Huffington Paid Little Income Tax

L.A. Times ^ | 8/14/03 | Rich Connell and Robert J. Lopez

[TastyManatees]

Huffington Paid Little Income Tax
The candidate for governor has criticized 'fat cats' for avoiding taxes. She denies taking advantage of loopholes and unfair deductions.
By Rich Connell and Robert J. Lopez
Times Staff Writers

August 14, 2003

MTV commentator and author Arianna Huffington, who launched her campaign for governor with criticism of "fat cats" who fail to shoulder a fair share of taxes, paid no individual state income tax and just $771 in federal taxes during the last two years, her tax returns show.

Huffington, who released her tax returns for the last two years to The Times, lives in an 8,000- square-foot home in Brentwood above Sunset Boulevard that is valued at about $7 million. She socializes with many wealthy and prominent people.

But the returns show that at least for the last two years, her income was far outweighed by losses that she reported were incurred by Christabella Inc., the private corporation she owns and uses to manage her writing and lecturing business.

In announcing her candidacy last week, Huffington blamed California's fiscal crisis, in part, on the corrupting influence of special interest groups that have helped "corporate fat cats get away with not paying their fair share of taxes."

Failing to close corporate tax loopholes, she argued, would "be a slap in the face of all the hard-working taxpayers being forced to dig deeper and deeper in their pockets so the well-connected can pad their bottom line."

In an interview Wednesday, Huffington said there was no inconsistency between her campaign message and income tax record. She characterized her deductions as "very conservative" and said that any comparison between her and those whom she has criticized would be unfair.

"There isn't any loophole here. There isn't any dodging here," she said. "This is basically putting your income against your expenses."

Nonetheless, tax experts said Wednesday that Huffington's tax profile is not one that the typical working family in California can duplicate.

"The average guy isn't able to wipe out the taxes on his wage income because he doesn't have millions of dollars in losses" from a private corporation, said Phil Holthouse, a partner in a Los Angeles certified public accounting firm.

[TastyManatees]

Wow! This multi-millionaire "paid no individual state income tax and just $771 in federal taxes during the last two years"!

But, what about "the children" she said tax "cheats" were hurting here?

Like I said, "Millionaire charity.".

Tasty Manatees

[xrp]

Wow...must be nice.

[Dave S]

What is that word that Arriana brings to mind? Oh yeah HYPOCRACY.

Also, million dollar losses off her writing and speaking business, give me a break. She's running some kind of scam.

[Hugin]

Sean Hannity had her on his radio show the other day and asked what kind of car she was calling from. "A sedan", she said. Hannity, "A town car? So you're driving around in a big gas guzzling V8 town car while you call people who drive SUVs supporters of terrorists? How many SUV drivers fly around in private jets like you do?" He absolutely nailed her for the phony she is.

[The Electrician]

The LA Times makes a typically foolish mistake of confusing wealth with income. You would think that a major news organization would understand the difference. The income tax is a tax that is levied against income, not against wealth. So, whether or not an individual is a millionaire is as about as relevant to how much income tax they pay as the color of their eyes. How can we expect to get an intelligent discussion of issues when a newspaper such as the LA Times is so ignorant?

[ibbryn]

It's odd, but the news that I am paying more in taxes than she somehow makes me happy! What a hypocrite. Someone needs to post a picture of her in a SUV or private jet.

[tdadams]

As repulsive as this is, it's not surprising. I've had occasion to work around high-income self-employed people for a few years. Many of them set up psuedo-corporations simply so they can take tax write offs for luxuries like first class airfare and throwing expensive catered parties.

It's perfectly legal, but it's still a bit unsettling, especially when you're someone like Huffington who seems to be staking out her claim as a crusader for the little guy.

[jjm2111]

She's running some kind of scam.

Not really. She's the sole owner of an S Corporation. She files the corporate expenses and income on her PERSONAL income tax statement. After you deduct the jet, employees, auto, insurance, food, lodging, etc. etc., she (and her corporation) probably have next to zero income.

[Tallguy]

Not really. She's the sole owner of an S Corporation. She files the corporate expenses and income on her PERSONAL income tax statement. After you deduct the jet, employees, auto, insurance, food, lodging, etc. etc., she (and her corporation) probably have next to zero income.

Yes, but the damage is done. Who's fingerprints are on the "Knife" (this news story). The Terminator's? Gray Davis'? That's what I'd like to know.

[jjm2111]

"Yes, but the damage is done. Who's fingerprints are on the "Knife" (this news story). The Terminator's? Gray Davis'? That's what I'd like to know. "

My Guess would be Gray, because a strong Arianna pulls votes from him.

[KAUAIBOUND]

Maybe so, but to have zero or near-zero taxable income, the only way she can actually support herself is if she owns leveraged income real estate property. It is impossible to write off most day-to-day living expenses, such as food, medical costs, insurance, etc. because these do not have a direct relationship to her business pursuits. On the other hand, even passively managed income-producing real estate losses are limited to $25K of write-off against ordinary income. I would be very interested in closely examining her returns. I could produce a better analysis of her tax situation than any dumbass reporter/journalist because I have been there, done that. By running for CA gov, she may be putting herself in the sights of the IRS - does Leona Helmsley ring a bell?

[Dave S]

She files the corporate expenses and income on her PERSONAL income tax statement. After you deduct the jet, employees, auto, insurance, food, lodging, etc. etc., she (and her corporation) probably have next to zero income

How is she generating that many expenses though? I would like to know what kind of expenses she is deducting. To be a writer or a speaker shouldnt require more than a staff of one or two part time employees. Sounds to me that she is trying to run a non-profit organization without having to do all the filings and following the rules for that classification.

[NativeNewYorker]

Einstein here didn't think about how this would look when she decided to enter public life? Now we know she is annoying AND stoopid.

[KAUAIBOUND]

Addition/correction: One more possible source of tax-free income - tax-free bonds. If the bulk of her wealth is in tax-free bonds and income-producing real estate, she could easily avoid paying taxes.

[jjm2111]

She might be lying on those returns, but if she owns a private jet, the fuel, insurance, pilots, they cost a lot of money, probably well into the multiple six figures.

[TastyManatees]

Good point. My own guess is that Huffington pulls in a tidy income from speaking engagements and has other ordinary income.

The real kicker for me is that I'm guessing the majority of her "income" comes from passive investment. That's right, capital gains from those nasty, tax "cheat" corporations she recently decried as out to get schoolchildren through sound tax planning. In my humble opinion, if this guess is true, she is much more hypocritical.

Tasty Manatees

[jjm2111]

Perhaps.

[TastyManatees]

Very good point. Years ago, when I was but lawyer-larvae, I thought I had the best idea ever for living free of the income tax. Luckily, I checked into it and found out that the corporate shell form I had hit upon was incredibly transparent and IRS enforcement personnel were very aggressive with them. That said, without even knowing all the details, I highly doubt Ms. Huffington's attorney would set her up in a questionable tax "shelter".

[talleyman]

The taxpayer's lament:
On my return, they are "legitimate deductions".
On your return, they're "loopholes" & "scams".

[B.O. Plenty]

Right on, sir.

No income(or sheltered income)=no income taxes...This points out the absurdity of a graduated income tax. In addition to being grossly unfair by creating "classes" of citizens...it pits those citizens against each other....class warfare don't you know. Look at the responses here...