A Sarah Palin Tax Problem?

From Talking Points Memo:

Back in September, it was reported that a dinner with former Alaskan governor Sarah Palin was being auctioned by charity on eBay with a minimum asking bid of $25,000.

That was sort of funny.

It was later reported that the winning bid was $63,500, from a woman in Alabama.

That was less funny, and less widely reported.

But the tax consequences were apparently not thought about, because she might have realized taxable income of $63,500 with nothing to show for it.

There is a sometimes-overlooked tax regulation that states that you don't realize income by providing services to a charity, but that you do realize income by providing a service to someone else who then pays the charity for that service. (Treas. Reg. 1.61-2(c).)

If Sarah Palin had charged someone $63,500 to have dinner with her, she would have $63,500 of income, and she could later donate that money to charity and claim a charitable deduction subject to the limits on charitable deductions (usually 50% or 30% of adjusted gross income). The point made by the regulation, and by various rulings issued by the Internal Revenue Service, is that Palin can't avoid that result by assigning the right to have a dinner with her to a charity and letting the charity collect the money. As the Supreme Court first ruled back in 1930, the law taxes incomes "to those who earned them." Lucas v. Earl, 281 U.S. 111, 114 (1930).

So Palin should report the $63,500 as income, and then claim a charitable deduction for the same amount. If the charity is a "public charity" described in IRC section 170(c)(1), and she has at least $63,500 of other income, with no other charitable deductions, it might be a "wash," because she will also be entitled to a charitable deduction of $63,500 for the money that was (after all) paid to charity. But if she doesn't have that much other income, or if she claims other charitable deductions, it's possible that her charitable deduction will be less than the income realized, and she will end up having to pay federal income tax on money she didn't actually receive.

“Told Ya So,” Says Sarah Palin

From Drudge Report:

Sarah Palin hits FOXNEWS tonight for the big 'Told Ya So' interview, the DRUDGE REPORT has learned. As President Obama vows to spend the 'stimulus' faster, Governor Palin tells host Sean Hannity: 'You gotta quit digging that hole!'

HANNITY: What do you make of – look at the state of the economy now...

PALIN: Well, when you consider that the federal government is about eleven trillion dollars in debt, and we’re borrowing more to spend more… it defies any sensible economic policy that any of us ever learned through college. It defies economy practices and principles that tell ya ‘you gotta quit digging that hole when you are in that financial hole’

Palin continues:

"America is digging a deeper hole and how are we paying for this government largesse. We’re borrowing. We’re borrowing from China and we consider that now we own sixty percent of GENERAL MOTORS – or the U.S. government does… But who is the U.S. government becoming more indebted to? It’s China. So that leads you to have to ask who is really going to own our car industry than in America."

HANNITY: You know but it goes back - It does go back a little to the campaign. I mean, ‘spread the wealth, patriotic duty…’

PALIN: Kind of a ‘we told ya so’.

HANNITY: Well, is that how you feel?

PALIN: That’s how I feel! I feel like… and I think that more and more constituents are going to open their eyes now and open their ears to hear what is really going on and realize ok… Maybe we didn’t have a good way of expressing that, or articulating that message of ‘here is what America could potentially become if we grow government to such a degree that we cannot pay for it and we have to borrow money from other countries, some countries that don’t necessarily like America.

And this many months into the new administration, quite disappointed, quite frustrated with not seeing those actions to rein in spending, slow down the growth of government. Instead Sean it is the complete opposite. It’s expanding at such a large degree that if Americans aren’t paying attention, unfortunately our country could evolve into something that we do not even recognize.

HANNITY: Socialism?

PALIN: Well, that is where we are headed. That is where we have to be blunt enough and candid enough and honest enough with Americans to let them know that if we keep going down these roads… nationalizing many of our services, our projects, our businesses, yes that is where we would head. And that is why Americans have to be paying attention. And we have to have our voices heard. And ultimately it need to be our will, the American people’s will imposed on Washington, instead of the other way around.

The interview is set to air tonight on FOXNEWS, 9 PM ET.

Gov. Sarah Palin To Pay Back Taxes

According to the Miami Herald, former Vice Presidential candidate and current Alaskan Governor, Sarah Palin, must pay back taxes on thousands of dollars in expense money she received over the past few years. A snippet of the article can be found below, but the full text can be found here.

The governor's office wouldn't say this week how much she owes in back taxes for meal money, or whether she intends to continue to receive the per diem allowance. As of December, she was still charging the state for meals and incidentals.

"The amount of taxes owed is a private matter," Sharon Leighow, Palin's spokeswoman, said in an e-mail. "If the governor collects future per diem, those documents would be a matter of public record."

The revelation about Palin comes as U.S. senators, including Sen. Mark Begich, D-Alaska, are under scrutiny over back taxes. A survey by the political newspaper and Web site Politico found that Begich was one of seven senators who acknowledged owing back taxes.

Some other state employees also owe back income taxes for travel payments and will be getting revised tax forms, Annette Kreitzer, state administration commissioner, said in an e-mail.

She wouldn't say which, or how many, employees will be receiving the notifications.

The payments became a touchy issue for Palin last fall when she was running for vice president and campaigned as a budget watchdog.

Fact Check: Would Obama's tax policy harm people with special needs?

From CNN.com:

The Statement:

During a speech Friday, Oct. 24, in Pittsburgh, Pennsylvania, Gov. Sarah Palin noted that parents of children with special needs often set up trusts to help ensure long-term assistance. "Many families with special needs children or dependent adults" are concerned that Sen. Barack Obama "plans to raise taxes on precisely these kinds of financial arrangements," she said. "They fear that Senator Obama's tax increase will have serious and harmful consequences, and they're right."

The Facts:

Some parents create special needs trusts in order to help ensure that their children with disabilities or other special needs will have help well into the future, after the parents retire or die. The Federal Citizen Information Center Web site explains that the primary advantage of a trust, rather than a gift or inheritance, is that the assets are owned by the trust, not the beneficiary. So, funds will be available to the person with special needs, but will not cause that person to be disqualified from the government-run Medicare program. The trust funds typically provide for such things as glasses, independent checkups, transportation, equipment, training, education, and other programs, the Web site says.

The way most of these trusts are structured, the interest they gain is taxed as part of the parents' income. Palin, in her remarks, suggests that Obama will increase taxes on these trusts in general, thereby reducing the funds in them. The McCain campaign did not respond to requests to explain or comment on the record.

Obama has pledged to increase taxes only on individuals with incomes over $200,000 and families with incomes over $250,000. He is not offering an exception for interest in special needs trusts — that income counts toward the total. So, if someone's taxes go up under Obama, the interest in a trust fund is part of what will be taxed at a higher rate.

But Obama does not have a plan to increase taxes on special needs trusts in general. And Jason Furman, economic adviser for the Obama campaign, noted that Obama has vowed to fix his plan if any individual making less than $200,000 or family making less than $250,000 is left paying higher taxes. So, if Obama's tax plan, unintentionally, forced taxes up on a special needs trust for someone at a lower income, the tax plan would change, and the person's taxes would not go up, Furman said.

Sen. John McCain is promising across-the-board tax cuts, so no one with a special needs trust would see a tax hike under his plan. As the CNN Truth Squad has reported, the nonpartisan Tax Policy Center says Obama's tax cuts would be larger for people in middle and lower income ranges.

Before Palin launched this attack Friday, the McCain campaign told the Wall Street Journal that it was coming. The newspaper, in an article published online Friday, quoted Andy Imparato, president of the nonpartisan American Association of People with Disabilities, saying he has not heard any complaints from constituents about Obama's tax plan. It was not clear what Palin's evidence was that "many families" were concerned about Obama's plan.

The Verdict:

Misleading. Obama's plan would increase taxes on individuals making more than $200,000 and families making $250,000, and it would include the income on interest in special needs trusts. But Obama does not have a plan to raise taxes on special needs trusts in general.

John McCain proposes new package of tax breaks

From: LA Times.com:

In an effort to seize the initiative in tackling the nation's financial troubles, John McCain on Tuesday outlined a $52.5-billion package of new tax breaks that he said would stimulate the economy and ease the money problems of many Americans.

Aiming his pitch largely at senior citizens who could be crucial swing voters in states with older populations such as Pennsylvania, McCain said he would lower the tax rate on their withdrawals from retirement accounts to 10% this year and next.

The Republican presidential nominee also proposed cutting the capital gains tax in half for two years, suspending taxes on unemployment benefits for workers making less than $100,000, and ordering the Treasury Department to guarantee 100% of Americans' savings for six months to calm fears of bank failures.

"If I am elected president, I will help to create jobs for Americans in the most effective way a president can do this -- with tax cuts that are directed specifically to create jobs and to protect your life savings," he told a cheering crowd of about 1,000 in the gymnasium of a community college here in the Philadelphia suburbs.

The new slate of proposals is an addendum to the Arizona senator's already expansive tax-cutting plans and his call to use $300 billion of the $700-billion rescue package to buy up bad mortgages and reset them with more favorable terms. It is part of McCain's effort to right his campaign and regain voters' trust in his handling of the economy, an area in which more voters favor his opponent, Illinois Sen. Barack Obama.

The Candidate’s Tax Returns Compared

Thanks to the TaxProf Blog, below is a chart comparing the tax returns of the four major presidential and vice presidential candidates (Sen. Barack Obama, Sen. John McCain, Sen. Joe Biden, and Gov. Sarah Palin). As you can see, Mr. Biden donated the lowest percent of his income to charity, but made more in the past two years than Mrs. Palin.

Tax Profs Agree: Gov. Palin's Tax Returns Are Wrong

From Tax Prof Blog:

Jack Bogdanski (Lewis & Clark) & Bryan Camp (Texas Tech) have independently reviewed the tax issues raised by the release of Gov. Palin's 2006 and 2007 tax returns and financial disclosure form, as well as the remarkable opinion letter issued from Washington D.C. tax lawyer Roger M. Olsen. Jack and Bryan conclude that there are serious errors in Gov. Palin's returns as filed and that she and her husband owe tens of thousands of dollars in additional taxes.

Jack Bogdanski, There's No Debate: Palins Owe Thousands in Back Taxes:

There is no serious debate (at least, none that has been brought to our attention) about the fact that at least the amounts paid for the children's travel -- $24,728.83 in 2007, according to the Washington Post -- are taxable. The campaign's tax lawyer has got at least that much of the law, and perhaps more, wrong. ... The Palins, who had their tax returns done by HR Block, simply got it wrong. And the fact that the state payroll office got it wrong, too, doesn't erase the Palins' unpaid tax liability.

Bryan Camp, A Brief Analysis of Governor Palin's Tax Returns for 2006 and 2007:

The release of an opinion letter by attorney Roger M. Olsen dated September 30, 2008, has stirred up the pot once again about the accuracy of Sarah and Todd Palin’s 2006 and 2007 tax returns. Not only that, but Mr. Olsen’s letter raises a couple of new issues.

This paper focuses on five problems: three raised in the tax returns and two new ones raised by Mr. Olsen’s letter. Here’s a summary of the five problems and my conclusions, for those who want to cut to the chase. My analysis will follow.

1. The Palins did not report as income some $17,000 that Governor Palin’s employer (the State of Alaska) paid her as an “allowance” for her travel. Can they do that? Yes, most likely.

2. The Palins did not report as income some $43,000 that the State of Alaska paid the Governor as an “allowance” for her husband and children’s travel. Can they do that? No, most likely not.

3. The Palins deducted $9,000 on their 2007 return, claiming it was a loss from Mr. Palin’s snow machine racing activity. Can they do that? Most likely not, but more info could make the deduction o.k. If any of the above issues goes against the Palins they then risk getting hit with the section 6662 penalty for “negligence or disregard of rules or regulations.”

4. Can the Palins avoid the section 6662 negligence penalty by claiming that they reasonably relied either (a) on the W-2’s sent to them by their employer, which did not reflect either the $17,000 or the $43,000, or (b) on their tax return preparer H&R Block, or (c) on Mr. Olsen’s opinion letter dated September 30, 2008? The three reliance defenses are unlikely to succeed, but more info may make the (b) defense a good one.

5. Does Mr. Olsen have any exposure to sanctions by the IRS because of his letter? I believe Mr. Olsen’s letter probably violates 31 C.F.R. section 10.35. If so, he would be exposed to possible sanctions from the IRS Office of Professional Responsibility.

Palin tax returns for 2006 and 2007 released

From the Associated Press:

Sarah Palin is the breadwinner and husband Todd is, well — he takes a lot of deductions for his fishing and snowmachine racing careers, according to 2007 and 2006 federal tax returns released Friday.

Sarah Palin makes $125,000 a year as Alaska governor. Plus, since she took the job in December 2006, she hasn't paid taxes on the more than $17,000 she received in controversial per diem payments for working out of the family's lakeside home in Wasilla — some 575 miles from the capital of Juneau.

For the 2007 tax year, Todd Palin's self-employment brought him $66,893 in gross receipts — $49,893 from fishing and $17,000 from snowmachine racing. But, the returns show, he claimed so many deductions that he reported only $15,513 net profit from the fishing operation and claimed a $9,639 loss from his racing, leaving him with an overall net income of only $5,874. In addition, Todd earned $43,519 last year working part-time on the North Slope for BP Exploration.

The self-employment deductions left the Palins, who have four dependent children, with a 15 percent tax rate for 2007 and a rate of less than 10 percent for 2006. Todd Palin also deducted for the business use of their home in Wasilla. A fifth child was born to the couple this year.

An Associated Press analysis of the returns released by the McCain campaign also reveals that the Palins underpaid their estimated taxes with an April extension and likely owe interest.

Latest Good Reads

McCain's economic plan boosts middle class.

The qualified privilege against discovery of federal income tax returns.

Sarah Palin’s tax returns compared to the rest of the candidates.

Tax resolution companies: the good, the bad, and the ugly.

Palin and Biden spar over taxes, energy and war.

Survey: will executive coaching get you to the corner office?

We ain’t seen ugly yet in the market.

Why vote aye for bad legislation?

Budgeting 101: get your priorities straight.

More on causes of the credit crisis.

Tax Misrepresentations in Vice Presidential Debates

As many of you know, last night was the first and only Vice Presidential debate between Sen. Joe Biden and Gov. Sarah Palin. The debate covered a wide range of topics, but not surprisingly taxes and the economy engulfed a large part of the discussion. As usual, there were quite a few misrepresentations of the facts from both sides.

Fortunately the experts at The Tax Foundation have reviewed the debate transcripts and outlined all the inaccuracies in both candidates’ arguments. Below are snippets from both Biden’s and Palin’s gaffes, but you can read the full review by clicking here.

Sen. Biden's Errors

First, Joe Biden responds to a charge by Gov. Palin, who said that Sen. Obama voted to raise taxes on people making as little as $42,000. We've been over this numerous times, and while Gov. Palin's claim is misleading (see below), Sen. Biden's response contained an error as well:

The charge is absolutely not true. Barack Obama did not vote to raise taxes. The vote she's referring to, John McCain voted the exact same way. It was a budget procedural vote. John McCain voted the same way. It did not raise taxes.

While Sen. Biden is correct to say that the vote did not raise taxes, actually, Sen. McCain did not vote on this non-binding resolution. It passed 51-44, but Sen. McCain was one of five members of the Senate who did not vote in that roll call vote. Therefore, Sen. Biden's claim that he "voted the same way" is incorrect.

A little later in the debate, Joe Biden made this statement:

The middle class under John McCain's tax proposal, 100 million families, middle class families, households to be precise, they got not a single change, they got not a single break in taxes. No one making less than $250,000 under Barack Obama's plan will see one single penny of their tax raised whether it's their capital gains tax, their income tax, investment tax, any tax. And 95 percent of the people in the United States of America making less than $150,000 will get a tax break.

Actually the "100 million" figure is not families. It is not households. It is tax returns. But that's a somewhat minor issue in the whole scheme of things. The figure is incorrect because Sen. McCain, even relative to a current policy with Alternative Minimum Tax (AMT) patch baseline, does cut corporate income taxes and provides his refundable health care tax credit, which would reduce that "100 million won't get a tax break" figure. That figure is technically correct if you look only at the individual income tax and ignore Sen. McCain's health care tax plan, and if you do it relative to a current policy baseline with AMT patch. Furthermore, Sen. Biden makes the same error as Barack Obama in mixing baselines. The "95 percent" figure (when properly used) gives Obama credit for an AMT patch whereas he does not give McCain credit for an AMT patch tax cut when referring to the 100 million figure.

But the "95 percent" figure is just plain wrong as well. According to the Tax Policy Center, no income quintile (including those earning under $150,000) would even see 95 percent of its tax units receiving a tax break under Pres. Obama's tax plan in 2009. Even in 2012 under Obama's tax plan relative to current law, an average of the fraction of tax units that receive a tax cut in the bottom four quintiles is less than 90 percent. In other words, Biden's statement is factually incorrect. The "95 percent" figure is fairly accurate when Obama uses it to talk about the fraction of working families that would receive a tax cut under his plan, but not the entire population nor the entire population earning under $150,000.

Gov. Palin's Errors

Gov. Palin started off early in the debate trying to label Sens. Obama and Biden as tax hikers. She said:

Now, Barack Obama and Sen. Biden also voted for the largest tax increases in U.S. history. Barack had 94 opportunities to side on the people's side and reduce taxes and 94 times he voted to increase taxes or not support a tax reduction, 94 times.

This is not true. Even if one considers the expiration of the so-called Bush tax cuts to be a tax increase (it is technically not a tax increase), it would not be the biggest tax increase in history under almost any measure that adjusts for the size of the economy. And Sen. Obama's presidential tax plan does "raise taxes" relative to a current policy baseline over ten years, but it's not even close to being the largest tax increase in U.S. history. Relative to a current law baseline, Sen. Obama is actually cutting taxes rather significantly in the aggregate (nearly $3 trillion).

Sticking with the "Obama will raise your taxes" theme, Palin also repeated the "$42,000" line that Sen. McCain has repeated over and over and over:

But we do need tax relief and Barack Obama even supported increasing taxes as late as last year for those families making only $42,000 a year. That's a lot of middle income average American families to increase taxes on them. I think that is the way to kill jobs and to continue to harm our economy.

As I wrote when Sen. McCain said this in the first debate: That was a non-binding Senate vote earlier this year, and it's different from what Obama is proposing as a candidate. Very few households making $42,000 per year would pay more in taxes under Obama's tax plan. Some may say that Obama is voting one way and proposing something else on the campaign trail. If that's fair, then McCain's drastic change of heart on the Bush tax cuts is fair game as well. McCain voted against the 2001 and 2003 tax cuts, but now supports extending almost all of them with the exception of the full repeal of the estate tax.

Gov. Palin's most egregious error of the night was actually repeated twice in 20 seconds. It was on the issue of Sen. McCain's health care plan, which neither side appears to understand.

I am because he's got a good health care plan that is detailed. And I want to give you a couple details on that. He's proposing a $5,000 tax credit for families so that they can get out there and they can purchase their own health care coverage. That's a smart thing to do. That's budget neutral. That doesn't cost the government anything as opposed to Barack Obama's plan to mandate health care coverage and have universal government run program and unless you're pleased with the way the federal government has been running anything lately, I don't think that it's going to be real pleasing for Americans to consider health care being taken over by the feds. But a $5,000 health care credit through our income tax that's budget neutral. That's going to help. And he also wants to erase those artificial lines between states so that through competition, we can cross state lines and if there's a better plan offered somewhere else, we would be able to purchase that. So affordability and accessibility will be the keys there with that $5,000 tax credit also being offered.

Sen. McCain's health care tax plan is not budget neutral. It is a $1.3 trillion tax cut over the next ten years, which is therefore the amount that would be added to the national debt under this proposal. It does cost the government something over the next ten years, and it's almost as expensive as Sen. Obama's health care tax plan, according to Tax Policy Center preliminary estimates ($1.6 trillion). To be budget neutral, Sen. McCain would essentially have to eliminate the exclusion from payroll taxes for employer-provided health insurance as well as the income tax exclusion. He does not do that. Notice that Gov. Palin, like Sen. McCain did in the first debate, doesn't give you the whole story on this plan, avoiding the inconvenient fact that he would tax employer-provided health insurance.

Biden and Palin – Comparing and Contrasting their Tax Views

Over the past week there has been a lot of media attention on the United States economy. With huge government buyouts, and record-breaking drops in the stock market, Americans are looking to the Presidential candidates for more information on their tax and economic plans.

In the past week weeks I have given an in depth look at both Vice Presidential candidate’s (see the entries on Sen. Joe Biden and Gov. Sarah Palin), and with the recent developments in our economy I thought it prudent to also compare the differences in their respective tax views on a few key issues.

Balanced Budget:

Joe Biden:

Senator Biden feels strongly that a balanced budget should be high up on the next president’s priority list. On top of consistently voting for what he believes were fair and balanced budget amendments since 1997, Biden has also voted against bills he felt would lead to an unbalanced budget. In 1990, Biden voted against George H. W. Bush’s budget bill, which aimed to raise taxes drastically over a five-year period. In 2000, Biden also voted against making tax cuts a priority over national debt reduction.

Biden’s own budget plan for the next few years includes cutting funding for the war (by which he hopes to generate over $100 billion in federal revenue), and eliminating tax cuts for the wealthiest Americans. He also plans on eliminating tax cuts for investment on dividends – which he claims could generate $195 billion in revenue over time.

Sarah Palin:

From the moment Palin took office as the Governor of Alaska, she began looking for ways to cut spending in all areas of the government. By cutting local project programs, selling a corporate jet, firing unnecessary government staff, and directing state agencies to reduce excess spending, she was able to reduce the states spending by $124 million. However, a $7 billion education and savings plan, new ice rink, and other local investments eventually led her state into debt. While the governor made many positive changes to Alaska and provided youth and cultural opportunity, debate rages at to whether her cuts were effective or not.

The difference:

Both candidates obviously agree that balancing the budget is an important task, though possibly on different levels. While Biden has experience working as a Senator to fix the national budget, Palin’s experience is limited to the state level. Without further statements from Palin herself, it’s hard to tell exactly what her plans for the budget are on the national level.

Gasoline Prices, Taxes, and Solutions:

Biden:

Knowing our dependence on oil and need for change, Biden has outlined multiple ways to help fix our countries current energy crisis. While other candidates have supported a gas tax holiday, Biden opposes the concept claiming that is merely a temporary solution. By pushing to reduce our dependence on oil entirely, Biden hopes to ease the demand for fossil fuels and also fight global warming. In 2005 he voted yes to bills that aim to significantly reduce oil by 2025, and for tax incentives to encourage energy production and conservation. He also voted against multiple bills promoting oil leasing programs in Alaska’s ANWR.

Palin:

A strong supporter of a gas tax holiday, Palin feels there is plenty of oil available for drilling in this country. Alaska has some of the highest gas prices in the country, and to help out citizens of her state Palin signed a gas tax holiday into law, and also pushed to get one time energy rebates sent out to Alaska taxpayers. Another one of Palin’s energy programs was known as Alaska’s “energy efficient month,” where the government provided incentives for reduced energy consumption. Although Palin has achieved some success in helping Alaska’s energy problems many wonder whether or not she will be able to do the same on the national level as the programs were made possible by windfall taxes from oil companies drilling in Alaska.

The Difference:

The only real similarity between the candidates is the fact that they both realize we are in an energy crisis. While Biden plans to make our nation less dependent on petroleum, Palin is very vocal about her support for increased offshore drilling. Palin does claim she supports green energy projects, but views them of secondary importance.

Earmarks:

Biden:

It is no secret that senator Biden has quite an earmark record. His FY09 requests total about $330 million, and it has caused a lot of bad publicity for Biden. Although it is not uncommon for members of Congress to take advantage of earmark spending, it is not helpful for a campaign running on the idea of change in a time of economic uncertainty.

Palin:

Although she’s taken stride to criticize both Obama and Biden on their earmark spending, Palin does have a record of wasteful spending. The infamous “bridge to nowhere” project, which she first embraced and then, later, dropped, was estimated at about $398 million. Obama criticized Palin for the first time ever on September 6^th, and on her earmark policies in particular:

"I know the governor of Alaska has been saying she's change, and that's great," Obama said. "She's a skillful politician. But, you know, when you've been taking all these earmarks when it's convenient, and then suddenly you're the champion anti-earmark person, that's not change. Come on! I mean, words mean something, you can't just make stuff up."

The Difference:

While no one tries to say straight out they “favor” earmarks, Biden is, if at all, more open and honest about it. It was a considered risky move on Palin’s part to be so critical on earmarks when she had does have some history of them herself.

Palin Billed Taxpayers for Nights Spent at Home

From Washington Post.com:

Alaska Gov. Sarah Palin has billed taxpayers for 312 nights spent in her own home during her first 19 months in office, charging a "per diem" allowance intended to cover meals and incidental expenses while traveling on state business.

The governor also has charged the state for travel expenses to take her children on official out-of-town missions. And her husband, Todd, has billed the state for expenses and a daily allowance for trips he makes on official business for his wife.

Palin, who earns $125,000 a year, claimed and received $16,951 as her allowance, which officials say was permitted because her official "duty station" is Juneau, according to an analysis of her travel documents by The Washington Post.

The governor's daughters and husband charged the state $43,490 to travel, and many of the trips were between their house in Wasilla and Juneau, the capital city 600 miles away, the documents show.

Latest Good Reads

Rangel's Villa; Palin's home away from home.

Yet again, the IRS bails out the Congress.

Economic stimulus checks, a complete failure?

Proposed federal regulations on retirement plans.

Is your bank safe?

10 tips to avoid information overload at work.

How to keep a steady flow of clients coming into your business.

Planning a career change?

Billion dollar lessons.

Palin Makes Her First Gaffe

From Huffington Post:

Gov. Sarah Palin made her first potentially major gaffe during her time on the national scene while discussing the developments of the perilous housing market this past weekend.

Speaking before voters in Colorado Springs, the Republican vice presidential nominee claimed that lending giants Fannie Mae and Freddie Mac had "gotten too big and too expensive to the taxpayers." The companies, as McClatchy reported, "aren't taxpayer funded but operate as private companies. The takeover may result in a taxpayer bailout during reorganization."

Economists and analysts pounced on the misstatement, which came before the government had spent funds bailing the two entities out, saying it demonstrated a lack of understanding about one of the key economic issues likely to face the next administration.

"You would like to think that someone who is going to be vice president and conceivable president would know what Fannie and Freddie do," said Dean Baker, co-director of the Center for Economic and Policy Research. "These are huge institutions and they are absolutely central to our country's mortgage debt. To not have a clue what they do doesn't speak well for her, I'd say."

Added Andrew Jakabovics, an economic analyst for the progressive think tank, Center for American Progress: "It is somewhat nonsensical because up until yesterday there was sort of no public funding there. Even today they haven't drawn down any of the credit line they have given to Treasury. 'Gotten too big and too expensive' are two separate things. The too big has been a conservative mantra for a while and there is something to be said of that in that they hold about half of the mortgage guarantees that are out there. And in the last year they have been responsible for roughly 80 percent out there. The 'too expensive to tax payers,' I don't know where that comes from."

Even conservative analysts acknowledged that the statement simply did not hold true.

"Heretofore, if the treasury had a balance sheet there would have been a liability but there was never a taxpayer payment before [the bailout]," said Gerald P. O'Driscoll, an economist with the Cato Institute. "[Fannie and Freddie] were not taxpayer funded. They had taxpayer guarantee, which is worth something, especially in the stock market..."

The Palin misstatement comes as Fannie and Freddie are set to be placed under control of the Federal Housing Finance Agency, created by President Bush in late July to help regulate the two housing giants. Both presidential candidates have been critical of Fannie and Freddie but neither is opposed to the government's plans for the companies. The treasury is hoping that the government's role will help stabilize credit markets and incentive more mortgage lending.

"With the takeover they will be taxpayer funded," said O'Driscoll. "As I understand it they get to withdraw funds with permission going forward."

How politically significant a "gaffe" it is remains to be seen. The major concern about Palin's position on the ticket is that she lacks the economic and foreign policy wherewithal to serve as vice president. This certainly doesn't help on that front. At the same time, the remark went almost entirely unnoticed over the weekend and discussions on the developments of the housing market can be difficult to process for even the most attuned voter.

There are varying explanations that could be offered for Palin's defense. As O'Driscoll noted, both Fannie and Freddie "were hybrid institutions because they had private ownership but... an implicit government guarantee which people thought at the end of the day was explicit." Meanwhile, as Baker noted, as of July the two lenders were being offered low market interest rates by the fed again, theoretically, at the taxpayer's expense. But, he added, "I kind of doubt she had any sense of that."

Separating Palin Fact from Palin Fiction

It seems like every other day there is a new rumor about Vice Presidential Nominee Sarah Palin. Yesterday I posted an entry taking a deeper look at the truth about her tax views, but there are dozens of other non-tax related stories floating the Internet about Palin. Below are some of those rumors – either true or debunked – from a list compiled by Charlie Martin of Pajamas Media, who took the time to separate the fact from fiction in recent rumors about the Governor.

• No, Willow and Piper are not named for witches on TV. Among other things, Willow was born before Buffy came on TV, and Piper was born before Charmed.
• Yes, it appears that she has a Big Dipper tattooed on her ankle. She lost a bet.
• No she was not a member of the (wild-eyed libertarian) Alaska Independence Party, although her husband once was.
• No, she was never a Pat Buchanan supporter – even when Buchanan claims she was, she was on the board of Steve Forbes’ campaign in Alaska.
• No, Buchanan does not support her now – in fact, he is supporting Obama. Buchanan did think her speech was amazing, but then so do 80 percent of the people who saw it.
• Yes, she was apparently pregnant when she got married
• Yes, barring Immaculate Conception virgin birth, Bristol appears to have had sex with her fiancee. No, Bristol didn’t receive only “abstinence-only” sex ed.
• No, it wasn’t/won’t be [bad tense, has not happened yet] a shotgun wedding; Bristol and Levi been engaged for a good while according to Levi’s mother. It was either an accident or just an unconventional order.
• Yes, she did try, clearly unsuccessfully, to get Bristol married off to her fiancée before the story came out.
• Yes, she did fire the public safety guy — but he said in the Anchorage paper that, for the record, she never, and no one else in her administration ever, tried to make him fire her ex-brother-in-law.
• And yes, the state trooper (her sister’s ex-husband) she was worried about did: tase her 10 year old nephew; drive his state patrol car while drinking or drunk; did threaten to “bring her down”; and did threaten to murder her father and sister if they dared to get an attorney to help with the divorce.
• Yes, the state trooper was suspended when he was put under a court protective order.
• No, the trooper wasn’t fired.
• Yes, she did try to cut her own salary as mayor by $4000 a year; yes, she had voted against the $4,000 a year raise while on the city council.
• No, she didn’t cut funding for unwed mothers; yes, she did increase it by “only” 354 percent instead of 454 percent, as part of a multi-year capital expenditures program. No, the Washington Post doesn’t appear to have corrected their story. Even after this was pointed out in the comments on the story.
• No, she didn’t cut special needs student funding; yes, she did raise it by “only” 175 percent.
• Yes, she did ask the librarian if some books could be withdrawn because of being offensive; no, they couldn’t; yes, it was “rhetorical, at least as was reported contemporaneously in 1996
• No, the list of books she wanted to ban that’s being passed around is not real; among other things, it includes a number of books published after her time in office there.
• Yes, she apparently believes in some variant of intelligent design.
• No, she didn’t try to force the schools to teach it; she said if someone brought it up, it was an appropriate subject for debate.
• No, she doesn’t believe in “abstinence only” education. Yes, she thinks abstinence is an effective way of preventing pregnancy. Duh. Yes, she believes kids should learn about condom use in schools.
• Yes, she did smoke marijuana, when it was legal in Alaska. Yes, she apparently did inhale.
• Yes, she kills animals and eats them, and wears their skins.
• Yes, she was a beauty contest contestant.
• Yes, she was once a sportscaster.
• Yes, she has a college degree in journalism, but I won’t hold that against her, as she seems to have found honest work as well.
• Yes, she was vetted extensively, not just in three days — I’ve got links to press reports about people coming to Wasilla on May 29, and we had her on our Veepstakes at PJM from the first day we ran it.
• Yes, Sarah Palin’s acceptance speech was written by a speechwriter. Duh. No, none of Obama’s, McCain’s, nor Biden’s speeches were impromptu off the cuff things either.
• Yes, she did put the governor’s plane on eBay. No, that’s not how it was finally sold. Yes, McCain did say it wrong. Bad McCain.

Gov. Sarah Palin: a Deeper Look at her Tax Views

Both presidential candidates have chosen their Vice Presidential picks and Election Day is a mere two months away. On August 29, 2008, Sen. John McCain announced his choice to have the Governor of Alaska, Sarah Palin, serve as his running mate. Within minutes, controversy began, and Palin’s personal life was thrown into the limelight – as well as the rest of her family. However, with so much media attention on Palin’s personal life, it is hard to get a clear view of her position on more important issues, like taxes. To help the readers of my blog make an educated decision come this election I have put together the following outline of Palin’s tax views.

Energy Tax Rebates

In her own state of Alaska, Palin proposed a monthly $100 rebate for all Alaskans to help deal with energy and fuel prices. She soon dumped the monthly idea and decided to make it a flat rebate of $1,200 instead. However, criticism rose almost immediately because the flat rate did not suit every Alaskan’s needs, as fuel prices and demand are different in every region.

Balanced Budget and Tax Relief

As soon as Palin was elected as Governor she carried out a campaign promise and sold a corporate jet purchased by her predecessor for $2.1 million on eBay. Determined to reduce State Budget, she then signed the largest operating budget in Alaska history, $6.6 billion. She also slashed hundreds of construction projects in Alaska, cutting $237 million from the construction budget. The closure of some projects was applauded, while others were criticized, but the state needed the funds regardless of popularity.

In 2007 Palin took on the biggest construction project, the infamous, “Bridge to Nowhere”, which she had originally wanted to rebuild but then later opposed. “She made the final decision to kill a very bad project, so she deserves credit for that. But she didn’t do it as an ideological opponent of earmarks. She did it as someone who had to balance the books,” Keith Ashdown, a tax investigator told the Washington post.

Oil Taxes

Alaska’s economy and way of life has come to depend strongly on oil wealth. Palin proposed a $750 million oil tax increase, which eventually came to $1.5 billion. As soon as the bill was approved in the state’s legislature, Palin signed it into law.

However, she has also fought hard to try to open the Arctic National Wildlife Refuge for drilling, which many environmentalists and citizens across the country strongly opposed. The people of Alaska however, who’s economy depends on oil, agree with the drilling.

Finally, Palin has also been a strong supporter of a gas tax holiday, which received national attention when it was supported by McCain and Sen. Hilary Clinton.

Dairy Farm Closure

One of Palin’s more controversial finance choices was her choice to keep a state-owned dairy farm open. The Alaska creamery board recommended that the Matanuska Maid Dairy be closed, but Palin decided to keep it against their advice. Controversy arose when Palin replaced the entire membership of the Board of Agriculture and conservatism (the only people who could fire or hire members of the Alaska creamery board). In 2007, it became clear that the business was unprofitable and not worth keeping. At that time, Palin decided to just sell the farm.

Sales Tax Increase

As mayor of Wasilla, Palin followed through promises to reduce property taxes as well as her own salary. However, she did have to raise the sales taxes by almost half a percent to pay for an indoor ice rink and sports facility though. The project would cost over $15 million to build, but could greatly stimulate small town’s economy. The tax increase was necessary to pay for the ice rink, as the state had already spent their budget on road and sewer projects. Palin pushed to have the sports facility built quickly, before the city had a clear title, and got a bad reputation as the property was in litigation for 7 years.

Palin’s Speech Filled With Inaccuracies

As many of you may know, Governor Sarah Palin spoke at the Republican National Convention a few days ago. To her credit, Palin delivered an excellent speech and got the whole crowd involved. However, as good as her speech may have been, it was unfortunately filled with inaccuracies. Embedded below is a video of Palin speaking, and below are some of the factual errors identified by the Associated Press.

PALIN:

"I have protected the taxpayers by vetoing wasteful spending ... and championed reform to end the abuses of earmark spending by Congress. I told the Congress 'thanks but no thanks' for that Bridge to Nowhere."

THE FACTS:

As mayor of Wasilla, Palin hired a lobbyist and traveled to Washington annually to support earmarks for the town totaling $27 million. In her two years as governor, Alaska has requested nearly $750 million in special federal spending, by far the largest per-capita request in the nation. While Palin notes she rejected plans to build a $398 million bridge from Ketchikan to an island with 50 residents and an airport, that opposition came only after the plan was ridiculed nationally as a "bridge to nowhere."

PALIN:

"There is much to like and admire about our opponent. But listening to him speak, it's easy to forget that this is a man who has authored two memoirs but not a single major law or reform — not even in the state senate."

THE FACTS:

Compared to McCain and his two decades in the Senate, Obama does have a more meager record. But he has worked with Republicans to pass legislation that expanded efforts to intercept illegal shipments of weapons of mass destruction and to help destroy conventional weapons stockpiles. The legislation became law last year. To demean that accomplishment would be to also demean the work of Republican Sen. Richard Lugar of Indiana, a respected foreign policy voice in the Senate. In Illinois, he was the leader on two big, contentious measures in Illinois: studying racial profiling by police and requiring recordings of interrogations in potential death penalty cases. He also successfully co-sponsored major ethics reform legislation.

PALIN:

"The Democratic nominee for president supports plans to raise income taxes, raise payroll taxes, raise investment income taxes, raise the death tax, raise business taxes, and increase the tax burden on the American people by hundreds of billions of dollars."

THE FACTS:

The Tax Policy Center, a think tank run jointly by the Brookings Institution and the Urban Institute, concluded that Obama's plan would increase after-tax income for middle-income taxpayers by about 5 percent by 2012, or nearly $2,200 annually. McCain's plan, which cuts taxes across all income levels, would raise after tax-income for middle-income taxpayers by 3 percent, the center concluded.

Obama would provide $80 billion in tax breaks, mainly for poor workers and the elderly, including tripling the Earned Income Tax Credit for minimum-wage workers and higher credits for larger families.

He also would raise income taxes, capital gains and dividend taxes on the wealthiest. He would raise payroll taxes on taxpayers with incomes above $250,000, and he would raise corporate taxes. Small businesses that make more than $250,000 a year would see taxes rise.

John McCain Has a Tax Plan To Create Jobs

From the Wall Street Journal:

Sen. John McCain's tax policies are designed to create jobs, increase wages and allow all Americans -- especially those in the hard-pressed middle class -- to keep more of what they earn. His plan achieves these goals in three important ways.

First, he proposes a package of tax incentives that will create jobs and raise earnings by inducing firms to invest more in the U.S. Second, he is strongly committed to blocking any increase in tax rates while doubling the personal exemptions for families with children, which will reduce the tax burden on working Americans. Third, he proposes a new, refundable tax credit that will increase health-care coverage, reduce the cost of health care, and provide more funds for families and individuals to purchase health care.

Here's how the three components of McCain's tax plan will work in practice.

To create jobs, Mr. McCain will reduce the corporate tax rate -- now at 35% the second highest among all industrial countries -- to one that doesn't penalize firms for doing business here. To encourage small businesses to expand, he will fight against higher tax rates on their income.

To increase wages, Mr. McCain will provide incentives to raise productivity, which leads to higher wages. To increase productivity, he will provide incentives for developing and applying new technologies by expanding the tax credit for research and development, and by making that credit permanent.

More savings and investment in businesses also raise productivity. Mr. McCain will stimulate saving by keeping tax rates low on the returns to saving in the form of dividends and capital gains. He will also allow faster depreciation of assets, which encourages investment. And he will strengthen the incentive to save by reducing the maximum estate tax rate, with a substantial, untaxed exemption.

In stark contrast to Sen. Barack Obama, Mr. McCain believes that tax policy should be used to foster the creation of jobs and higher wages through economic growth, rather than to redistribute incomes. The economy is not a zero-sum game in which some people can enjoy higher incomes only if others are made worse off.

Mr. McCain's plan will significantly ease the tax burden on American families with children by doubling the personal exemption to $7,000 from $3,500. This means a larger percentage tax reduction for families with smaller taxable incomes, and specifically helps families in the middle income levels. And a President McCain will enable people to keep more of their earnings by preventing Congress from raising tax rates.

Mr. McCain's overall tax policy will also expand health-insurance coverage, and make health care more efficient. Most taxpayers will also pay less in tax. Here's how it will work. His plan includes a refundable tax credit of $2,500 for single individuals and $5,000 for couples, if they receive a qualifying health-care policy from an employer (one that includes adequate coverage against large medical bills), or buy a qualifying policy on their own. The credit will replace the current tax rule, which excludes employer payments for health insurance from employees' taxable incomes.

10 Things to Know About Sarah Palin and Energy

As many of you have probably already heard, Presidential Candidate Sen. John McCain made headlines around the world when he announced that his Vice Presidential running mate would be Gov. Sarah Palin. Although there still has not been much written about her tax views, I found this interesting article on 10 Things to Know About Sarah Palin and Energy. Below are a few items that I found most interesting from the list, but you can read the whole article by clicking here.

Standing Up to Big Oil

Serving as the ethics commissioner of Alaska’s Oil & Gas Commission, Palin built her reputation on cracking down on big oil and her fellow Republicans for corruption. As governor, she also successfully led a bipartisan tax levy on big oil’s profits.

Creation of Alaska’s Climate Change Sub-Cabinet

Palin does recognize that her home state is thawing. Palin created the Climate Change Sub-Cabinet to consolidate the state’s knowledge on climate change and guide the state’s mitigation and adaptation policy. The Cabinet was also charged with exploring the state’s renewable energy potential, especially “geothermal, wind, hydroelectric, and tidal resources.”

Drill, Drill, Drill

As governor of an oil-rich state, it is no surprise Palin is in favor of domestic oil production. While McCain has reversed his position on drilling on the outer continental shelf (OCS), he has yet to call for drilling in the Arctic National Wildlife Refuge, which Palin refers to as “that little 2,000 acre plot.” But Palin thinks he’ll change his mind: “[McCain] came around on OCS…I anticipate the same with ANWR.”

Energy Rebate Check

Palin issued a press release praising Obama’s proposal for $1,000 energy rebate checks. She had proposed a $100-a-month energy debit card, but dropped that plan in favor of a $1,200 one-time special payment to eligible Alaskans, which she signed into law just this week.

Gas Tax Holiday

Alaska has some of the highest gasoline prices in the country and Palin signed into law a gas tax holiday, suspending the motor fuel tax on gasoline, marine fuel, and aviation fuel for one year. McCain and Clinton both were in favor of gas tax holiday while Obama claimed such a move was merely a “gimmick.”