be too far away for the AEP to investigate.

How much does corporate America pay in income taxes you might ask? How about this bit of information: "Corporate tax payments are already at historic lows, less than 8 percent of all federal tax revenues"

Tax editorial

How about our leaders, surely they pay their taxes. right? Yes, they do, although they pay less due to the Bush tax cuts:
"According to calculations by Bloomberg News, tax cuts that Bush championed and last year signed into law saved his family about $23,000. They saved the Cheneys as much as $60,000.

A new 15% rate on dividend income saved the Bushes $2,586, and lower rates and tax breaks for married people saved them $20,600, according to Bloomberg calculations.

Cheney and his wife saved $19,855 in taxes on dividends they received and as much as $19,350 on capital gains from investments. Lower tax rates for couples saved them about $21,000, Bloomberg calculations showed"
Ouch, you mean they saved themselves alot of dough? And the AEP wants to lambast Kerry about a potential tax savings for a company he doesn't get a dime from? sorta odd, wouldn't you say?

Here's another interesting item: "A study by the General Accounting Office found that more than 60 percent of U.S. companies and 70 percent of foreign companies doing business here paid no income taxes".
What, NO income taxes? hmm, wonder what the AEP writer was thinking? Obviously he wasn't....

[EricaLubarsky]

First, John Kerry does not own any interest in Heinz Corp., and from the info in his tax filings he doesn't get a dime from Heinz.

It's still Cronyism. He is still to blame IMO the same way Bush was to blame with Bechtel.

[Mavdog]

erica, what exactly are they all being "blamed" for?

[kg_veteran]

Originally posted by: EricaLubarsky
I think it's funny how partisan debate tends to miss the cronyism, hypocricy and sleaziness of their own party. As far as Im concerned they are all sleaze-bags-- both Democrat and Republican.

I'll just keep voting based on the promises the candidates give and on tradition knowing full well that both candidates are crappy individuals.

I'd appreciate it if you could elaborate on why our current president is a "sleaze-bag".

[kg_veteran]

Originally posted by: Mavdog
First, John Kerry does not own any interest in Heinz Corp., and from the info in his tax filings he doesn't get a dime from Heinz.

Kerry pays his taxes

Mavdog, from what I can tell you're a pretty intelligent guy. But you're trying to split hairs like a damn lawyer.

It is apparent to anyone not trying to be asinine what madape is talking about. Kerry's plan would give a huge benefit to his wife's company. While this may not literally be "in Kerry's pocketbook," the rest of ape's comments ("sugar mamma's company", "savings to Kerry's family") make it abundantly clear what he's talking about. In fact, the Yahoo! story you link states, "The Massachusetts senator and presumed Democratic presidential nominee is married to Teresa Heinz Kerry, heiress to the $500 million Heinz Co. food fortune. He files his income taxes returns separately." Since he files his taxes separately, of course his returns won't indicate that he "earns a dime" from Heinz. But no one is naive enough to think that he doesn't financially benefit when Heinz does. Well, no one except you, apparently.

I can only suppose that you have no substantive response to ape's point, so you just start splitting hairs.

On the other hand, our current Vice President was paid $178,437 in 2003 by Halliburton, a company that has received over $6 BILLION in payments by the US Government. Kinda ironic that the AEP would target Kerry about Heinz, who pays him NOTHING, but fails to target Cheney about Halliburton. hmm, something stinks here, and it smells like dishonesty over at the AEP.

Big difference here. Halliburton actually renders services in exchange for the money it receives from the federal government. Heinz isn't going to do anything to receive the massive benefits Kerry's plan would provide. Also, should Dick Cheney forego his retirement from Halliburton? You wouldn't say that if it was your retirement. Should Halliburton be prohibited from doing business with the government because Cheney used to work there? Would that really be fair to the thousands of people that work for Halliburton, to discriminate against them because a former executive is now in public office? That doesn't make a whole lot of sense, and your analogy falls flat.

Second, the AEP article you linked to is wrong. It states:

"The other factor that harms U.S. competitiveness is the very high rate of U.S. corporate tax. Most other countries have reduced their corporate tax rates sharply in recent years. The U.S. has not, and the result is that we are now one of the highest tax countries on earth. In a recent paper I coauthored with my colleague Eric Engen, for example, we found that the U.S. corporate tax rate was 18 percent higher than the non-U.S. average in 2001"

Odd then that here is a factoid from a news editorial:
"According to recent reports, nearly 2 out of 3 U.S. companies paid no income taxes durng the five years ending in 2000"

So how can it be true that the United States is "one of the highest tax countries on earth"? Because it is not. Canada (and about a dozen others that I could find with a simple google search) has a higher corporate tax than the USA, but that must be too far away for the AEP to investigate.

What you don't point out is that of those "2 out of 3 U.S. companies" that paid no income taxes, virtually all of them are closely held and/or family companies which don't report any income or don't report much income; consequently, they don't pay taxes. This quote does nothing to prove or disprove what the AEP report said in comparing the U.S. tax rate vs. the "non-US average for 2001".

How much does corporate America pay in income taxes you might ask? How about this bit of information: "Corporate tax payments are already at historic lows, less than 8 percent of all federal tax revenues"

Tax editorial

You're still not addressing the issue unless you cite some comparison to the taxation occurring in other countries. The percentage of total revenues is irrelevant.

How about our leaders, surely they pay their taxes. right? Yes, they do, although they pay less due to the Bush tax cuts:
"According to calculations by Bloomberg News, tax cuts that Bush championed and last year signed into law saved his family about $23,000. They saved the Cheneys as much as $60,000.

A new 15% rate on dividend income saved the Bushes $2,586, and lower rates and tax breaks for married people saved them $20,600, according to Bloomberg calculations.

Cheney and his wife saved $19,855 in taxes on dividends they received and as much as $19,350 on capital gains from investments. Lower tax rates for couples saved them about $21,000, Bloomberg calculations showed"
Ouch, you mean they saved themselves alot of dough? And the AEP wants to lambast Kerry about a potential tax savings for a company he doesn't get a dime from? sorta odd, wouldn't you say?

While I think most people would agree that $23,000 or $63,000 is peanuts compared to $33 million, you're still kind of missing the point. One plan contains a loophole that almost seems targeted to help Kerry's wife; the other contains tax savings that benefit Bush and Cheney but also many other American citizens.

[Mavdog]

[quote]
Originally posted by: kg_veteran

Mavdog, from what I can tell you're a pretty intelligent guy. But you're trying to split hairs like a damn lawyer.

It is apparent to anyone not trying to be asinine what madape is talking about. Kerry's plan would give a huge benefit to his wife's company. While this may not literally be "in Kerry's pocketbook," the rest of ape's comments ("sugar mamma's company", "savings to Kerry's family") make it abundantly clear what he's talking about. In fact, the Yahoo! story you link states, "The Massachusetts senator and presumed Democratic presidential nominee is married to Teresa Heinz Kerry, heiress to the $500 million Heinz Co. food fortune. He files his income taxes returns separately." Since he files his taxes separately, of course his returns won't indicate that he "earns a dime" from Heinz. But no one is naive enough to think that he doesn't financially benefit when Heinz does. Well, no one except you, apparently.

kg, you seem to be smarter than the average guy, you tell me why the article's title and point of reference isn't the relative strength or weakness of the Kerry proposal, but how the company that his wife's ex-husband's family made a fotune from may benefit. Pretty much attacking the messenger without even loooking at the message.

Come to think of it, there's been no connection established that Kerry's wife actually gets any money from heinz Corp. either, just a trust set up for her deceased husband. For all we know the trust doesn't have any heinz Corp. stock.

Filing seperately will show all hissources of income BTW, rather than grouped with hers.

I can only suppose that you have no substantive response to ape's point, so you just start splitting hairs.

So what exactly was the "point"? That the tax proposal is wrong? That it will cause what negative result? Funny, the article never got to that did it?

Big difference here. Halliburton actually renders services in exchange for the money it receives from the federal government. Heinz isn't going to do anything to receive the massive benefits Kerry's plan would provide. Also, should Dick Cheney forego his retirement from Halliburton? You wouldn't say that if it was your retirement. Should Halliburton be prohibited from doing business with the government because Cheney used to work there? Would that really be fair to the thousands of people that work for Halliburton, to discriminate against them because a former executive is now in public office? That doesn't make a whole lot of sense, and your analogy falls flat.

"massive benefits"? could you quantify this?
The plan is to give a tax reduction for US cos. to return foreign earnings. But the article never even looked at it...

"Retirement"? Cheney rec. several million $ when he resigned, he has the gov. benefits now as well. Cheney should NOT accept ANY compensation from halliburton while he is the VP, or halliburton should stop doing government work (and especially no bid contracts, which they have been wawarded.)

What you don't point out is that of those "2 out of 3 U.S. companies" that paid no income taxes, virtually all of them are closely held and/or family companies which don't report any income or don't report much income; consequently, they don't pay taxes. This quote does nothing to prove or disprove what the AEP report said in comparing the U.S. tax rate vs. the "non-US average for 2001".

Unless these are Sub S corps they report income, and 2/3 of the corps are not Sub S.

You're still not addressing the issue unless you cite some comparison to the taxation occurring in other countries. The percentage of total revenues is irrelevant.

It is relevant when compared to the US history of percentage, which it is doing ("Historic lows")

While I think most people would agree that $23,000 or $63,000 is peanuts compared to $33 million, you're still kind of missing the point. One plan contains a loophole that almost seems targeted to help Kerry's wife; the other contains tax savings that benefit Bush and Cheney but also many other American citizens.

The presumption that Kerry's plan "almost seems targeted to help Kery's wife" is unsupported, interesting isn't it that the article never mentioned the other multi-nationals who would also be affected. Actually it's interesting that the article never really discussed the tax plan, only an insinuation about a benefit that its proponent might have a connection to. Fine bit of work by that author....at least fine work of attacking by insinuation and character assasination.

Yes, the Bush tax plan helped many American citizens who had similar incomes, especially those with equity investments that paid a dividend.

[EricaLubarsky]

I'd appreciate it if you could elaborate on why our current president is a "sleaze-bag".

I was trying not to bring up Bush bashing in this thread or any, but you asked. Remember that.

Mavdog already posted some good stuff, but there is so much more. Let me get some reasearch and I'll post within a day or two.

Ed Vulliamy of the London Observer ("Dark Heart of the American Dream, June 16, 2002") reported that George W. Bush sailed into the governor's mansion with $42 million collected for his two campaigns. Much of this money came from corporations that generate a lot of pollution, including Exxon, Shell, Amoco, Enron, and Alcoa. A gift of $348,500 came directly from Ken Lay of Enron.

Governor Bush rewarded his benefactors with legislation that allowed self-regulation of pollution. Companies could audit their own pollution records and enjoy protection from public disclosure. As a result, Texas enjoyed the highest air pollution volume in the nation.

Another Bush benefactor was a man named Tom Hicks, who bought Bush's shares of the Texas Rangers. Paul Krugman explained in his New York Times column of July 16, 2002, how Governor Bush was able to funnel University of Texas endowment money to Hicks and other cronies.

First, he changed the rules governing the endowment so that Texas officials no longer had to tell the public what they were doing with public money. Then Mr. Bush privatized (his term) $9 billion in university assets, transferring them to a nonprofit corporation known as UTIMCO that could make investment decisions behind closed doors, Krugman said.

Next, Governor Bush made Tom Hicks the chairman of UTIMCO. Hicks saw to it that his friends and his political interests were well funded by Texas money. According to Krugman, at least $450 million went to funds managed by Hicks's business cronies and Republican Party donors. Such transactions were safe from public view, thanks to Governor Bush. An employee of UTIMCO who alerted auditors was fired.

Further, when Bush sold his shares of the Texas Rangers to Hicks, he was entitled to about $2.3 million from that sale, according to Paul Krugman. "But his partners voluntarily gave up some of their share, and Mr. Bush received 12 percent of the proceeds --$14.9 million. So a group of businessmen, presumably with some interest in government decisions, gave a sitting governor a $12 million gift."

there is waaaayy more. At least as much as Clinton.

[kg_veteran]

kg, you seem to be smarter than the average guy, you tell me why the article's title and point of reference isn't the relative strength or weakness of the Kerry proposal, but how the company that his wife's ex-husband's family made a fotune from may benefit. Pretty much attacking the messenger without even loooking at the message.

Nice attempt to sidestep my point about your hair-splitting.

As for the article, it lays out pretty clearly why the proposal is weak.

Come to think of it, there's been no connection established that Kerry's wife actually gets any money from heinz Corp. either, just a trust set up for her deceased husband. For all we know the trust doesn't have any heinz Corp. stock.

Actually, since you brought it up, I did a quick search. Here's an interesting article:

Does Teresa Heinz Trust John Kerry?

His wife had him sign a prenuptial agreement, so your technical point is correct. He doesn't directly receive any money in his bank account. His wife has to give him an allowance out of that $33 million tax break. [img]i/expressions/face-icon-small-wink.gif[/img]

Filing seperately will show all hissources of income BTW, rather than grouped with hers.

Yes, I know that. That's why it was silly for you to suggest that a separate filing would reveal whether his wife benefitted or not.

So what exactly was the "point"? That the tax proposal is wrong? That it will cause what negative result? Funny, the article never got to that did it?

Ape's point was that the plan gives Kerry's wife's company a huge break. Amazing that you didn't catch that.

"massive benefits"? could you quantify this?

I thought the article already did. $33 million.

The plan is to give a tax reduction for US cos. to return foreign earnings. But the article never even looked at it...

As the article points out, most countries don't even tax those foreign earnings.

"Retirement"? Cheney rec. several million $ when he resigned, he has the gov. benefits now as well. Cheney should NOT accept ANY compensation from halliburton while he is the VP, or halliburton should stop doing government work (and especially no bid contracts, which they have been wawarded.)

Odd that Cheney should receive money from the company he ran upon resignation/retirement. That never happens.

As for compensation while he's the VP, why not? If you had earned something, you'd expect to receive it too.

As for Halliburton, you wouldn't feel that way if someone in your family worked there. It's absolutely absurd to suggest that the company should just cease operations until Cheney leaves office.

Unless these are Sub S corps they report income, and 2/3 of the corps are not Sub S.

You're confusing double taxation with reporting income. To report income, you have to earn it. The issue was whether the tax RATE for corporations is one of the highest in the world. Pointing to the ones that pay none doesn't prove that it isn't.

To prove that the tax RATE for corporations in the U.S. isn't "among the highest in the world," you have to compare what a corporation making "X" dollars in the United States pays in taxes vs. what a corporation earning the same amount pays in another country.

It is relevant when compared to the US history of percentage, which it is doing ("Historic lows")

That percentage is "Amount of Tax Paid by U.S. Corporations" divided by "Amount of Tax Paid by all U.S. Taxpayers". It doesn't involve a comparison of what a corporation earning a set amount pays in Mexico vs. here.

In other words, like I pointed out in my last post, it's irrelevant to the point you're trying to make.

The presumption that Kerry's plan "almost seems targeted to help Kery's wife" is unsupported, interesting isn't it that the article never mentioned the other multi-nationals who would also be affected. Actually it's interesting that the article never really discussed the tax plan, only an insinuation about a benefit that its proponent might have a connection to. Fine bit of work by that author....at least fine work of attacking by insinuation and character assasination.

You can ignore the obvious if you want, I suppose. The plan does, in fact, help Kerry's wife's company, and helps it substantially.

I never really was defending the article itself, but the article does discuss the multinationals affected and the Kerry plan. You're just so busy accusing everyone of "character assassination" (what an overrated term) that you didn't see that.

Yes, the Bush tax plan helped many American citizens who had similar incomes, especially those with equity investments that paid a dividend.

It helped a heck of a lot more people than the Kerry proposal would.

[madape]

Now we're getting down to it... this is from Drudge:

-------------------------------------------------------------

HEINZ ASSETS USED TO BOOST CAMPAIGN

In December '03, Kerry announced that he loaned his campaign $6.4 Million by mortgaging a share of a Boston home he jointly owns with his wife. Teresa Heinz Kerry paid cash for the Beacon Hill mansion in January 1995. But according To Kerry's own 1994 senate personal financial disclosure [signed May, 15, 1995], Kerry's own personal net worth was somewhere between a negative $130,000 to positive $34,995. The current loan on the house carries an annual interest payment of $200,000, records show, more than Kerry's $158,000 Senate salary.

Kerry's campaign insists he intends to pay off the 30-year mortgage himself. "Sen. Kerry is a man who has considerable assets," spokesman Michael Meehan explains. But Kerry's own financial disclosures show no assets sufficient to pay the loan -- or even a way to keep up with the interest payments!


--------------------------------------------------

Convenient little business arrangement the Kerry's have going on there. You scratch my back, I scratch yours. Could it be that Kerry is paying back his wife for campaign contributions by writing in a tax loophole that will massively benefit her holdings in Heinz? Nahhh... that sort of stuff never really happens.

In a related note, Teresa Heinz Kerry refuses to release her tax records

Something doesn't smell quite right here, does it?

[kg_veteran]

Excellent research, ape. The picture is coming into focus now. The reason they don't file their taxes jointly is so that there won't be public disclosure of how she's using her money to aid her husband's campaign.

Notably, as indicated in the article I cited above, because of the prenuptial agreement in place, "The only way Heinz Kerry could now give substantial money to Kerry's campaign would be to tear up her prenup and kill herself."

I smell not only a "I scratch your back, you scratch mine" situation, but a possible violation of federal campaign law.

[Mavdog]

[quote]
Originally posted by: kg_veteran

kg, you seem to be smarter than the average guy, you tell me why the article's title and point of reference isn't the relative strength or weakness of the Kerry proposal, but how the company that his wife's ex-husband's family made a fotune from may benefit. Pretty much attacking the messenger without even loooking at the message.

Nice attempt to sidestep my point about your hair-splitting.

No, your perceived "hair splitting" isn't valid at all. The article suggests that, rather than anaylze the benefits/problems with the Kerry tax proposal (and actually not even discussing the meat of the changes) it focuses on how the Heinz Corp might benefit, and insinuates that Kerry or his wife would reap benfits personally.

As for the article, it lays out pretty clearly why the proposal is weak.

Really? Here's some lines from the report:
"Two factors that significantly undermine our competitiveness have been identified. The first is that we tax corporate income on a "worldwide" basis. If a company makes a profit in France, it will have to pay U.S. tax on that profit when it mails the money home, after receiving a credit for foreign taxes paid. Most other countries do not tax foreign profits at all. Any multinational firm that earns money in France, after all, pays French tax immediately. Why should we add a second tax on top of that?...The other factor that harms U.S. competitiveness is the very high rate of U.S. corporate tax."

Odd, they don't mention the fact that kerry's proposal reduces the Corporate rate, or that Kerry's proposal will encourage these mutinationals to return their foreign earnings to domestic operations.

Come to think of it, there's been no connection established that Kerry's wife actually gets any money from heinz Corp. either, just a trust set up for her deceased husband. For all we know the trust doesn't have any heinz Corp. stock.

Actually, since you brought it up, I did a quick search. Here's an interesting article:

Does Teresa Heinz Trust John Kerry?

His wife had him sign a prenuptial agreement, so your technical point is correct. He doesn't directly receive any money in his bank account. His wife has to give him an allowance out of that $33 million tax break. [img]i/expressions/face-icon-small-wink.gif[/img]

This article does not tell us what is in Theresa Heinz's trust and if she gets $ from Heinz Corp. Second, the "$33 million tax break" isn't a tax break, it is what the writer assumes the market value of Heinz Corp. would be affected (still full of assumptions, not facts, of THKerry's trust has in its portfolio):
"With a P/E ratio of 19.35, that means that absent the loophole, the firm's market value would drop by about $832 million upon passage of the Kerry tax plan. Assuming that the Kerry-Heinz family's share of the company is four percent, which is the upper limit of what has been reported, then this loophole saves Mr. Kerry's family around $33 million."

Filing seperately will show all his sources of income BTW, rather than grouped with hers.

Yes, I know that. That's why it was silly for you to suggest that a separate filing would reveal whether his wife benefitted or not..

My point was that Kerry "doesn't get a dime from Heinz Corp.".

So what exactly was the "point"? That the tax proposal is wrong? That it will cause what negative result? Funny, the article never got to that did it?

Ape's point was that the plan gives Kerry's wife's company a huge break. Amazing that you didn't catch that.

What's amazing is the phrase "Kerry's wife's company" which it is not. Theresa Heinz doesn't own Heinz Corp,. and from all we know Theresa Heinz doesn't receive a dime from Heinz Corp. as she gets benefits from a family trust set up for her deceased husband. Amazing that you can't grasp that.

"massive benefits"? could you quantify this?

I thought the article already did. $33 million.

As shown above, this is the SPECULATION of how much the market value of Heinz Corp. could change with SPECULATION on how much that COULD mean to Theresa Heinz's trust. Not very factual...

The plan is to give a tax reduction for US cos. to return foreign earnings. But the article never even looked at it...

As the article points out, most countries don't even tax those foreign earnings.

So that is a reason to not mention the proposal and how it might increase tax collections by the US Government? Nice attempt to avoid the subject BTW.

"Retirement"? Cheney rec. several million $ when he resigned, he has the gov. benefits now as well. Cheney should NOT accept ANY compensation from halliburton while he is the VP, or halliburton should stop doing government work (and especially no bid contracts, which they have been awarded.)

Odd that Cheney should receive money from the company he ran upon resignation/retirement. That never happens.

Is that the point? I didn't criticize Halliburton nor Cheney for their severance agreement, that's for stockholders to do.

As for compensation while he's the VP, why not? If you had earned something, you'd expect to receive it too.

He is employed by the US Government to be VP, he should NOT be receiving any compensation from a government contractor while in the employment of the US Government, and especially from a contractor who received over $4B in no-bid contracts from the US Government.

As for Halliburton, you wouldn't feel that way if someone in your family worked there. It's absolutely absurd to suggest that the company should just cease operations until Cheney leaves office.

My point is NOT that they should "cease operations until Cheney leaves office", they can do business with the US Goverment...just don't be paying the VP while he is in office. Pretty simple concept actually. It's called "Conflict of Interests".

Unless these are Sub S corps they report income, and 2/3 of the corps are not Sub S.

You're confusing double taxation with reporting income. To report income, you have to earn it. The issue was whether the tax RATE for corporations is one of the highest in the world. Pointing to the ones that pay none doesn't prove that it isn't.

Your assertion was "What you don't point out is that of those "2 out of 3 U.S. companies" that paid no income taxes, virtually all of them are closely held and/or family companies which don't report any income or don't report much income; consequently, they don't pay taxes". The only cos, that "don't report income" are either ones that a) are unprofitable (unlikely that that is the predominant reason) and have no income, or b) are Sub S where the company doen't report income but such income is reported as individual income. If they are "closely held and/or family companies" that are not Sub S and have income they WILL report income as a business.

To prove that the tax RATE for corporations in the U.S. isn't "among the highest in the world," you have to compare what a corporation making "X" dollars in the United States pays in taxes vs. what a corporation earning the same amount pays in another country.

Here's a list of corporate tax rates in other countries. That is the question, isn't it? Yes, I believe it is...
Intl corp tax rates

[quote]

You're still not addressing the issue unless you cite some comparison to the taxation occurring in other countries. The percentage of total revenues is irrelevant.

It is relevant when compared to the US history of percentage, which it is doing ("Historic lows")

That percentage is "Amount of Tax Paid by U.S. Corporations" divided by "Amount of Tax Paid by all U.S. Taxpayers". It doesn't involve a comparison of what a corporation earning a set amount pays in Mexico vs. here. In other words, like I pointed out in my last post, it's irrelevant to the point you're trying to make.

These are two distinct issues, the relative rate of taxation by different countries, and then the level of US tax receipts from individuals and business. The latter issue is the "historical lows" that have no relationship to other countries tax code.

The presumption that Kerry's plan "almost seems targeted to help Kery's wife" is unsupported, interesting isn't it that the article never mentioned the other multi-nationals who would also be affected. Actually it's interesting that the article never really discussed the tax plan, only an insinuation about a benefit that its proponent might have a connection to. Fine bit of work by that author....at least fine work of attacking by insinuation and character assasination.

You can ignore the obvious if you want, I suppose. The plan does, in fact, help Kerry's wife's company, and helps it substantially.

I never really was defending the article itself, but the article does discuss the multinationals affected and the Kerry plan. You're just so busy accusing everyone of "character assassination" (what an overrated term) that you didn't see that.

Really? Just what other multinational company is mentioned in the article besides Heinz Corp.? Answer: None. Clearly they are not the only multinational affected...

Yes, the Bush tax plan helped many American citizens who had similar incomes, especially those with equity investments that paid a dividend.

It helped a heck of a lot more people than the Kerry proposal would.

The totals I've read say that 25% of taxfilers had dividend income. It is fair to conclude that at least if not more than 1 in 4 people could see a benefit from the Kerry corporate tax proposals either from their tax obligations being reduced, their employment status or their investment returns.

[kg_veteran]

Originally posted by: Mavdog
No, your perceived "hair splitting" isn't valid at all. The article suggests that, rather than anaylze the benefits/problems with the Kerry tax proposal (and actually not even discussing the meat of the changes) it focuses on how the Heinz Corp might benefit, and insinuates that Kerry or his wife would reap benfits personally.

Apparently you only read the portions of the article you wanted to read. Sure, it discusses how the Heinz Corp might benefit, but it also discusses why the author believes that Kerry's tax proposal is problematic. For example:

Under current law, they can locate production and profits abroad and avoid paying the very high U.S. taxes by letting profits sit in bank accounts overseas. This strategy does not avoid foreign taxes, but since those are much lower than ours, the playing field is leveled somewhat. A U.S. manufacturer can produce a good in Ireland for sale in Europe and be competitive despite our high tax rates.

Senator Kerry plans to end this. If a multinational makes money abroad, it must pay U.S. taxes immediately. This will make the negative impact of high U.S. taxes impossible to avoid and force U.S. firms to significantly increase prices. That should lead to sharp reductions in market share and employment both at home and abroad, and a likely wave of foreign acquisitions of U.S. companies. The plan's second measure, a 1.75 percent reduction in the corporate tax rate on all worldwide profits, would not begin to offset the lost benefit of tax deferral.

Odd, they don't mention the fact that kerry's proposal reduces the Corporate rate

Really? So when the author says, "The plan's second measure, a 1.75 percent reduction in the corporate tax rate on all worldwide profits, would not begin to offset the lost benefit of tax deferral," he's not mentioning it?

or that Kerry's proposal will encourage these mutinationals to return their foreign earnings to domestic operations.

How does taxing ALL earnings encourage the multinationals to return the earnings to domestic operations?

This article does not tell us what is in Theresa Heinz's trust and if she gets $ from Heinz Corp.

You're right, it doesn't. But a quick search of the Internet tells us that she IS a stockholder in Heinz Corp...

Heinz is the widow of the late Senator John Heinz of Pennsylvania, who was heir to the $640 million Heinz food fortune. (John Heinz and Wirth were old friends in the Senate, and co-authored Project '88, a detailed manifesto of free-trade environmentalism.) Teresa Heinz,
a ruling class Portuguese woman who is a sort of green version of Ariana Huffington, remains a leading stockholder in the Heinz Corp., which owns StarKist, the world's largest tuna processor. -- 12-6-95 -- The Shameless Seven Ride Again

Second, the "$33 million tax break" isn't a tax break, it is what the writer assumes the market value of Heinz Corp. would be affected

Can you refute his calculations? I realize that he makes assumptions (albeit reasonable ones), but do you think his numbers are wrong?

My point was that Kerry "doesn't get a dime from Heinz Corp."

In the direct and literal sense, that's long since been established.

What's amazing is the phrase "Kerry's wife's company" which it is not. Theresa Heinz doesn't own Heinz Corp

See above.

and from all we know Theresa Heinz doesn't receive a dime from Heinz Corp. as she gets benefits from a family trust set up for her deceased husband. Amazing that you can't grasp that.

See above.

So that is a reason to not mention the proposal and how it might increase tax collections by the US Government? Nice attempt to avoid the subject BTW.

The general thrust of the article is that increasing taxation of American multinational corporations hurts their ability to compete in the global marketplace. Something you have yet to refute.

Is that the point? I didn't criticize Halliburton nor Cheney for their severance agreement, that's for stockholders to do.

Sure you did. You said it was dishonest to criticize Kerry for legislation that might benefit Heinz Co. and NOT criticize Cheney for receiving his severance package from Halliburton.

He is employed by the US Government to be VP, he should NOT be receiving any compensation from a government contractor while in the employment of the US Government, and especially from a contractor who received over $4B in no-bid contracts from the US Government.

So what should he do? Refuse the money that he earned BEFORE he became Vice-President? There's a BIG difference between receiving something you earned beforehand and what you're implying.

My point is NOT that they should "cease operations until Cheney leaves office", they can do business with the US Goverment...just don't be paying the VP while he is in office. Pretty simple concept actually. It's called "Conflict of Interests".

It's not a conflict of interest unless the amount he's being paid changes based upon an award of contracts to Halliburton and/or you can show that he's the one giving the contracts to Halliburton.

Here's a list of corporate tax rates in other countries. That is the question, isn't it? Yes, I believe it is...
Intl corp tax rates

That link indicates that the author of the article is correct. It shows the average US corporate tax rate at 40%. According to the author of the article, the world average is 18%. That's a difference of 22%. So when you said, "So how can it be true that the United States is "one of the highest tax countries on earth"? Because it is not. " -- you were wrong.

The totals I've read say that 25% of taxfilers had dividend income. It is fair to conclude that at least if not more than 1 in 4 people could see a benefit from the Kerry corporate tax proposals either from their tax obligations being reduced, their employment status or their investment returns.

How is it fair to assume that? You haven't established that anyone will receive a benefit from Kerry's plan. You haven't even talked about the plan. All you've done is quibbled over whether the writer of the article had a bias or not and unsuccessfully tried to nitpick the facts stated in his article.

For a guy who is constantly criticizing the opinions of others, you sure don't back your own opinions up with any facts.

[Mavdog]

[quote]
Originally posted by: kg_veteran

Apparently you only read the portions of the article you wanted to read. Sure, it discusses how the Heinz Corp might benefit, but it also discusses why the author believes that Kerry's tax proposal is problematic. For example:

Under current law, they can locate production and profits abroad and avoid paying the very high U.S. taxes by letting profits sit in bank accounts overseas. This strategy does not avoid foreign taxes, but since those are much lower than ours, the playing field is leveled somewhat. A U.S. manufacturer can produce a good in Ireland for sale in Europe and be competitive despite our high tax rates.

Senator Kerry plans to end this. If a multinational makes money abroad, it must pay U.S. taxes immediately. This will make the negative impact of high U.S. taxes impossible to avoid and force U.S. firms to significantly increase prices. That should lead to sharp reductions in market share and employment both at home and abroad, and a likely wave of foreign acquisitions of U.S. companies. The plan's second measure, a 1.75 percent reduction in the corporate tax rate on all worldwide profits, would not begin to offset the lost benefit of tax deferral.

Under current law all these foreign profits are subject to taxation when returned to the US. They don't "avoid" paying the tax, they defer. They don't leave the profit forever, what good would that be?
The doomsday scenario for US business is laughable.
The Kerry proposal is for a 5% not 1.75% as mentioned above.
Other than that...

or that Kerry's proposal will encourage these mutinationals to return their foreign earnings to domestic operations.

How does taxing ALL earnings encourage the multinationals to return the earnings to domestic operations?

see above

This article does not tell us what is in Theresa Heinz's trust and if she gets $ from Heinz Corp.

You're right, it doesn't. But a quick search of the Internet tells us that she IS a stockholder in Heinz Corp...

Heinz is the widow of the late Senator John Heinz of Pennsylvania, who was heir to the $640 million Heinz food fortune. (John Heinz and Wirth were old friends in the Senate, and co-authored Project '88, a detailed manifesto of free-trade environmentalism.) Teresa Heinz,
a ruling class Portuguese woman who is a sort of green version of Ariana Huffington, remains a leading stockholder in the Heinz Corp., which owns StarKist, the world's largest tuna processor. -- 12-6-95 -- The Shameless Seven Ride Again

1995? Anyway, I don't know what assets she has, Heinz is 67% owned by institutions and funds, the trust is not listed in any filings. Of course, there are perhaps tens of thousand s of stockholders in heinz Corp.

Second, the "$33 million tax break" isn't a tax break, it is what the writer assumes the market value of Heinz Corp. would be affected

Can you refute his calculations? I realize that he makes assumptions (albeit reasonable ones), but do you think his numbers are wrong?

It wasn't a question of the "calculations", you incorrectly said "His wife has to give him an allowance out of that $33 million tax break", it's not a tax break.

What's amazing is the phrase "Kerry's wife's company" which it is not. Theresa Heinz doesn't own Heinz Corp[/i]

See above.

see above. She doesn't.

and from all we know Theresa Heinz doesn't receive a dime from Heinz Corp. as she gets benefits from a family trust set up for her deceased husband. Amazing that you can't grasp that.[/i]

See above.

see above.

So that is a reason to not mention the proposal and how it might increase tax collections by the US Government? Nice attempt to avoid the subject BTW.[/i]

The general thrust of the article is that increasing taxation of American multinational corporations hurts their ability to compete in the global marketplace. Something you have yet to refute.

It refutes itself as the article is incorrect in its premise that the US cos. "avoid" rather than defer taxes. Kerry's proposal says "Under John Kerry's plan, more than 99 percent of taxpaying companies will see their taxes go down."

Is that the point? I didn't criticize Halliburton nor Cheney for their severance agreement, that's for stockholders to do.

Sure you did. You said it was dishonest to criticize Kerry for legislation that might benefit Heinz Co. and NOT criticize Cheney for receiving his severance package from Halliburton.

Yes, the portion of the package that pays him today I guess I am criticizing. My above was in regard to the payment when he left the co.

He is employed by the US Government to be VP, he should NOT be receiving any compensation from a government contractor while in the employment of the US Government, and especially from a contractor who received over $4B in no-bid contracts from the US Government.

So what should he do? Refuse the money that he earned BEFORE he became Vice-President? There's a BIG difference between receiving something you earned beforehand and what you're implying.

He can defer the payment, that's simple to do. There is NO difference in the fact Halliburton is seeking work from the government that will be part of its revenues to pay the VP.

[My point is NOT that they should "cease operations until Cheney leaves office", they can do business with the US Goverment...just don't be paying the VP while he is in office. Pretty simple concept actually. It's called "Conflict of Interests".

It's not a conflict of interest unless the amount he's being paid changes based upon an award of contracts to Halliburton and/or you can show that he's the one giving the contracts to Halliburton.

No, the monies Halliburton gets from the government are part of the monies going to the VP. These government contracts also help Halliburton stay profitable. That's a clear conflict.

The totals I've read say that 25% of taxfilers had dividend income. It is fair to conclude that at least if not more than 1 in 4 people could see a benefit from the Kerry corporate tax proposals either from their tax obligations being reduced, their employment status or their investment returns.

How is it fair to assume that? You haven't established that anyone will receive a benefit from Kerry's plan. You haven't even talked about the plan. All you've done is quibbled over whether the writer of the article had a bias or not and unsuccessfully tried to nitpick the facts stated in his article.

For a guy who is constantly criticizing the opinions of others, you sure don't back your own opinions up with any facts.

I didn't pen a piece purporting to discuss a tax proposal put forth by the presumed demo candidate, merely saw a hatchet job and by showing what the plan actually says (the "facts" BTW) exposed the poorly conceives article for what it was- wrong in its premise and full of inaccuracies, not even mentioning the fact the article implied the tax policy was influenced by selfish motives.

[kg_veteran]

Glad to see that you dropped the whole "US corporate taxes aren't high" bit. Especially considering your man Kerry thinks so, too.

"Foreign taxes are one-third lower than U.S. taxes." -- John Kerry's Economic Plan

Under current law all these foreign profits are subject to taxation when returned to the US. They don't "avoid" paying the tax, they defer. They don't leave the profit forever, what good would that be?
The doomsday scenario for US business is laughable.

The flaw in your thinking is that they have to return the profits to the United States. Here's what John Kerry has to say about it:

"American companies do not have to pay taxes on their active foreign income until they bring it back to the United States. If they keep their money abroad, a company can avoid paying U.S. taxes entirely. In addition, this provides an incentive for companies to keep re-investing their money abroad, and not to bring it back to contribute investment and growth to the American economy." -- John Kerry's Economic Plan

It's rather enjoyable to refute your points using your idol's own words.

see above

You didn't explain it "above". All you did was disagree with your idol.

Taxing them equally just heavily increases the cost of doing business for US multinational companies. If Kerry wanted to REALLY give incentive to return JOBS to the United States, he'd propose what Hassett suggested: a return of the corporate tax rate to around 18% (the world average in 2001).

1995? Anyway, I don't know what assets she has

Thank you for the admission.

It wasn't a question of the "calculations", you incorrectly said "His wife has to give him an allowance out of that $33 million tax break", it's not a tax break.

Ah, that's right. You'd rather argue semantics than make a point.

The writer's calculation was that (assuming she owned 4% of Heinz Corp.) she'd see a savings of $33 million from the loophole in the Kerry plan. A calculation you don't refute.

Moving along...

see above. She doesn't.

Funny how you can admit you don't what her assets are in one breath, then claim you do in the next.

Your flip-flopping would make Kerry proud.

[quote]
So that is a reason to not mention the proposal and how it might increase tax collections by the US Government? Nice attempt to avoid the subject BTW.[/i]

It refutes itself as the article is incorrect in its premise that the US cos. "avoid" rather than defer taxes.

While your semantics are correct, practically speaking you're wrong. And John Kerry thinks you're wrong.

"If they keep their money abroad, a company can avoid paying U.S. taxes entirely." -- John Kerry's Economic Plan

Kerry's proposal says "Under John Kerry's plan, more than 99 percent of taxpaying companies will see their taxes go down."

If you're a multinational company that generates 50% of its income domestically and 50% of its income abroad, and you were paying around 40% on the half that you generate here and 18% on the half you generate elsewhere, it sounds like your overall rate is 29%. I'm no genius, but that's what it sounds like. If you suddenly drop the U.S. tax rate by 5% and make me pay that rate on all of my income, now my overall rate is 35%.

I guess I'd like to see how Kerry comes up with the "more than 99 percent" number, because it sounds awfully fishy to me.

[Mavdog]

Originally posted by: kg_veteran
Glad to see that you dropped the whole "US corporate taxes aren't high" bit. Especially considering your man Kerry thinks so, too.

I believe that all taxes are “too high” kg, my difference of opinion is the point that taxes on US businesses are an uncompetitive weight and need to be lowered. I pointed that the business portion of the US tax receipts was at “historic lows”.

The public sector is growing greatly, tax revenue decreasing from business means a greater burden on other tax producers

The net affect of the proposal is an increase in near term tax collections.

Under current law all these foreign profits are subject to taxation when returned to the US. They don't "avoid" paying the tax, they defer. They don't leave the profit forever, what good would that be?
The doomsday scenario for US business is laughable.

The flaw in your thinking is that they have to return the profits to the United States. Here's what John Kerry has to say about it

Kerry's phrase is wrong. They were accurate when it was mentioned above that specific quote:

"FUNDAMENTALLY REFORM AMERICA'S INTERNATIONAL TAX SYSTEM. John Kerry will fundamentally reform America's international tax system, eliminating tax breaks for companies that create jobs overseas and using the approximately $12 billion in annual savings to cut the corporate tax rate. Under John Kerry's plan, more than 99 percent of taxpaying companies will see their taxes go down.
· End tax breaks that encourage companies to move jobs overseas by eliminating the ability of companies to defer paying U.S. taxes on foreign income.
· Close abusive international tax loopholes.
· Cut the corporate tax rate by 5 percent.

It's rather enjoyable to refute your points using your idol's own words.

I wouldn’t call him an “idol”, as I said he made a mistake in that quote and the point hasn’t been refuted.

US cos. will pay a tax on the foreign income when they bring that money home. They cannot avoid the tax when it comes home.

A co. can keep the money in foreign ops, tho that makes it tough to use it. Sound business practice is to bring it back to the parent to be used in investing in their business. The objective of the proposal is motivating US cos. to bring it home, juicing investment in domestic industry.

Taxing them equally just heavily increases the cost of doing business for US multinational companies. If Kerry wanted to REALLY give incentive to return JOBS to the United States, he'd propose what Hassett suggested: a return of the corporate tax rate to around 18% (the world average in 2001).

Oh, Hassett found time to stop impugning Kerry’s character long enough to make a point?

I disagree with the concept of a need for these cos. to decrease their share of tax receipts. US business has led the world in ROE as well in their equity valuations, there's no apparent need for tax relief to stay competitive.

A 50% reduction in their tax rate? They’ll be then paying a historic low in total tax receipts while government spending is increasing along with the national debt.

1995? Anyway, I don't know what assets she has

Thank you for the admission.

Where’s yours? None of us, including the writer, knows what assets she has today.

It wasn't a question of the "calculations", you incorrectly said "His wife has to give him an allowance out of that $33 million tax break", it's not a tax break.

Ah, that's right. You'd rather argue semantics than make a point.

The writer's calculation was that (assuming she owned 4% of Heinz Corp.) she'd see a savings of $33 million from the loophole in the Kerry plan. A calculation you don't refute.

Here it is:
”the Kerry plan on that company's value would be tremendous. If we assume that deferring U.S. tax on their foreign income saves them the difference between the U.S. tax and the average foreign tax, then that adds up to annual savings of about $43 million. With a P/E ratio of 19.35, that means that absent the loophole, the firm's market value would drop by about $832 million upon passage of the Kerry tax plan. Assuming that the Kerry-Heinz family's share of the company is four percent, which is the upper limit of what has been reported, then this loophole saves Mr. Kerry's family around $33 million.”

The writer assumes a tax savings by the Heinz. Corp, the affect on earnings and the assumed decrease in market cap for Heinz Corp., concluding the number is $832M, so the intended to be shocking no. of $33M in declining value to Theresa Heinz if she owns 4%, which is the max she could hold without being listed on the public docs of owners. The calculations are fine with all the presumptions, but that doesn’t make it a “33M tax break”, nor is it ‘savings’ either. It’s a paper loss realized if the stock is sold.

It’s just as easy to presume a slightly higher p/e so no real loss in value would be there.

The goal of his illustration was to throw some big number of suggested personal gain to Kerry. That’s not good journalism nor good analysis.

What's amazing is the phrase "Kerry's wife's company" which it is not. Theresa Heinz doesn't own Heinz Corp

Funny how you can admit you don't what her assets are in one breath, then claim you do in the next.

Your flip-flopping would make Kerry proud.

No flopping here I’m saying that NONE of us know what she owns.

So if she has any stock at all, which none of us know, she might own as much as 4%, isn’t involved in the company and somehow in your world it’s accurate to say it's “her company”? Ridiculous. With the high level of institutional and fund ownership I showed, it’s clear whose company it is, and it’s not Theresa Heinz Kerry.

So that is a reason to not mention the proposal and how it might increase tax collections by the US Government? Nice attempt to avoid the subject BTW.[/i]

It refutes itself as the article is incorrect in its premise that the US cos. "avoid" rather than defer taxes.

See above. Explain to me how a company can avoid paying tax on money they return to the US.

Kerry's proposal says "Under John Kerry's plan, more than 99 percent of taxpaying companies will see their taxes go down."

If you're a multinational company that generates 50% of its income domestically and 50% of its income abroad, and you were paying around 40% on the half that you generate here and 18% on the half you generate elsewhere, it sounds like your overall rate is 29%. I'm no genius, but that's what it sounds like. If you suddenly drop the U.S. tax rate by 5% and make me pay that rate on all of my income, now my overall rate is 35%.

I guess I'd like to see how Kerry comes up with the "more than 99 percent" number, because it sounds awfully fishy to me.

The plan Kerry proposes is to give a short term impetus to business investment. The cos. will over a longer term be returning these earnings, the plan says do it now and here’s a break to do so.

It borrows future tax revenue to motivate business to invest today. That’s a better concept than decreasing business’s share of tax receipts today by lowering their rate by 50%.

[MavKikiNYC]

Now we know a little more.

Teresa's Fair Share
WSJ: October 18, 2004; Page A18

The Kerry campaign finally released Teresa Heinz Kerry's 2003 tax return, or rather two pages of it, late last Friday, and the story got buried next to the hardware-store ads. We think she ought to release the rest of her return, since her wealth was crucial to salvaging her husband's struggling campaign during the Democratic primaries in 2003.

But even this minimal disclosure deserves more attention in light of John Kerry's pledge to raise tax rates. In 2003, Mrs. Kerry -- or Teresa Heinz , as she declared herself on her IRS 1040 form -- earned $5.07 million, hardly a surprising income for someone estimated to be worth nearly $1 billion.

The news is that $2.78 million of that income came in the form of tax-exempt interest from what the Kerry campaign's press release attributed to investments in "state, municipal and public entity bonds." What the campaign didn't say is that these are the kind of investments that rich people can afford to hire lawyers and accountants to steer their money into. On her remaining "taxable" income of $2.29 million, Mrs. Kerry paid $627,150 in taxes, for an overall average federal tax rate of only 12.4% on her $5.07 million in total income.

As the nearby chart shows, this puts Mrs. Kerry's tax rate at well below that of other filers in her super-rich neighborhood. But it also means she is paying a lower average rate than nearly all middle-class taxpayers paid in 2001, the last year for which the IRS has published the data. The top 50% of all federal filers contributed 96.1% of all federal income taxes in 2001, and they paid an average income-tax rate of 15.9%. That's 3.5-percentage points more than Mrs. Kerry paid in 2003.

The use of these tax-exempt investment vehicles is perfectly legal, and we don't begrudge her the savings even if her husband attacks others who exploit them as greedy and vaguely dishonest. Our point is less about hypocrisy than about what our liberal friends like to call "fairness."

Mega-millionaires such as Mrs. Kerry who can invest in tax-shelters will be able to dodge the new higher two top marginal tax rates on dividends and other income that Senator Kerry is proposing for anyone making more than $200,000. The top rate would go back up to 39.6% from 35% -- or to nearly 41% if you include the phase-out of deductions that remains part of the tax code.

The people who won't be able to escape these higher rates are two-earner couples on mid-career salaries, or small-business owners who pay taxes as subchapter S companies at individual rates, or pensioners who've saved all their lives to build a nest egg and are now living off dividends. Mr. Kerry calls these people "the rich," but we know a lot of them who are decidedly middle-class and who certainly can't afford the five homes that the Kerrys own.

At the very least, Mrs. Kerry's tax returns are a screaming illustration of the need for reform to make the tax code simpler and fairer. But they also show that Senator Kerry's proposed tax increases are much more about a revenue grab than they are about tax justice.

Average federal income tax rate

Teresa Heinz Kerry, 2003 12.4%

All Taxpayers, 2001 14.2

Top 1%, 2001 27.5
Top 10%, 2001 21.4
Top 25%, 2001 18.1
Top 50%, 2001 15.9

Sources: Kerry campaign, Tax Foundation.

[Drbio]

Dear lord kg.....at least make sure the guy has medical insurance. [img]i/expressions/face-icon-small-wink.gif[/img]