Monday, April 07, 2008

Clinton Tax Lessons

The former, and perhaps future, first couple earned $109 million over the past eight years, putting them among the top .01% of taxpayers. Apparently the Bush years haven't been a Depression era for everyone. The bulk of the Clintons' income came from speech-making ($51.9 million) and book-writing ($29.6 million), and it's hard to begrudge their desire to cash in on the Presidency after toiling for so many years in public service. The Clintons are hardly unique in showing that in today's Washington you can do very, very well after you've done good.

We can also now understand why the couple took so long to release their returns, and are still reluctant to release other information. Their political status has given them access to wealthy folks who've helped make them rich. For example, Mr. Clinton raked in as much as $15 million working as an adviser and rainmaker for billionaire financier Ron Burkle's Yucaipa firm.

Meanwhile, the Clintons also made liberal use of the charitable deduction, claiming $10.2 million in charitable giving over the eight years. Intriguingly, nearly all the donations went to the Clinton Family Foundation, which has disbursed only half the money. The Clintons can thus use the foundation for, er, strategic giving, such as the $100,000 it donated last year to a local South Carolina library – the day after Mrs. Clinton debated in that key primary state. There are other examples of such politically targeted philanthropy, and it's worth noting that most of the foundation's disbursements came only after Mrs. Clinton announced her Presidential run.

Similar conflict-of-interest questions apply to the separate William Jefferson Clinton Foundation, for which the couple has so far refused to release a list of donors. Such a list could contain more of the likes of Canadian mining tycoon Frank Giustra, who took Mr. Clinton along on a trip to Kazakhstan as a character reference, won a Kazakh mining concession, and gave more than $30 million to the foundation. The Clintons have an obligation to let voters see who their foundation donors are.

Like other Americans during this tax season, the Clintons have also had to endure the complexity of the tax code. Their 2006 return alone totaled 67 pages. While they can afford a smart accountant to sift through all those forms, would it be too optimistic to think Mrs. Clinton might be inspired by her tax experience to promote tax reform?

Alas, yes. Senator Clinton's main tax proposal is to repeal the tax cuts of 2001 and 2003, raising rates to the levels of the Clinton Presidency. "We didn't ask for George Bush's tax cuts. We didn't want them, and we didn't need them," Mrs. Clinton explained.

With friends like Mr. Burkle, clearly they didn't. But her higher tax rates wouldn't merely hit those who make $109 million; they'd soak middle-class families that make $100,000 or $200,000 a year and hardly feel "rich."

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