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Vice President and Mrs. Cheney Too Generous?
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
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.