“Somehow, despite his ecological principles and concern with tax fairness, Gore manages to deposit the check and take the depletion allowance.”
The article is below.
Just Like Those Other Rich Guys;
A classic tax shelter for Hillary, mining royalties for eco-freak Al
April 25, 1993, Newsday
IF YOU’RE a true financial voyeur, April 15 is one of the highlights of the year. Yes, you have to send off your tax return (or returns), which is a pain. But you get to peep into the intimate financial affairs of the high and mighty, who have been hounded into giving copies of their federal tax returns to us vultures in the news media.
So today we’ll take a voyeuristic voyage through the tax returns of President Clinton and Vice President Gore. There’s not much socially redeeming value to this exercise, but it offers insights here and there. And besides, it’s fun.
As you probably know, Hillary Clinton has made the real money in the Clinton family for years, because Bill was Arkansas governor forever and the job paid just $ 35,000 a year. Bill could live on 35 grand because Hillary, a high-powered lawyer, was knocking down big bucks. So why should Arkansas taxpayers give Bill Clinton more money when his family was already among the highest-earning families in the country?
On the second page of the Clintons’ tax return, where you list your occupation as of year-end, Clinton calls himself “president-elect.” That’s a lot classier than “between jobs,” which Clinton was on Dec. 31. He quit his governorship in mid-December, but wasn’t sworn in as president until Jan. 20.
Clinton could have doubled his Arkansas state pension by lingering as governor until January. That would have given him a pension based on the $ 70,000 gubernatorial salary Arkansas voters approved in November. But with a salary of $ 200,000 a year as president, plus fat retirement benefits and free housing and transportation, Clinton probably figured he didn’t need the money. He certainly didn’t need the political grief. Besides, now that Bill knocks down six figures a year and is the family breadwinner, maybe he just felt mellow.
The Clintons are your basic high-income family. They have partnerships, some tax-exempt income and other odds and ends. Hillary owned a piece of the partnership that owns the building in which her Little Rock law firm is housed – a classic tax shelter and capital gains combo investment.
Indeed, Hillary more than quintupled her money on that investment, which she sold as part of her departure from the firm. She also sheltered $ 6,480 of her $ 32,400 of corporate directors’ fees and other miscellaneous income by sticking the money into a retirement plan. If things don’t work out with Bill, she won’t have to depend on just Social Security.
When it comes to tax returns, Al Gore is more interesting than Bill Clinton – possibly the only area of human endeavor in which this is true.
For starters, eco-freak Gore gets a $ 20,000-a-year royalty from zinc-mining operations on his 88-acre farm in Tennessee. Zinc mining, of course, is an extractive industry, which means it’s messy and dusty. Gore shelters $ 4,400 of his royalties with a depletion allowance, which is accountant-talk for a tax loophole. Somehow, despite his ecological principles and concern with tax fairness, Gore manages to deposit the check and take the depletion allowance.
As you may know, Gore made a killing on his book “Earth in the Balance: Ecology and the Human Spirit.” The book, which had become moribund after a brief fling on the best-seller lists, came back to life after Gore was nominated for vice president. Even after taxes, the book has made almost enough to cover tuition in fancy private colleges for the four Gore children. We should all be so lucky.
Last year, Gore reported $ 461,529 of royalties on the book, in addition to a $ 100,000 advance he received earlier. Gore’s tax return shows he paid a 15 percent agent’s commission on his 1992 royalties. That’s higher than the standard 10 percent fee typically paid by an author of Gore’s standing.
Why did Gore pay 15 percent rather than 10 percent? Ask him. I couldn’t get anyone in Gore’s office to talk to me, despite phoning for days. So my Gore analysis is based on public records, my reading of his return, and some kibitzing from tax preparers who for obvious reasons asked me not to name them.
Another mystery is why Tipper Gore didn’t shelter any of her $ 6,300 of speaking fees and why Al didn’t shelter any book income in retirement funds, the way Hillary Clinton sheltered some of her income. And, for that matter, the way I shelter some of my non-Newsday writing income.
One possibility is that the rules don’t let Gore stash more money away than is already being stashed in his Senate retirement account. Another possibility, somewhat nastier, is that his financial advisers are betting that the higher brackets proposed by Gore’s boss will still be around when Gore retires. Why shelter income from today’s 31 percent tax rate when you may have to pay more than 40 percent when you take the money out?
Gore’s charitable contributions are strange. Al donated $ 50,000 of his book income to endow a chair at the University of Tennessee in memory of his late sister, a very classy and generous thing to do. Tipper took $ 1,348 of deductions for inventory that her family’s plumbing business donated to Hurricane Andrew victims. But except for those donations, the Gores seem to have made only $ 630 of cash contributions and $ 580 of noncash contributions last year. Doesn’t seem like very much.
If the Clinton-Gore tax hike goes through, Clinton and Gore, being high-income types, will feel pain. I can hardly wait until next April 15, to see if they’ve begun buying tax shelters.