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Mitt Romney & Ron Paul: Historic Overview of Their Views on Taxes

David Mitchell — Wed, 25 Jan 2012 13:30:15 +0000

Because taxes can significantly impact the economy by changing the cash flow available to both individuals and businesses, a presidential candidate’s view on taxes has become an increasingly hot topic during the past several election seasons.

Each presidential candidate’s view on tax policy is different. Some candidates weigh heavily on the standpoint that tax money should be used to stimulate the economy, while others believe that taxes should be severely cut in order to stimulate the economy. Taking a look at the history of how the candidates voted on taxes – as well as the stances that they have taken – can give us a good idea as to how they’ll handle taxes if elected into office.

Like all politicians, both Mitt Romney and Ron Paul have each taken their own unique positions on taxes. Here is a historic overview of what these two presidential hopefuls have said and done on the topic of U.S. taxes over the years:

Mitt Romney’s History on Taxes:

November 1994 – Promised not to raise taxes.

March 2002 – Promised not to freeze the tax rollback.

May 2007 – Said that he wanted an end to taxes on capital gains, dividends and interests. That same month, he raised Massachusetts fees, but not Massachusetts taxes, and pledged no new taxes for 2007. He had refused such a pledge in 2002.

August 2007 – Said that the death tax doesn’t make sense.

September 2007 – Signed a no-tax pledge. At the same time, the Democrats pledged to raise taxes.

December 2007 – Stated his intention to reduce taxes for middle-income families.

January 2008 – Said that he never supported the Bush cuts of 2003, but that he also never opposed them. That month, he said that lowering taxes, such as the Bush tax cuts, would grow the economy. He also came out in support of a capital tax rate of zero for those with incomes as high as $200,000. Additionally, in that very same month, Romney raised Massachusetts fees of $240 million, covering only the cost of services. Highway ads were raised from $200 to $2,000. He said that recession could be avoided with tax cuts for middle-income earners, and that he supported the Bush tax cuts.

March 2010 – Supported eliminating taxes on interest and dividends but not with the FairTax.

August 2011 – Said that as Massachusetts governor, he cut taxes 19 times.

September 2011 – Said that the FairTax was not structured well for the middle class.

October 2011 – Said that the middle class needs help.

November 2011 – Said that he didn’t want to raise taxes during a recession.

Ron Paul’s History on Taxes:

December 1981 – Said that inflation was a type of tax for the poor and middle class.

December 1987 – Said that the 1986 tax simplification has actually made the code harder to understand.

December 2000 – Said income tax needed to be overhauled and the inheritance and capital gains taxes should be ended.

March 2000 – Voted yes on small business tax cuts that totaled $46 billion.

April 2002 – Voted to keep the Bush tax cuts permanently.

April 2004 – Voted yes on eliminating the marriage tax penalty permanently.

May 2004 – Voted to make the Child Tax Credit increase permanent.

2004 Campaign Year – His campaign slogan was The Taxpayers’ Best Friend.

May 2007 – Supported working immediately to phase out the IRS.

December 2007 – Said that the most sinister tax is inflation.

January 2008 – Said that spending money would not stimulate the economy but that reducing taxes would.

February 2008 – Expressed his support for repealing the 16th Amendment in order to get rid of income tax.

September 2009 – Said that a disastrous tax code contributes to an underground economy.

September 2011 – Said that governments don’t pay for tax cuts, and that they instead simply give people back their money.

November 2011 – Said that spending is the real problem and that the tax code is merely a symptom.

Mitt Romney Releases Tax Returns: 14% Tax Rate & $21M in Income

Manny Davis — Tue, 24 Jan 2012 19:52:24 +0000

Mitt Romney released his tax returns on January 24th, 2012. His 2010 earnings showed $21.7 million in income with an effective tax rate of just 14%. Newt Gingrich shared his tax return last week and his tax rate came in around 31%.

Why is Romney’s Tax Rate so low? Unlike Newt, Romney’s income mostly comes from dividends that are not taxed at the same rate as ordinary income; dividends are typically taxed at 15%. Romney’s tax rate was dropped more from charitable donations and other itemized deductions that he was able to claim. Many people take this lower tax rate out of context because they don’t understand that the capital gains income he’s receiving has already been taxed by the government before he received the income.

Highlights from Mitt Romney’s Tax Return

Donated $7 million in the past two years
Donated $4.1 million to the Church of Jesus Christ of Latter-day Saints
Majority of income came in the from of dividends
Tax rate of 14%
Mitt’s real first name is Willard

Romney stated that his tax return is “entirely legal and fair.” He also stated: “I pay all the taxes that are legally required and not a dollar more. I don’t think you want someone as a candidate for president who pays more taxes than he owes.”

Links to Tax Returns

Newt Gingrich Shares His 2010 Tax Returns

Manny Davis — Mon, 23 Jan 2012 00:51:03 +0000

Newt Gingrich shared his 2010 tax returns on his website on January 19th, 2012. Newt and his wife, Callista, filed a joint tax return with an adjusted gross income of $3.14 million. They paid a total of $994,708 in income taxes.

According to the tax returns, Callista was paid $191,827 in W-2 wages in 2010 and Newt received $2.5 million in K-1 profit from an S corp and an additional $250K in W-2 wages.

Here are some miscellaneous observations from the couple’s tax filing:

Paid only $613,517 before the filing and had to pay an additional $382,734 after. Since they didn’t withhold enough, they were charged an estimated tax penalty of $1,543.
Invested in American Funds Capital, which they sold at a loss of $20,340
Invested in Ishares Tust S&P Smallcap 600 and had a gain of $11,555
Had an overall longer term loss of $35,636 on misc investments
Paid alimony in the amount of $19,800
The tax rate of their income comes in around 31%
The couple paid over $8K in tax preparation fees

Below are the links to the actual tax returns that they filed:

Top candidates in elections will give into pressure to disclose their tax returns, especially the wealthy candidates. Wealthy individuals have received a lot of press lately after Warren Buffet announced that he pays a lower tax rate than most Americans.

Mitt Romney plans to share his tax returns on January 24th, and many people believe that his returns will show that he paid an effective tax rate of about a 15%, since he earns most of his money in investment income rather than ordinary income.

With Gingrich’s income, the majority of his income came from his businesses. This seems to be a strategic play by Gingrich in order to show that he pays a higher percentage tax rate than his opponents do.

Actress Lindsay Lohan Hit with $90K IRS Tax Lien

Kellie Marks — Thu, 12 Jan 2012 02:14:17 +0000

As if Lindsay Lohan hasn’t had enough negative publicity lately, she has now been hit with an IRS tax lien. According to official documents filed in Los Angeles County, the actress failed to pay $93,701.57 in federal income taxes back in 2009.

Sources for Lohan told TMZ that the 25-year-old had no knowledge of her outstanding tax bill, as she assumed that her finances were being handled by her accountants.

Those sources also explained that the unpaid taxes may have been a result of the Mean Girls star’s recent overhaul of her business team, and made assurances that the issue would be resolved immediately.

If Lindsay doesn’t settle her hefty back tax bill, however, the federal government can file a tax levy against her as part of it’s standard collection process. For Lohan, this could mean asset seizure – whereby the IRS can take her property, including homes, cars or jewelry – or the more likely scenario of having a bank levy placed on her bank accounts.

Although 2009 was not a particularly lucrative year for the actress, paying off her delinquent taxes should not be an issue since she recently received almost $1 million to pose for Playboy.

According to E! News, she is also in talks to star as Elizabeth Taylor in a Lifetime movie, Elizabeth & Richard: A Love Story.

Lindsay, who first gained fame as a child star and had leading roles in such films as Freaky Friday and Herbie: Fully Loaded, is no stranger to notoriety and legal struggles. Since 2007, she has had two DUIs and three stints in rehab. Subsequently, she was rumored to have been passed over for movie roles when she was deemed uninsurable by producers. Additionally, on Tuesday – the same day that TMZ first reported the tax lien filed against Lohan – a paparazzo filed suit against the actress, alleging that she was in a car that he claims struck him last January in Hollywood.

It also appears that tax troubles may run in the Lohan family; Lindsay’s father, Michael Lohan, made our list of the top 100 celebrities with tax problems in 2010.

Paying Double on a Tax Lien Ain’t a Thang for Jermaine Dupri

Kellie Marks — Thu, 12 Jan 2012 00:26:10 +0000

Record producer, songwriter and rapper Jermaine Dupri (also known as “JD”) has finally paid off his back taxes from 2007 – but at a cost nearly twice the amount of the initial tax lien filed against him, according to TMZ.

JD’s original tax bill totaled $254,782.64. However, Georgia records show that late fees, penalties and interest – including $91,721.75 in associated interest, $64,969.57 in penalties, a $82,294.79 collection fee, and $50 in miscellaneous fees – were added to the principle amount owed, creating a new grand total of $493,818.75.

Dupri, who founded record label So-So Def Records, also made our list of top 100 Celebrities With Back Tax Problems in 2009. He has produced albums for artists like Usher, Destiny’s Child and Mariah Carey, and dated Janet Jackson off and on since 2001.

IRS Files Tax Liens Against Santana Moss, Albert Pujols

Kellie Marks — Thu, 22 Dec 2011 19:33:38 +0000

The IRS has filed a $258,017 tax lien against Redskins wideout Santana Moss.

The lien comes as a result of more than $250k in taxes that the 11-year NFL veteran neglected to pay back in 2006, despite his earning more than $1.9 million that year.

The Detroit News reports that the tax lien was filed against Moss’s $5.2 million Florida home on November 22nd in Broward County Circuit Court.

The tax lien isn’t the first financial hardship that Moss has faced in 2011; he was sued for $308,870.64 in back rent by a Florida businessman earlier this year.

Settling these debts shouldn’t be too much of a problem for the 32-year-old wide receiver, though, as he is reportedly earning $2.5 million (including bonuses) this season.

Also being sought by the IRS for back taxes is MLB first baseman Albert Pujols, who has made headlines recently for signing a 10-year, $250 million contract with the Los Angeles Angels (of Anaheim). The Missouri Department of Revenue filed two tax liens against Pujols that combine for a measly total of $729.94.

Albert Pujols Highlights

Another Rapper in the IRS Doghouse? Bow Wow Hit With Tax Lien

Kellie Marks — Tue, 29 Nov 2011 16:14:55 +0000

The IRS has reportedly filed a tax lien against rapper Bow Wow in the state of Florida.

According to TMZ, the 24-year-old, whose real name is Shad Gregory Moss, owes $91,105.61 in unpaid taxes from 2006.

Bow Wow, who has been criticized lately for pushing back the release of his upcoming album, Underrated, claims that the tax lien story is untrue, posting on his blog that “TMZ saying they are about to runa story on me thats once again “Not True” as im sitting in my beautiful condo as of RIGHT NOW that they said i dont have anymore.”

It’s possible that the rapper doesn’t quite understand what a tax lien is. A tax lien is the government’s claim to a delinquent taxpayer’s assets – not the actual seizure of assets to satisfy owed taxes. Since no actual collection actions are being taken and he’s still residing in his condo, Bow Wow may not even realize that the IRS has filed this lien against him.

Bow Wow joins a long list of rappers who’ve faced tax-related controversy in recent years, including Ja Rule, Snoop Dogg, Young Buck, Method Man, Swizz Beatz, Fat Joe, Trick Daddy, Obie Trice, Lil Wayne, Chamillionaire, DMX, Nas, Beanie Sigel and Doug E Fresh.

Regardless of whether or not the tax lien against Bow Wow exists, we sure hope that he has a qualified tax professional on his side to help him sort things out.

Tax Implications for Kim Kardashian and Others Facing Divorce

Linda Lawrence — Tue, 08 Nov 2011 14:00:48 +0000

Kim Kardashian captured the nation’s attention last week when she filed for divorce from Kris Humphries – citing irreconcilable differences – after only 72 days of marriage. Although it appears that the couple may now be attempting to save their marriage through counseling, it does not seem all too promising.

For most couples, divorce is both an emotional and stressful time. Added to the emotional aspects of separation are the financial and tax concerns, which includes dealing with retirement accounts, spousal support in the form of alimony and, for some couples, child support. While both Kardashian and Humphries are each worth several million dollars and have a prenuptial agreement in place, there may still be some significant tax implications of their divorce.

Retirement Accounts

Depending on how long you’ve been married – whether 72 days or 72 years – there is a good chance that you will have to divide any retirement account funds between you and your spouse, regardless of whose paycheck made the contributions.

The most important thing to remember about your retirement accounts during a divorce is to not hand your ex his or her share of the money unless the appropriate language is in place in your divorce agreement. By giving your spouse his or her share without the appropriate documentation in place – either before or after the divorce is finalized – you could end up having to pay taxes on the money that your spouse receives as income (even though you did not actually receive the money yourself), and if you’re under the age of 59½ then you’ll also have to pay a 10% early withdrawal penalty on the amount of money that your ex receives.

IRAs

If your name is listed on the current IRA – be it a traditional, Roth, SEP or simple IRA – you can have your ex-spouse set up a new IRA in his or her name and then arrange for a tax-free rollover of his or her portion of the money. Make sure that the divorce agreement specifies the need for the rollover, because if your ex-spouse takes his or her portion of the money out without this stated in the divorce agreement, you may be held responsible for the taxes and early withdrawal penalties on the money withdrawn – even if you didn’t receive any of that money.

Your ex can then manage their own IRA and defer taxes just as you until he or she takes withdrawals or distributions from the account. This method of dividing an IRA means each person is responsible for his or her own portion of income taxes or penalties resulting from early withdrawals from their own IRAs.

401(k) or Other Qualified Retirement Plans

If you or your ex-spouse have a qualified retirement plan – such as a 401(k) or a self-employed Keogh Plan – you will need to set up a Qualified Domestic Relations Order (QDRO) to ensure that the tax implications of the retirement accounts are shared appropriately and that you (or your ex) are not unfairly required to pay tax on the other person’s share of the money.

The QDRO must be included in your divorce agreement and should specify each person’s legal rights to the designated percentage of money from the retirement account (usually 50% each). The Qualified Domestic Relations Order ensures that income taxes are paid by the person receiving payouts from the plan at the time of withdrawal, in addition to any penalties assessed on early money withdrawals prior to the age of 59½.

The QDRO can permit your spouse to roll over his or her portion of the retirement account to a tax-free IRA in order to continue receiving tax benefits until he or she takes withdrawals. Your ex-spouse will then gain full control over his or her own IRA.

If you need help writing the Qualified Domestic Relations Order to include in your divorce agreement, see IRS Notice 97-11 for sample language.

Alimony Payments

In addition to asking the court to order Humphries to pay his own legal fees, Kardashian also requested in her divorce filing that she not have to provide Kris any spousal support. Although Kim’s net worth is estimated to be more than four times that of her husband, Kris is still worth a reported $8 million, so Kim most likely will not be forced to pay any spousal support or legal fees. However, this is not the case for most other divorcing couples, and in those other cases it is important to be aware of the tax implications of alimony payments.

Also known as spousal maintenance or spousal support, alimony payments are considered tax-deductible for the spouse who is making the payments and taxable income for the spouse who receives the payments. The IRS has strict guidelines in place for reporting alimony payments, and penalties may be assessed as a result of misreporting payments. Additionally, if one spouse reports the payments to the IRS and the other spouse does not, the spouse who filed the inaccurate return will greatly increase his or her chances of being audited. You can learn more about taxes and alimony here.

Child Support

Although Kim and Kris did not have any children together, many divorcing couples do. For divorcing couples who do have children, it is important to be aware that child support is not classified as taxable income for the recipient parent. Furthermore, neither current child support payments nor back child support payments are considered taxable income. Therefore, the parent receiving the child support payments is not required to claim that money as income on his or her federal income tax return. You can learn more about taxes and child support here.

Kelly Monaco the Latest Tax-Troubled DWTS Alumn

Manny Davis — Thu, 22 Sep 2011 19:07:38 +0000

It’s becoming a question of whether celebs go on the hit ABC show Dancing with the Stars because they are struggling financially, or if the stars’ tax woes arise as part of some sort of DWTS curse.

According to The Detroit News, Kelly Monaco is the latest Dancing with the Stars alumn to have a tax problem made public, as the IRS filed a lien with the LA County Recorder of Deeds earlier this month against the Playboy model for failing to pay $67,817 in federal taxes.

The General Hospital actress, who was the very first champion of DWTS, joins the growing list of former Dancing with the Stars contestants who’ve had IRS run-ins, including Kelly Osbourne, Macy Gray, Toni Braxton, Lil Kim, Chynna Phillips (of Wilson Phillips), Shannen Doherty, Jodie Sweetin, Aaron Carter and Debi Mazar.

Hopefully, the 35-year-old Monaco will be able to pay her back taxes with the profit that she makes from her new E! reality show, Dirty Soap, which premiers this Sunday.

America’s Got Talent $1,000,000 Prize… But How Much After Taxes?

Ryan Parker — Tue, 13 Sep 2011 23:32:05 +0000

One million dollars! Its a sexy number. $1,000,000. It’s nice to look at. It’s fun to say. America is gearing up to crown its latest member to the esteemed millionaire club on the Wednesday night season finale of America’s Got Talent. That is, if we are to believe what the promotions are telling us. But what about taxes? How much money are the final four acts really set to take home if they win the grand prize? What other fine print is in play?

Landau Eugene Murphy Jr is the ultimate potential rags to riches story. A hard working professional car washer from a small town in West Virginia the idea of him joining elusive millionaire club seems hard to believe. It would be a great story if the cornrowed crooner took home the grand prize, but how much would he actually win?

From the IRS’s point of view the tax rules on prize winnings are very simple. If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest or other event you must include it in your income. Landau’s potential one million dollar payday would be no exception. Landau would land himself in the same tax bracket as America’s billionaires (35%) and would face a hefty tax bill of roughly $302,000 dollars when he filed his taxes. His status as a millionaire would be revoked just as fast as it was given to him. That’s not all for our friend Landau, West Virginia wants a piece of that pie as well and after they get their roughly 6% cut of the action, Landau is staring at another tax bill of around $64,000 dollars. Landau, America’s newest millionaire would actually be nearly $366,000 short of the title.

If that’s not enough, America’s Got Talent isn’t really offering up a one million dollar check next Wednesday but they are paying out the equivalent of 1 million dollars. As the very fine print at the end of each episode reminds us “The prize, which totals $1,000,000, is payable in a financial annuity over 40 years, or the contestant may choose to receive the present cash value of such annuity.” In other words, Landau is going to have to wait 40 years to get that million dollar payday and its going to be paid out in mere $25,000 increments. While taking the cash in installments would lessen the taxes he ultimately paid on his winnings, Landau wouldn’t be retiring from his car washing job any time soon with only an extra $25,000 coming in a year. Landau’s second option would be to take the present day cash value of such an annuity which is estimated to be around $450,000 before taxes. After cutting a income tax check to the IRS ($125,000) and West Virginia ($28,000) Landau, America’s newest “millionaire” would take home $297,000. Nothing to scoff at but a far cry from the million dollars number that the producers would like us to believe.

Landau actually has the most to potentially gain by winning the grand prize in comparison to the other finalists. As a one man act he does not have to share his potential prize winnings with anybody. The 6 member young crew of musicians encompassing PopLyfe would end up with a healthy college fund if they won the grand prize. Each member’s claim to the $450,000 present cash value payment would be $75,000. Minor children are taxed on their winnings just like their adult counterparts and PopLyfe members $75,000 share would shrink to around $63,000 after a $12,000 cut by the IRS. Not to be outdone by West Virginia, California would tax their winnings at a 9% clip to the tune of roughly $6,600 dollars. $56,400 would be a nice cushion for each of these young musicians to start the rest of their lives, but pales in the comparison to the much discussed million dollar prize.

One of the two super acts, the two favorites to ultimately take home the grand prize also would suffer a similar fate. The 11 member brilliant dance team light show act “Team Iluminate” are vying for a $41,000 grand prize before taxes each when their shares of the $450,000 are divvied up. Federal taxes ($5,700) would chop down that $41,000 to around $35,300 and since the members of the group reside in different states they can be hit with an additional state tax as high as $2,300 (New York). Team Iluminate members are each gunning for the equivalent to a new car, not a million dollars.

The final potential “million dollar” winner of America’s Got Talent is the “Silhouettes”, a 42! member ballet dance team that uses shadows to create beautiful imagery. While their size helps fill a stage and mesmerize an audience it also cuts into their individual prize winnings. The 42 members of the Silhouettes each have a claim on roughly $11,000 of current prize money or if they opt for the installment payments they would receive a check for about $600 a year for 40 years. The only good news for them is that the tax man is more generous to those with the least. The IRS would want roughly $500 dollars for their troubles and the Colorado tax department would want another $500 more. $10,000 might make a good down payment for a new car, but isn’t going to change anybody’s life.

Of course these numbers are simply approximations. Landau is actually married and his wife’s income and the number of children he has would also pay a role in determinnig his tax liability. The group acts may have a higher % payout agreed upon among themselves for the main choreographers of their acts. The head of Team Iluminate is a successful software engineer in New York and may already be in a higher tax bracket for the year. With so many moveable parts in the average tax return and information unknown to us its hard to pinpoint an exact figure of tax owed. With that being said, we can get pretty close.

It’s disingenuous for the media to hype up a life changing million dollar prize that is just an illusion for the talent on the stage. The real award and grand prize of this show is the unrivaled exposure that has occurred which is worth more than a million dollars. Taxes and fine print leave the various acts with at most $297,000 today or as little as $600 a year for 40 years. The increase of earning power of the talent involved on the show due to the exposure of the show is life changing, not the financial grand prize itself.

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