Posted on 01/24/2012 4:42:45 AM PST by SeekAndFind
Newt Gingrich avoided tens of thousands of dollars in Medicare payroll taxes in 2010 by using a technique the Internal Revenue Service has consistently and successfully attacked. Republican Presidential candidate Gingrich and his wife, Callista, treated only $444,327 of what they got from Gingrich Holdings. Inc. and Gingrich Productions as compensation to them, while reporting a whopping $2.4 million of their earnings from these corporations as profits or dividends. Medicare taxes are levied at a rate of 2.9% on an unlimited amount of compensation and self-employment income (say, from a consulting contract, speeches or a book) but not on profits from a business.
It appears that he is not paying his fair share of Medicare tax, Robert E. McKenzie, a partner in the Chicago law firm of Arnstein & Lehr LLP concluded, in an email to Forbes, after reviewing Gingrichs 2010 tax return. McKenzie, a past chairman of the Employment Tax Committee of the American Bar Association Tax Section and a member of the IRS Advisory Council, added: There are a multitude of cases where the IRS has successfully challenged the improper tax strategy of this candidate and his accountants. Service businesses are only allowed to distribute a fair return on investment from an S corp. as profits exempt from Medicare taxes. The remainder of profits must be paid as salary subject to a 2.9% Medicare tax levy.
Since Gingrich released his 2010 tax return Thursday night during the Republican debate, news coverage has focused on his hefty income tax ratehe paid tax equal to 31.5% of his adjusted gross income of $3.14 million.
(Excerpt) Read more at forbes.com ...
Good for Gingrich. The system is set up this way, and we should all strive to do the same thing. Why should any one person need to pay that much into Medicare to pay for other people’s healthcare? It is criminal.
At this point I'd vote for Charlie Manson if he ran against the Democrats. He couldn't be any worse.
“It appears that he is not paying his fair share of Medicare tax”
F*** Fair Share!
I never get into tax arguments. There is no winning them. Whatever the IRS decrees or decides, that’s the win.
That said, be aware that when the nomination is sewn up, the nominee will be under investigation by the IRS. Make that “criminal investigation.” Obama will see to it. And you don’t want it to be an investigation of Romney, which would go on forever and not one in a thousand voters would be able to follow the explanation.
Gingrich’s tax situation is, on the other hand, something most brains can press without herniating.
GOOD!
I am HAPPY he paid as little taxes as possible.
I would vote for him even more now, over “Proud to Pay Taxes” Romney
WHEN ARE ANY OF THEM GOING TO TALK ABOUT THE GOVERNMENT SPENDING $100,000 TO HAND OUT $27,000 IN WELFARE? That’s the equivalent of nearly a full-time government employee for every family on Welfare.
Just like I posted on thread about Romney’s tax returns: he followed the law. I applaud his tax strategies.
No one should bash Romney for his tax return and then give Gingrich a pass. They both followed wise tax strategies that most CPAs employe every day for their clients.
I’m sure he’s had business records vetted for years and years. If the IRS didn’t grab them, then I don’t see the problem.
He paid more in taxes than GE did. Just sayin’
The income from a company is derived from both services and from the investment of capital that its owners make. Capital can be money and/or goodwill.
The medicare tax is only on salary. If Newt was paid a fair salary for his services, there is no underpayment of tax.
I also take dividends instead of a salary to reduce my tax burden. It is perfectly legal.
That being said, the IRS laws say whatever they want them to say at any time. Subject to change according to how the auditor feels that minute.
Exactly. $444K is way, way more than a fair salary base for self-employment taxes. Non-story. Stupid author.
The headline and text is meant to mislead.
Yes, the IRS has attacked this method of minimizing tax debt before -- WHEN IT IS ABUSED.
There is no indication here that this method of minimizing tax debt was abused.
“Robert E. McKenzie, a partner in the Chicago law firm of Arnstein & Lehr LLP...”
... and then I stopped reading.
You posted the article. What’s your comment?
This wasn't Obama's doing.
This was that sleazy POS Romney's.
I simply cannot vote for the bastard after this one, NO MATTER WHAT.
The smoking gun is it was sourced to Forbes.
” Robert E. McKenzie, a partner in the CHICAGO law firm”
Enough said.
The medicare tax is only on salary. If Newt was paid a fair salary for his services, there is no underpayment of tax.
Exactly. If I invest my own capital in a business and take dividends from the profit, that is not salary.
BTW - tax evasion is illegal, tax avoidance is not (at least thats the way it used to be).
Saying that Gingrich has used a tax strategy that has been successfully attacked by the IRS does not say that the IRS has always been successful OR that this is an unreasonable reading on Gingrich’s part of the tax law.
I agree with Gingrich. If that’s the way it appears to be written, then let the IRS correct you.
I also suspect that the man reviewing this form doesn’t have all the data and background info that went into his assessment.
I also suspect that his interest in the case is as an opponent and not as a supporter.
Yep, I do the same every month. Pay myself as little salary as legally possible to minimize payroll taxes (most of which don’t do a damned thing for me anyway), and take the rest in dividends.
I’d think he was stupid if he didn’t, and wouldn’t believe a word he said on tax reform or economics in general.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.