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Gingrich Used Payroll Tax Ploy Often Attacked By IRS
Forbes ^ | 01/24/2012 | Janet Novack

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 Gingrich’s 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 rate—he paid tax equal to 31.5% of his adjusted gross income of $3.14 million.

(Excerpt) Read more at forbes.com ...


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: fairshare; gingrich; irs; itslegal; mediabias; medicare; mediscare; newt; tax; taxes
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To: SeekAndFind

BFD. He is paying more medicare tax than 99% of the people and will receive less in benefit.

Often disliked by the IRS... sure, just another pound of flesh for them to extort from legal tax paying processes.


51 posted on 01/24/2012 6:18:35 AM PST by Sequoyah101 (Half the people are below average.)
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To: SeekAndFind

So Mr. Gingrich followed the law and paid all taxes due.

Meanwhile, Obama pisses away $550 million on Solyndra’s campaign bundlers, which equals the total amount of federal taxes paid by 45,833 average Americans ($60K income at 20% tax rate). Or, the total amount of taxes paid by 550 Newt Gingrich’s.


52 posted on 01/24/2012 6:18:39 AM PST by Oldeconomybuyer (The problem with socialism is that you eventually run out of other people's money.)
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To: SeekAndFind
McKenzie, a past chairman of the Employment Tax Committee of the American Bar Association Tax Section and a member of the IRS’ Advisory Council,

Wonder you he voted for in '08 (and '04 and '00 etc)

Nah, I really don't.

This is chickensh*t but let's get it out now.

53 posted on 01/24/2012 6:21:58 AM PST by Tribune7 (GAS WAS $1.85 per gallon on the day Obama was Inaugurated! - - freeper Gaffer)
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To: Petrosius

“His income claimed as dividends or capital gains is not counted as a business expense. It is thus taxed twice: once as income to the corporation and then a second time as personal income to Mr. Gingrich.”

You are mistaken. Gingrich is using an S Corporation so the salary or dividend flows to his personal return without tax consequences to the S Corporation. The issue is the additional Medicare payroll tax.


54 posted on 01/24/2012 6:26:06 AM PST by businessprofessor
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To: SeekAndFind

Well said.


55 posted on 01/24/2012 6:26:59 AM PST by Tribune7 (GAS WAS $1.85 per gallon on the day Obama was Inaugurated! - - freeper Gaffer)
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To: Larry Lucido; SeekAndFind
Slow down on the thread posting and leave some comments (or at least reply to some of the replies).

Cartman gets a badge.

56 posted on 01/24/2012 6:33:20 AM PST by Tribune7 (GAS WAS $1.85 per gallon on the day Obama was Inaugurated! - - freeper Gaffer)
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To: SeekAndFind; Admin Moderator

The (MSM/ GOP elite/ Romney camp) is desperate to throw more mud that will stick, as soon as possible....

...because Gingrich is again in the lead.

WHY is this BREAKING news??


57 posted on 01/24/2012 6:36:06 AM PST by Future Useless Eater (Chicago politics = corrupted capitalism = takeover by COMMUNity-ISM)
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To: SeekAndFind

Let me see if I can explain it to the ‘media’: Irony is when you are a pro tax ‘n spend DemonRat and you avoid paying your own taxes. Irony is not when a conservative anti taxer practices what he preaches.


58 posted on 01/24/2012 6:38:39 AM PST by sportutegrl
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To: SeekAndFind
So?.... I'm still not going to vote for the RINO Romney.

In my opinion mittens and his little band of progressive Republicans can sit and spin. My view is... If walks like a liberal, if it looks like a liberal and if it acts like a liberal ("Romney's record?") IT'S A LIBERAL.
Notice how the liberal author of this article never mentions those in the democrap party that cheat on or pay NO taxes at all (Daschle, Geithner, Kirk,...)? and frankly... Who cares what the IRS doesn't like. I for one don't like the IRS.

JMHO
59 posted on 01/24/2012 6:40:56 AM PST by Whats-wrong-with-the-truth
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To: SeekAndFind

Al Gore or John Kerry did this too, IIRC. Can’t remember whic h.


60 posted on 01/24/2012 6:47:56 AM PST by PghBaldy (War Powers Res: http://avalon.law.yale.edu/20th_century/warpower.asp)
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To: Petrosius
His income claimed as dividends or capital gains is not counted as a business expense. It is thus taxed twice: once as income to the corporation and then a second time as personal income to Mr. Gingrich.

Exactly. When I'm listening to the talking heads, they never mention anything about double taxation. Their analysis is shallow.

The same for their analysis of tax policy. Obama wants to raise taxes, so that means more money. The republicans want to decrease taxes, so that mean less money. Stupid and shallow.

61 posted on 01/24/2012 6:51:37 AM PST by Tao Yin
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To: shelterguy

We need tax reform. I liked Perry’s 20% flat tax.


62 posted on 01/24/2012 6:56:36 AM PST by altura
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To: SeekAndFind

Don’t worry. I hate thread nannies. They’ve figured out their own rules as to how people should behave on Free Republic and they enforce them with all the force of the IRS.

I’ve been chided for the same thing. I seldom post an article but sometimes when I do, I have to leave and then come back later to respond to anything I feel needs a response.


63 posted on 01/24/2012 6:59:45 AM PST by altura
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To: Tribune7

KMA


64 posted on 01/24/2012 7:00:18 AM PST by Larry Lucido (Six months ago I was all "Go away Newt." Now I'm "Eh, he's the best we got, so 'Go Newt.'")
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To: PghBaldy

We should SOOO not let the media force us into this type of discussion.

Not about Bain, not about Mitt’s 15% taxes - except that this fact should cause us to think seriously about revamping the tax laws, not to punish capital gains but to make it fair for everybody.

But we’ve got more to worry about than this.


65 posted on 01/24/2012 7:03:30 AM PST by altura
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To: PghBaldy
Al Gore or John Kerry did this too, IIRC. Can’t remember whic h.

John Edwards absolutely did it.

66 posted on 01/24/2012 7:06:56 AM PST by alancarp (Liberals are all for shared pain... until they're included in the pain group.)
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To: SeekAndFind

The implication is that Newt did something wrong, when if fact what he did is perfectly legal. Nice try, Forbes.


67 posted on 01/24/2012 7:07:09 AM PST by kevao
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To: All; cuban leaf
Despite being in the 35% bracket themselves, I've read Obama paid mid-20s, Biden paid low-20s.

Newt paid the greatest percentage and yet somehow a Chicago lawyer claims Newt isn't "paying his fair share" (precise language of the Rat talking point). I'm shocked. /s

68 posted on 01/24/2012 7:35:32 AM PST by newzjunkey (a FL win returns Romney to the "inevitability" path... do the right thing, Rick!)
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To: SeekAndFind
Janet Novack is Manager of the Washington Bureau, Forbes

I’m the Washington D.C. bureau chief for Forbes and have worked in the bureau for more than two decades. In recent years, I've spent much of my time reporting about taxes -- tax policy, tax planning, edgy tax shelters, tax evasion, wacky tax credits, and Congressional tax malpractice. (Think AMT and the lapsed estate tax.) I also write about retirement policy and planning.

I'm Known For...

Exposing the tax games of billionaires. A cover story with the provocative title, "How To Cheat On Your Taxes".

69 posted on 01/24/2012 7:39:47 AM PST by kcvl
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To: altura
We need tax reform. I liked Perry’s 20% flat tax.

Or Newt's 15%.

70 posted on 01/24/2012 7:41:45 AM PST by newzjunkey (a FL win returns Romney to the "inevitability" path... do the right thing, Rick!)
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To: SeekAndFind
This Forbes scribe's having chosen fellatio is rather clear here via this screed.
Mystery lingers as to which side of the same coin is the intended target of her ministrations . . Ø (d) or ø (r),
71 posted on 01/24/2012 7:52:49 AM PST by tomkat (Newt/Sarah '12)
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To: altura

I too was unaware of the thread rules.

Don’t post without giving your opinion! Especially if it is a negative story about some popular politician!!

Secret motives you know...


72 posted on 01/24/2012 8:11:08 AM PST by JRochelle (Note to the MSM: Unemployment has been higher under every month of Obama than any month under Bush.)
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To: SeekAndFind

So Gingrich paid 31% of his income in fed taxes and that’s still not enough for the Democrat / Communists and labor unions (I repeat myself)


73 posted on 01/24/2012 8:40:17 AM PST by VeniVidiVici (Obama's War on Prosperity is killing me)
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To: SeekAndFind

Salary/wages are guaranteed things. Profits are not.

Small business owners have no guarantee of salary or profits. Yet the IRS has a vague demand that a reasonable wages must be paid.

In my opinion, small business owners should be allowed to take 100% of their profit as dividends. Further, those profits should be taxed at the capital gains rates.

I know, I know. This is an s-corp so the profits were not taxed at corporate rates. But, for legitimate businesses (not shells) where the owner has invested capital it is a much healthier use of capital gains rates than profits from flipping stocks.


74 posted on 01/24/2012 8:46:20 AM PST by laxcoach (Government is greedy. Taxpayers who want their own money are not greedy.)
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To: Tao Yin

“When I’m listening to the talking heads, they never mention anything about double taxation. Their analysis is shallow.”

You do not understand Subchapter S corporations. The income is not double taxed. The salary and dividends flow to the personal return in which both are taxed. The difference is that payroll taxes are assessed on salary not dividends. Since the Medicare payroll tax is unlimited, the dividends escape the Medicare payroll tax. I am not complaining about Gingrich’s usage of a subchapter S corporation, just indicating that there is no double taxation.

I believe that Obamacare has effectively closed this tax treatment as it imposes a surcharge on the Medicare payroll tax levied on all income.


75 posted on 01/24/2012 9:04:12 AM PST by businessprofessor
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