Monday, December 12, 2011

Tennessee`s Governor Bill Haslam a 1%`er !


Key Except: In 2008, for example, Haslam's effective federal income tax rate on his non-Pilot income was just 4.8 percent, lower than the rate of a typical upper middle-class family of four earning $152,000 and nearly as low as a family earning half that. ...

Haslam: "The easiest thing to say is, 'Well, there's the super rich. And the '1 percent' is doing well.'"

Tennessee Gov. Haslam's claim of high tax rates has some twists.

The Commercial Appeal Newspaper

Sunday, December 11, 2011

By Marc Perrusquia

Contact Gov. Haslam here >

During his successful candidacy for Governor, Bill Haslam(upper left) released data listing millions of dollars in income and taxes, contending his tax rate at times topped 48 percent on those earnings. Although Haslam's report went unchallenged during last year's campaign, a closer look at it reveals a much lower tax rate for the uber-wealthy businessman turned Knoxville mayor, then Tennessee governor.
So low, in fact, Haslam's tax data provides fodder for an emerging national debate over how federal income tax policy benefits the rich. The mother lode of Haslam's wealth flows from Pilot Flying J, a nationwide chain of convenience stores and truck stops ranked as one of the most lucrative private companies in the country.
Haslam has never disclosed his earnings from Pilot. Instead, Haslam gave reporters a summary that listed just his non-Pilot income -- $28.5 million earned between 2003 and 2008 from a range of investments. An analysis by The Commercial Appeal found Haslam used a variety of tax breaks to greatly reduce the taxes he paid on that portion of his annual income. While most taxpayers rely on wages progressively taxed up to 35 percent, the tax on much of Haslam's publicly disclosed income -- much of it capital gains involving stocks, real estate and private equity deals -- is capped at 15 percent. That's step one. In a second tax-saving step, Haslam used deductions to write off nearly a third of that non-Pilot income -- shielding $9.2 million from taxes, the newspaper found.
What emerged was an effective federal income tax rate that at times was lower than that paid by many middle-class families. In 2008, for example, Haslam's effective federal income tax rate on his non-Pilot income was just 4.8 percent, lower than the rate of a typical upper middle-class family of four earning $152,000 and nearly as low as a family earning half that. Haslam's report, which used methodology questioned by one expert and attempted to weigh the impact of both state and federal taxes, claimed a tax rate of 22.2 percent that year. Haslam told the newspaper his overall tax rate likely is higher when income is included from Pilot Flying J, which, with $18 billion in annual sales, ranks No. 11 on Forbes' list of America's largest private companies. Yet as he did during the campaign when he bucked a long tradition among gubernatorial candidates by refusing to release his tax return$, the first-term Republican declined to discuss his Pilot income or disclose his returns. "I'm not sure that this is a case of somebody that's trying to dodge taxes,'' said Haslam, emphasizing that much of his federal tax deduction involves huge charitable contributions he's made, plus state taxes he paid. Renewed interest in Haslam's finances comes amid a flourishing national debate over taxes and wealth. Spurred in part by the Occupy movement, the debate is gaining currency, too, among conservatives influenced by the likes of billionaire investor Warren Buffett, who says the wealthy don't pay their fair share of taxes. A report this fall by the nonpartisan Congressional Budget Office fueled the debate by finding a growing income inequality between the middle class 99% and America's
richest citizens 1%. "There is a bigger gap there, that's true,'' Haslam said. "So the question is: Why ? Is it solely tax policy ? Is that what's driving the difference ? Or are there a lot of other factors at play ? And I think that's the discussion we should be having,'' he said, suggesting that inadequate education and the breakup of the traditional family might also be factors in the growing income gap. "The easiest thing to say is, 'Well, there's the super rich. And the '1% percent' is doing well.' '' Haslam's income summary reveals generous charitable giving -- he and his wife, Crissy, gave $4.1 million between 2003 and 2008 to a range of organizations including the American Cancer Society, the Boy Scouts of America, Fellowship of Christian Athletes and other groups -- donations also used as itemized deductions to reduce tax payments. Haslam said his federal tax deductions also include state taxes he paid under Tennessee's Hall tax on dividends and interest -- nearly $597,000 over six years. The bulk of the remainder of his deductions -- about $4.4 million -- involves investment expenses tied to business partnerships, he said. Haslam's non-Pilot income alone -- $4.7 million a year -- easily ranks him among the nation's top earners, or the much discussed "1 percent," and brings in more than many in the country's top 0.1 percent -- the $uper Rich. Haslam's summary reported he paid $3.8 million in federal taxes and $597,000 in state taxes on his non-Pilot income over the six-year period. This, the summary said, amounted to an effective tax rate that averaged 22.35 percent over the six years and reached 48 percent in two of those years. However, Haslam's non-Pilot tax rate is much lower when isolated to federal taxes and calculated in a manner typically used to compare tax rates. For one, Haslam calculated his tax rate by using taxable income, not total income. Taxable income is lower because itemized deductions and personal exemptions have been subtracted. Using taxable income inflates a tax rate, said Nick Kasprak, an analyst for the Tax Foundation, a nonpartisan, Washington-based tax research organization. "That is nonsense,'' Kasprak said. "It's misleading to do that. There are a lot of tax deductions people can take. If you're not including those in your income, you're inflating your tax rate.'' Haslam said his CPA computed the tax rates published in his income summaries using accounting software by a leading national firm. The software divides taxes paid into taxable income, he said. However, using Kasprak's method, the newspaper found Haslam's effective federal income tax rate (on non-Pilot income) averaged 13.1 percent over the six years and dipped as low as 11.7 percent in 2007 and 4.8 percent in 2008. Taxing the wealthy has become a hot political issue and is expected to heat up again next year when Congress decides whether to renew the 15 percent long-term capital gains tax. Reform proposals, including a flat tax, also surround tax breaks like itemized deductions, which tend to benefit the rich. Most middle-class taxpayers take a standard deduction. "High-income people more likely are going to surpass what the standard deduction does for you,'' said Donald Marron, director of the nonpartisan Urban-Brookings Tax Policy Center in Washington. Haslam said his personal tax burden is greater on income earned through Pilot Corp., a so-called S corporation that pays no corporate income tax. Instead, earnings are passed to controlling shareholders, who then pay the taxes at rates up to 35 percent on their individual tax returns. Haslam said his Pilot income at times involves only a paper gain because those profits are funneled back into the company to upgrade and build new stores and don't actually go into his pocket. "The only thing that I take are dividends ... which are automatically attributed to you (for tax purposes) even if you don't get the cash,'' he said.

-- Marc Perrusquia: (901) 529-2545

Editorial : As a 99% `er, I can only wish, that I have the monetary problems that Governor Haslam has ! Sorry folks, he knows exactly what he is doing. He(1%`er) pays little Tax`s. You (99%) pay all of the Tax`s ! I make no apology for that fact. Here is another fact, Governor Haslam is a Super Rich 1%`er. He really does`nt understand the problems of the 99% ! Or does he ?. Tennesseans How do you like him now ?

Fiat Lux

1 comment:

Brandt Hardin said...

Bill IS on a roll between taking the word “gay” out of school, making it illegal to send an offensive email, making it illegal to post offensive images to the internet, and NOW leaving the government program put in place to raise our expectations of schools. I was compelled to create a visual commentary in response Governor Haslam’s blatant smothering of Civil Rights in our state on my blog at where you can see my new portrait of the Governor and First Lady of TN to defend Freedom of Speech.