Vice President and Mrs. Cheney Too Generous?

Vice President and Mrs. Cheney Too Generous?

News story posted in General on 20 April 2006| 36 comments
audience: National Publication | last updated: 18 May 2011
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Summary

Under the heading of no good deed going unpunished, a tax professor's blog has Vice President Cheney and Mrs. Cheney walking the plank for taking advantage of Katrina Relief Act provisions that allowed them to deduct gifts to non-Katrina related charities in 2005 that exceeded 50% of their AGI.

by Marc D. Hoffman
Editor-in-Chief
Planned Giving Design Center

Well, it's Friday—the day when less serious items often appear on the Internet. When we heard the following story, it reminded us of television commentator Bill O'Reilly's "most ridiculous item of the day." See if you concur.

On April 14th the White House issued a press release in which it described the details of Vice President and Mrs. Cheney's 2005 federal income tax return. The release stated the Cheneys made charitable contributions totaling $6.8 million, which represented 77% of their adjusted gross income for the year. The gifts were made by an independent gift administrator to three charities to satisfy an irrevocable gift agreement the Cheneys established in 2001.

The gifts were funded with proceeds of exercised Halliburton stock options and royalties from book sales. To optimize their gifts in 2005 the Cheneys wrote an additional personal check to charity for $2.8 million (presumably to cover income taxes withheld on the previously mentioned income items). The Cheneys will receive a tax refund of $1.9 million, which will place them in a tax neutral position, according to the press release.

Enter an April 17th posting by Notre Dame tax law professor Michael Kirsch on TaxProf Blog entitled "Kirsch: Cheney Tax Return Shows Katrina Tax Benefits for Non-Katrina Charitable Contributions."

In his introduction, Mr. Kirsch states, "It appears that the VP is a major beneficiary of the Hurricane Katrina tax relief act." At issue is the fact the Cheneys took advantage of the 100% AGI charitable deduction limitation made available by the Katrina legislation to make and deduct gifts to three charitable organizations unrelated to Katrina relief efforts. Although this was perfectly legal and anticipated under the bill, it nonetheless gave a number of people heartburn.

It is not so much what Mr. Kirsch said in his posting that is ridiculous; rather, the vitriolic comments it spawned:

  • "Why is this man not in jail?"
  • "How does this guy sleep at night? This administration makes me sick to my stomach. They are sooooo corrupt."
  • "REPREHENSIBLE, totally devoid of any moral values, ...a true, dyed-in-the-wool Robber Baron."
  • "We need a perp-walk, and we need it now."

On the other side and in the minority:

  • "Wow. The ignorance of most of the commenters is shocking to me. And, Taxprof, if you think this is some kind of scandal, then you don't know much about tax law or philanthropy. I'm glad my accountant knows a lot more than some professor living in the bubble of academia."
  • "I think you've left something out. It was not only sold as helping Katrina victims, but it was also supposed to help make up for the fact that other, non-hurricane related charities would be hurt by the massive giving that would go to Katrina-stuff (and not other charities). It seems to have achieved that goal. Personally, I'd rather have him give 3/4 of his income to charity, as opposed to the government."

These were but a few of the comments. We encourage you to go have a look for yourself. They will either give you a good laugh or make your blood boil. And yes, you will see some expletives. Such is the blogosphere.

Were the Cheneys the only people in the country to donate more than 50% of their AGI to non-Katrina related organizations in 2005? No. Could the Cheney's gifts have made up for shortfalls in giving to those same organizations whose other donors chose to redirect their philanthropy to Katrina related organizations? Sure. Are the Cheneys major beneficiaries or major donors?

Ridiculous? Click "Comment" and share your thoughts.



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Comments

Dick Cheney is not vice

Dick Cheney is not vice president, he is good as business man

apotik online

gifts over 50% of income

For 30 years or more there was a provision in the law that allowed unlimited charitable contributions if you had contributed 90% or more of your income (40% without tax benefit) for ten or more prior years. This loophole was known as the "Rockefeller amendment" and probably was responsible for extraordinary contributions such as Colonial Williamsburg and the Grand Teton Lodge, both of which are the subject of another tax loophole for "Operating Foundations." I would submit that with these loopholes, the Rockefellers did much more for us than the Federal Government would have done with the tax revenue. I don't like Dick Cheney one bit, but there was nothing wrong with this deal.

Cheney didn't become more

Cheney didn't become more generous in 2005. These gifts were irrevocably agreed to in 2001. He just took advantage of a temporary tax measure to pass more of the bill for his gift to the American public. Opportunistic timing of a fulfillment of his gift agreement. He is certainly not to be commended as more generous for it, but neither should he be villified for it. It seems somewhat disingenuous as he was part of the administration that arranged for this law that then saved him considerable money. But then, he would have seemed somewhat stupid had he not taken advantage of it.

Politicians are always

Politicians are always dirty, gain something for their own profit and benefit. The problem is that elections required huge amount of money, the parties rises money from corporation and individual, those corporation off course want to get something back if the supported candidate get elected. Farmasi

I think ridiculous is the

I think ridiculous is the answer. The Cheneys were not the only people in the country to donate more than 50% of their AGI to such organizations in 2005, but they could have made up for shortfalls in giving to these organizations whose other donors redirected their philanthropy to Katrina related organizations.

Chrney's "bashers"

I wonder how much of their AGI these Cheney bsashers gave?

Cheney's Bashers

I wonder how many of these "Cheney bashers" broadcast their charitable gifts to minimize criticism for advocating torture, limitation of civil rights and running roughshod over constitutional principles?

Cheney's Bashers

"It is better to remain silent and be thought a fool, than to speak out and remove all doubt." - Abraham Lincoln Have some more Kool-Aid, David

What a way to slience

What a way to silence someone

Vice and Presidential Philanthropy

Not to be partisan, here, but if Bill Clinton can author a book on philanthropy without getting thoroughly skewered by the press, after taking itemized deductions for donations of used undershorts, criticism of Dick Cheney's gifts -- on any grounds -- is absurd.

On a related matter, I hear that Monica Lewinsky is considering donating her blue dress to the Clinton Presidential Library. Any thoughts on fair market value, who might be qualified to appraise such unique property, or whether, in fact, it is a capital asset? And does Bill Clinton have a valid claim of partial ownership, given his "contribution"? 

Dick Cheney

I applaud the Cheney's for being charitable. I doubt that the professor or even many of the other political candidates are anywhere near as charitable. Perhaps they need to study the old adage in the Bible about the moot in their eye. In a day and age where charity from the rich is greatly lacking, where they would rather see who can have the biggest, fanciest house, etc., let's recognize with appreciation anyone willing to be charitable regardless of their political affiliation or choice of charities.

Politics Does Not Equal Law

I found the original article to be quite humorous in its attempt to criticize legitimate use of charitable donations. As one commenter pointed out (quite correctly in my opinion) opinions about this particular donation change depending on the identity of the donor. There is no better proof of the premise that one's politics are the wrong compass in analyzing the law and in properly advising our clients.

Cheney's Generosity

The last I looked, when you give away $6.8 million and save $3 million in taxes, you and you're estate are still worse off (by $3,800,000) than if you had paid the taxes. What kind of a jackass condemns a guy for making charitable gifts as opposed to giving it to the government in the form of taxes? Obviously someone not qualified to be teaching math, finance, accounting or economics. That teacher would flourish in some liberal political science think tank. Steve Mathieu, Manchester, NH

Cynicism is Not Unwarranted...

Vitriolic comments? Yes, some were harsh. But do you really find the response to your partisan-sounding article to be

Cynicism Misplaced

Dwight, Thanks for your comment. Yes, today's political landscape is more polarizing and full of rancor than at any time in my memory. If my article sounded partisan, it was intended to be so, but not in the way you might think. I favor philanthropy. To use the Cheneys' gifts and appropriate use of the tax law for political fodder was, in my opinion, misplaced. Maybe you disagree and that's fine. But had the Cheneys' tax return shown no charitable gifts, I'm sure some would have criticized them for their greed. See my point? Perhaps we can turn this discussion away from politics by discussing a related question: Under what circumstances does an organization decline a gift?

Cheney "philanthropic"

The charitable tax deductions set up for large donors giving outright AND irrevocable planned gifts are enormous. (I work in Planned Giving for universities and other organizations) Did Mr. Cheney give to Yale or some non-profit think tax like the Hoover Institute at Stanford University instead of to Katrina victims or other helping "charities"? If so, the benefits of those kinds of contributions are legion and include board positions, fancy events with high wealth contacts, and honors like named buildings, rooms, etc. and even honorary degrees!!! Why should we all pay for Mr. Cheney's war and not have him give his fair share to the IRS?!--as he continues using Halliburton profits to feather his own nest??

Katrina Gifts by the Cheney Family

Bush Derangement Syndrome (BDS) has mutated into Cheney Derangement Syndrome (CDS).

Charitable Chaney

The incredible amount of ignorance surfacing over this issue should put American academia to shame. The education industry, which is decidely left-oriented, has little interest in actually educating people. And the good professor, who most likely has never spent a day outside of the academic industry is incapable of educating his students as to the truth. The true fact is that the tax rates are not 100%. This means that when someone donates $1.00, at most they save $0.45 in taxes. However, they no longer have the $1.00 because they gave it away! The same thing is true of all tax deductions. e.g. Mortgage interest is a tax deduction. Pay $1.00 of mortgage interest and you will save (at most) $0.45 in Federal and State income tax. Anyone who thinks this is a good deal is welcome to pay my mortgage and I will give them the tax deduction. They can pay my charitable pledges and I will gladly give them the deduction. I will be much happier keeping the $1.00 from which I will then have to pay $0.45 in taxes, leaving me $0.55 to purchase whatever I want. When I give away the $1.00 of my own money or pay $1.00 of mortgage interest, I have nothing left; yes I have a lower tax bill, but I do not have the $0.55 after-tax money either. People say that Chaney "took advantage" of the tax law. The connotation here is that there is something sinister here. Do we say that someone "took advantage" of the government when they drive on an interstate highway? No, we say they used what was intended for them to use. The first thing that the VP did was give his money to a charity. Then he completed his tax return in accordance with the law. He did not "take advantage" of anyone or anything. He used what was available to him and it was available to every American. The professor and his left-leaning buddies does not understand the facts of life. Too bad. Frank Monti, CPA Many of the other commenters got this right. There are many people in this country who hate this administration regardless of what they do and those people try to find any way of disparaging the President or Vice President. Unfortunately, the hatred blinds them to serious thought and criticism. The professor is in this segment of the population. The schools should find a way to dismiss him. The students should boycott his class and demand his ouster by the institution to which they are paying for an education that is not being delivered. If the professor were in the restaurant business dishing out this stuff, he would be out of business. He deserves to be out of the academic industry -- but it will not happen.

Another Smart Law Professor Misleads Ignorant Public

It is amazing what passes for "legal scholarship" by politically motivated law professors.

Katrina Relief Act

The Cheney brouhaha aside, it might be instructive to analyze whether and how people used the charitable donations provision. Did most people ignore it? Was there a particular income cutoff above which more people tended to use it? Did most people who used it give a large donation to Katrina relief? Or a large donation to an organization they already support? Or did they increase their donations across the board? Were there many new donors? The list of questions could continue. I look forward to reading an analysis of how this played out.

Katrina Gifts by the Cheney Family

The original posting by the 'professor' displays typical ivory tower academic arrogance and pseudo-moral superiority, but it's also an amazing demonstration of ignorance about the tax law in which he professes expertise. What I think is scandalous is that relatively few gifts were made during the Katrina window of opportunity, due mostly to the professional and charitable communities' inability to understand and get the message out to their clients and donors. The Cheneys certainly displayed admirable philanthropy by making a generous gift; too bad other high profile taxpayers didn't follow suit and allow their wealth to be passed on to their communities. The only benefits accrued to the charities; you can not make money by giving it away.

Blog comments on Cheney's generosity

It seems people who don't like the current adminstration will find a way to express their displeasure, no matter what the facts are. Others have correctly pointed out the purposes of the Katrina Relief provisions, a wise combination to encourage direct support to the victims and to bolster other charities that might have otherwise suffered. The Cheney's level of generosity is commendable and probably a siginificant multiple of what Mr. Hirsch may have contributed.

Cheyney

I see, Al Gore who is also independently wealthy, gives nothing to charity but he "cares" and has "passion" for all the "worthwhile" causes.

Post Katrina charitable deductions

Dick Cheney may not always please me in his role as Vice-President but I am pleased with the philanthropic genorisity shown by him and his wife. Learned Hand in his role as a Federal Appellate Judge admonished us, "There is nothing sinister in arranging one's affairs as to keep taxes as low as possible. Everybody does so, rich or poor...." This approach should apply to the Cheneys as well as to the rest of us as taxpayers. I can only assume that as a professor of tax law Michael Kirsch has read this opinion. It seems he does not agree with it. I also assume that Mr. Kirsch has taught his students about the use of "Social Capital" when doing estate planning. What bettter choice could Vice President Cheney have made for using his Social Capital than a generous gift to a charitable institution? And, who would have a better reason to devote his Social Capital to the federal treasury than Mr. Cheney? Mr. Kirsch barks up the wrong tree.

Dick Cheney breaks another law and the American media doesn't ca

The Notorious V.P. claims he is not required to live by the same laws as all other American citizens. Why not?

Dick Cheney

"Charity is no substitute for justice withheld." -- St. Augustine

Mr. and Mrs. Cheney's 2005 Federal Income Tax Return

You can tell it is Friday!! Who cares what they contribute or do not contribute to charity? Just commend them for making the contributions for 2005, remind Al Gore to practice what he preaches, and move on to more important matters...like Iraq, high gasoline prices, the monstrous profits of the oil companies, China, Iran, Medicare, Social Security, and so on. Take care of these issues first, and no one will have time to worry about how much money the Cheneys gave to charity in 2005!!! Have a great and charitable day in America!!. David Green. Houston, Texas.

Cheney Charitable Deduction

Please help me out, people! Someone's upset because Cheney gave away money. Give me a break! That benefited others more than himelf. We need to encourage people to give and not criticize people for doing good deeds. Donald G. Lisle

Cheney charitable donation

The statement "Politics make strange bedfellows" surely holds true in this instance. The VP gives away 7 million dollars of his personal wealth, and the Bush haters condemn him for it. And can you imagine if he made no charitable gifts? They'd condemn him for that too. Heads he loses, and tails he loses too. The tax law was not created or passed by Cheney. Congress and the Pres. were the parties to the transaction. I am ashamed of a Law Prof. spouting words of stupidity. David Diness CPA, (retired Tax Consultant)

"Independent Gift Administrators"

Point well taken that the charitable provisions of the Katrina Tax Act were only understood by a meer handful of US taxpayers and their advisors. Those who did understand it AND either were able to take advantage of it or the clients/donors who were assisted in using Aug 28 to Dec 31 window are probably an even smaller number. Would they fill one hotel ballroom, I wonder? Hopefully, we will some research on this in the future. On PGCC? Some other aspects of the Cheney story may be worth understanding. "The gifts were made by an independent gift administrator to three charities to satisfy an irrevocable gift agreement the Cheneys established in 2001." What is an "independent gift administrator?" How independent are they when the action taken is "to satisfy an irrevocable gift agreement the Cheneys established in 2001." ? To administer a gift, first a gift has to be made to then be administered. Organizations that operate "Donor Advised Funds" should qualify for the title "independent gift administrators." But administrators of assets not yet donated? An intentially defective irrevocable trust restricted to charitable beneficiaries? Is there more to the story of the "IGAs" working for the Cheney's? David Harris

Cheney gifts

The Cheney's broke no laws, get a clue Gregory. J. Victor Conrad, CFP, ChFC, AIF

Dick Cheney is not vice

Dick Cheney is not vice president, he is good as business man

apotik online

Charity never humiliated him

Charity never humiliated him who profited from it, nor ever bound him by the chains of gratitude, since it was not to him but to God that the gift was made. Antoine de Saint-Exuperypokerstars marketing code

Common Sense Challenged

I went to Harvard Law at the tender age of 32, after a life. I attended the USAF Academy as an undergrad, so I was never previously exposed to the "real" world of academia (the academics who taught me at USAFA had advanced degrees as well and actually thought their primary job was to teach....AMAZING!). I was continually amazed that academics actually thought this way, undeterred by the realities of life outside the Cambridge bubble. Then I discovered that MOST academics thought that way. And interestingly...the biggest names were some of the worst teachers. But hey...they had their political agendas, and they pursued those with a vengeance. I may disagree with Dick Cheney on a lot of things...but if one considers the Cheneys' record of giving and our current VP (who is also a multi-millionaire), the differences are startling. Ole Joe-Bob Biden gave a few dollars several years ago to something...but he's never been enamored of charity. John

Sounds like sour grapes to

Sounds like sour grapes to me and partisan politics at its most base level. Let's look at Al Gore's lack of charity, for instance, if one wants to compare. Or Leona Helmsley, who everyone loves to hate. Why don't we pile on her, or Rockefeller or Ford or Carnagie -- those "damn robber barrons?" Why don't we go out on a witch hunt and find our about all that dirty money? And, what about Warren Buffett, "living in sin?" I wonder what we'll find out in Bill Gates' closet?

Gifts by politicians

It would be interesting to see a summary of the charitable gifts made by the various candidates for President. Surely amid the financial disclosures, the information is out there. Robert Hastings

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