Paul L. Caron

Thursday, April 20, 2006

More on Cheney's Tax Return

Kirsch_3Michael S. Kirsch (Notre Dame), whose Monday's post on Cheney Tax Return Shows Katrina Tax Benefits for Non-Katrina Charitable Contributions attracted a great deal of attention in the blogosphere (noted here), has some follow-up comments:

I think it's important to keep this whole issue in perspective. I don't think it represents any wrongdoing (either legal or ethical) by the Vice President. Under the VP's 2001 gift administration agreement, all of the income from his Halliburton options was irrevocably set aside to pay (i) taxes on that income, and (ii) gifts to the charities (as well as administrative costs of implementing the agreement). In effect, the Katrina tax legislation (and some heads-up tax planning by the VPs advisors) had the net effect that more of the stock option proceeds went to the charities and less (i.e., zero) went to pay taxes. It didn't result in any extra personal financial benefit to the VP.

I think the main point of these events is to shine light on the ad hoc way that Congress goes about changing the tax code. Instead of enacting the short-term changes to the charitable giving rules (which expired on 12/31/05), Congress should decide on the proper way to handle charitable contributions and then stick with it (in that regard, I think many people would argue that the approach of the Katrina legislation -- which removed the arbitrary limits on the amount of charitable contributions that can be deducted in any one year -- should become the permanent rule).

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