Saturday, April 6, 2013
Wall Street Journal: Obama Won’t Deduct Returned Pay, by Laura Saunders:
President Barack Obama’s gesture of solidarity with furloughed federal workers will cost him about $8,000 out of pocket, according to tax specialists.
On Wednesday, the White House announced that the president plans to return 5%, or about $20,000, of his $400,000 salary this year to the Treasury in sympathy with federal workers facing reduced pay because of the automatic spending cuts known as the “sequester.” A White House aide said the president plans to write a check to the Treasury every month for a portion of his pay. He will write the first check this month. ...
In January, Congress raised the top tax rate on ordinary income to 39.6%, and a new payroll tax of 0.9% also took effect for high earners. The Obamas are expected to be subject to both, giving them a total tax rate of at least 40.5% on the $20,000 they donate, or about $8,100. ...
Of course, the president could treat the $20,000 as a charitable gift to Uncle Sam. Such contributions are typically deductible, according to IRS Publication 526. If he did, says [Jay] Starkman, “his net out-of-pocket would only be about $11,900.”
On Thursday a White House aide said the president will not take a charitable deduction for the $20,000.