April 18, 2006

Cheney, Bush Make Out Like Bandits Under Bush Tax Cuts in 2005

Never let it be said that the Bush administration doesn't understand the advantages of a preemptive strike. The White House released the tax returns of President Bush and Vice-President Cheney a little early this year, and got some pretty compliant press coverage as a result. The Good Friday release, on April 14, prompted some pretty analysis-free coverage from MSNBC, which had this to say about Cheney's taxes:
The White House also released the 2005 tax return filed by the Cheneys. They reported adjusted gross income of nearly $8.82 million, which was largely the result of exercising stock options that had been set aside in 2001 for charity. According to the return, they have overpaid their taxes this year and are entitled to a refund of about $1.9 million.
The Washington Post's headline on their story is equally analysis-free: "Bushes Paid $187,768 in Federal Income Tax." (Which the Houston Chronicle reprinted under the byline "Bushes' tax bill almost $190,000.") Neither article makes any attempt to put these tax bills in the context of the Bushes' ability to pay.

A new CTJ analysis puts a little meat on these bones. The analysis shows that Bush paid 25.4 percent of his income in federal income taxes, saving $26,000 in 2005, while Cheney paid just 5.7 percent of his income in tax, saving almost $1.1 million.

Of course, what made Cheney's huge tax savings possible is that he gave away close to 80% of his income this year-- for which he deserves kudos, although his hands were somewhat tied by a promise he made a while back to donate proceeds from his Halliburton stock options to charity.

A big part of Cheney's tax savings have to do with the tax bill passed late last fall, allegedly for "Katrina relief," that makes it easier for the super-rich to write off more of their deductions. Under normal rules, a taxpayer's charitable deduction is limited, for federal income tax purposes, to 50 percent of their adjusted gross income. But the most recent round of "Katrina relief" signed into law last fall suspends this limit for donations made during the last four months of 2005 only. Without this temporary tax break, Cheney's tax cut would have been substantially less.

The oddest feature of this so-called "Katrina relief" is that wealthy contributors don't actually have to channel their donations to anything hurricane-related to get the tax benefit. Cheney's donations went to the University of Wyoming, a Washington DC hospital, and an outfit called "Capital Partners for Education," which helps low-income
Washington, D.C. students pay private school tuition. There's almost certainly a Katrina or two in the pay of one of these institutions, but the linkage between this tax break and hurricane relief seems pretty tenuous.


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