Kerry's pay their 'fair share'?

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RACastanet
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Kerry's pay their 'fair share'?

Post by RACastanet »

From the WSJ:

Wild and Crazy Guy
John Kerry and his billionaire wife pay lower taxes than you do.

BY STEPHEN MOORE
Sunday, October 17, 2004 12:01 a.m. EDT

Remember the classic 1970s comic routine from Steve Martin? You can make a million dollars and pay no taxes. First, get a million dollars. Then when the IRS comes knocking on your door demanding to know why you didn't pay your taxes, just remember two simple words: "I forgot."

Well, John Kerry has his own version. It goes like this: You can make a billion dollars and pay almost no taxes. First, marry a billionaire. Second, hire a gaggle of tax accountants and lawyers to bring your tax rate down to about half what many middle-income families pay. Except for John Kerry, this is no gag; it's reality. According to the Kerrys' own tax records, and they have not released all of them, the couple had a combined income of $5.51 million last year and paid $704,227 in income taxes. That means their effective tax rate was a whopping 12.8%. And it was all (presumably) done legally.

Now don't get me wrong: I'm not against people paying a 12.8% tax rate. Far from it. I just believe that all Americans--even those who can't afford to hire tax attorneys to set up complicated trusts and find legal ways to stash income in other tax-sheltered investments like municipal bonds--should have a shot at that kind of non-confiscatory tax rate.

Under the current tax system the middle class pays far more than the Kerry tax rate. In fact, the average federal tax rate--combined payroll and income tax--for a middle-class family is closer to 20% or more. George W. and Laura Bush, who had an income one-tenth of the Kerrys', paid a tax rate of 30%.





Of course, there is delicious irony in the Kerry family tax-return data. Here is the man who finds clever ways to reduce his own tax liability while voting for higher taxes on the middle class dozens of times in his Senate career. He even voted against the Bush tax cut that saves each middle-class family about $1,000.
The Kerrys have unwittingly made the case for what George W. Bush says he wants to do: radically simplify and flatten out the tax code. Dick Armey and Steve Forbes have persuasively argued over the years that America should have a flat tax with a rate of 17% to 19%. John Kerry has consistently opposed a flat tax, because he says it would be a tax break for the rich. But the truth is with a 19% flat tax, some rich people with lavish tax shelters, like John Kerry, would pay more taxes. I calculate that the Kerrys would pay another $500,000 of taxes if we had a flat tax.

So before John Kerry is given the opportunity to raise taxes again on American workers, shouldn't he and Teresa at least pay their fair share?
Last edited by RACastanet on Thu Oct 21, 2004 9:26 am, edited 1 time in total.
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IJ
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Post by IJ »

The Kerry contribution to the tax coffers looks embarassing, I completely agree. Note also:

"He even voted against the Bush tax cut that saves each middle-class family about $1,000."

This is a oft repeated nonfact. This is an average savings across america. Does not apply to the "average" family because those making more saved more, an average families saved less. For some, benefits cuts exceeded breaks (I'm not arguing that we should lay the bennies on thick, I'm just saying the advert to the middle class was deceptive.)

The bigger picture here is that those with means, well, have means. If you've got money, you can invest in stocks, businesses, your kids education, and so on... there are wonderful stories of rags to riches in the USA, but mostly, the wealthy got set up. This looks to me primarily like another example of how money opens doors and how the push to reaganomically unburden the wealthy to spur growth leads to them paying less than would seem fair...
--Ian
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Bill Glasheen
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Post by Bill Glasheen »

The bigger picture here is that those with means, well, have means. If you've got money, you can invest in stocks, businesses, your kids education, and so on... there are wonderful stories of rags to riches in the USA, but mostly, the wealthy got set up. This looks to me primarily like another example of how money opens doors and how the push to reaganomically unburden the wealthy to spur growth leads to them paying less than would seem fair...
Yes and no... Allow me to step in as an objective party (yes, I can play that role :) ) and critique this thinking.

My father is the classic individual I am thinking of. He started with virtually nothing when he and my mom moved from the New York area down to Virginia to work for NASA. He subsequently got pi$$ed off at the government bureaucracy there, and started an independent contracting firm. He then became a stock broker and investment advisor.

My parents had eight kids. In spite of starting with nothing, he was able to send all eight of those kids to private schools. All eight got at least a bachelors degree, and now 5 of the 8 have advanced degrees. This took a lot of dedication on the part of my parents, as well as a lot of money.

One could argue that it's impossible to save and grow wealthy in that scenario. Not so. My father was extremely disciplined about putting money aside and investing it. And he understood a basic principle that determines whether people will become wealthy or poor - the time value of money. It works for you on the investment side, and it works against you on the borrowing side.

Most people do not have either the knowledge or the discipline I'm talking about. Even with the knowledge, a lot of people will NEVER make enough money. They'll always piss it away before they get it. They will never be in a position to make money work for them and stop being dependent on a job for income. They will tell you otherwise, but don't believe it. As a lawyer friend of my father used to say, "It isn't how much money you make; it's how much money you save."

Certainly investors would prefer one type of administration over the next. My father loved JFK because he reduced the capital gains tax. That allowed him to do more of the kinds of things that brought him from being a slave to a job all the way to being a master of his investments. It helped him get there quicker. Many argue that reducing things like captial gains taxes encourage the Gabriel Glasheens of the world to invest more, which stimulates the economy. That in turn brings in more revenue to the government in the form of corporate taxes, and causes job creation. This in turn means more dividends to the Mr. Glasheens of the world, and thus more TOTAL taxes coming back to Uncle Sam. It also means more taxpaying workers.

The kinds of things that the Kerrys are doing are the kinds of loopholes in the tax code that allow the extremely wealthy to hide money from Uncle Sam. The intent of the tax code may have been good, but the reality is to create an infrastructure that allows the hyper wealthy from paying much in the way of taxes. Their assets may not be liquid, but at least they aren't taken away from them. My father has become aware of many of these over time. He does some good with it. For example when my mom died, he created a charitable foundation that is paying for a number of statues at churches with plaques in her honor. There are also some scholarship funds. But he can just as easily be selfish with these loopholes. Some people spend every waking hour working these schemes to maximize what they keep.

I'm not completely damning of what the Kerrys do. There are some real evils in the tax code. Why the inheritance tax is the way it is is beyond me. When my dad dies, his wealth is NOT the government's wealth. And when you spread it out amongst eight kids and all their grandkids, it doesn't amount to much. Plus...there are some family businesses like farming that are being destroyed by this generational inheritance tax. It takes much in the way of assets to run a farm. If Uncle Sam gets a big chunk of the assets of a deceased beyond a threshold, then you can kiss a family farm goodbye when grandpa dies.

Bottom line... Don't believe the simplistic partisan drivel you hear from some - on both sides of the aisle. It's very complicated.

And at the end of the day cream rises, no matter who is in the White House.

- Bill
ljr
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Post by ljr »

I also believe that a lot of the Heinz wealth is in tax free inrstments like municipal bonds and US Treasuries.

I believe that most of the Tax shelters were removed by Pres Reagan back in the '80s.

Teresa is using the same tax breaks you are from you IBM stocks, except some of her investments allow here to pay 0% in taxes....

Her biggest advantage is she does not "work" for any of her income, and she was help by the Bush cap gains tax cut.

ljr
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Post by Gene DeMambro »

Contrary to popular belief, John Kerry did not come from wealth. While descended from the Puritan Forbes family (who actually owns a private island off of Martha's Vineyard), his tuition at St. Pauls' school was paid for by a wealthy aunt as his parents did not have the means.

In the 80's, after Kerry divorced his first wife and his election to the Senate, he travelled back and forth from Washington to Boston every weekend to be with his daughters. He didn't even own a home then.

Teresa Heinz Kerry Kerry was previously married for 25 years to the late Henry John Heinz III, a member of the founding family of the H.J. Heinz Company, and after his death in a 1991 plane crash she inherited a Heinz family fortune estimated at over $500 million. He was a Republican US Senator from Pennsylvania. So Tereas Heinz Kerry became wealthy after inheriting millions upon the death of her Republican husband.

Together, Senator and Mrs. Kerry own a single piece of property - their home in Louisberg Square in Boston. This is the home he partially mortgaged to help finance his Presidential run. Heinz Kerry owns four other pieces of property - all owned before her marriage to Sen. Kerry. Some are even still in the name of the late John Heinz. The senator and his wife signed a prenuptial agreement and have kept their premarital assets separate. They file separate tax returns.

Ms. Heinz Kerry also doesn't even own anything close to a controlling interest of H.J. Heinz Company. The Heinz family trust which Mrs. Kerry inherited sold most of its shares of Heinz stock back in 1995 and currently holds less than a 4% interest in the company:
Neither Mrs. Heinz Kerry nor Senator Kerry nor any of the Heinz trusts or endowments — either individually or collectively — holds a significant percentage of shares of the H.J. Heinz Company. In 1995 the Heinz Endowments and family trusts sold a large percentage of Heinz shares in a secondary share offering to diversify their holdings. As a result, their current holdings are under 4 percent.
http://www.heinz.com/jsp/presidential_statement.pdf

The "embarassing" Kerry contribution to the tax coffers was 30% of $346,664. Nothing embarassing about that. And unless one wishes to delve into the types of investments and securities Theresa Heinz has her family money (and what the late John Heinz's will calls for) and the charitable foundations Heinz Kerry is involved in, including the Howard Heinz Endowment, the Vira Heinz Endowment, and the Heinz Family Philanthropies, I wouldn't go so far as to call her contribution "embarassing".

Gene
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Post by IJ »

Bill, I agree, smart people can work wonders with $. Most of it for some in SoCal, so I can figure, goes to gas for the hummers and other dumb cars people commute in. I saw gas for 2.67 today. Whoa. I'd rather drive something modest and save... or invest (just bought a house).

BUT, start a bunch of people of equal smarts out with vastly different support networks, and see what happens. IF someone lives on the bare minimum ("x") for an area and saves the rest of their income ("y") and invests wisely, they'll beat their dumb neighbor and come in far behind the guy who does the same and happens to make x + 100y. The more discretionary income you have the more miracles you can work. At a point, the mere interest on a savings account can pay for your life expenses and for wisdom to do something better with it.

Brains and money BOTH open doors...
--Ian
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Bill Glasheen
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Post by Bill Glasheen »

Maybe.

But look at all those Hollywood actors and of course Mike Tyson himself, broke, after all that friggin money.

I don't spend time worrying about what I don't have. As one of my favorite song ladies says, It's not having what you want, it's wanting what you have.

- Bill
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