June 4, 2006
NY Times: § 1043 Will Save Treasury Nominee Paulson $48 Million in Taxes
Interesting article in the New York Times: A Tax Rule Could Save Treasury Nominee Millions, by Eric Dash:
Henry M. Paulson Jr., the nominee for Treasury secretary, has a big reason to support tax relief. Because of a little-known provision in the federal tax code, Mr. Paulson, the departing Goldman Sachs chief executive, could receive a tax break of at least $48 million if he is confirmed.
The tax rule, Section 1043 of the Internal Revenue Code, allows individuals who are forced to sell stock to meet federal conflict-of-interest rules to defer paying capital gains tax, so long as the proceeds are reinvested in government bonds, diversified index funds and other similar instruments. The provision applies only to employees in the Executive Branch (Congressional lawmakers, Supreme Court justices or ordinary taxpayers need not apply) and is intended to "minimize the burden of government service" resulting from a forced divestiture.
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I know what's on everyone's mind these days: Incoming Treasury Secretary Henry Paulson. Specifically, why would a CEO of Goldman Sachs want to be (1) Treasury Secretary, (... [Read More]
Tracked on Aug 5, 2006 12:47:46 AM
I fail to understand the parenthetical caveat, "(Congressional lawmakers, Supreme Court justices or ordinary taxpayers need not apply)."
Congress enacted 1043 and it is law. Members of Congress actively campaign for their offices, unlike many high Executive Branch officials who get unexpectedly drafted into public service by a phone call from the White House. Does anyone contend that Henry Paulson secretly harbored the desire to become SecTreas just so he could invoke 1043? Extending 1043 to Supreme Court justices might make sense, except then the entire federal judiciary would want to jump on that bandwagon. The judiciary has the alternative relief of recusal in specific cases.
Posted by: Jake | Jun 4, 2006 7:33:22 PM