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Rangel Protects Virgin Islands Tax Dodgers

From, of all places, the Washington Post:

Congressman Charles Rangel, left and Rev. Calvin Butts, center, listen as New York Senator and Democratic presidential hopeful Hillary Rodham Clinton, D-N.Y., speaks at the Abyssinian Baptist Church, Saturday, Oct. 27, 2007 in New York.

Bill Would Limit IRS’s Reach in Virgin Islands

Rangel Backs Measure to Restrict Audits

By Jeffrey H. Birnbaum
Wednesday, November 7, 2007; A04

A tax provision making its way through the House of Representatives would close down IRS audits on hundreds of wealthy Americans who live part of the year in the U.S. Virgin Islands and avoid the higher income taxes paid by mainlanders.

Under law, Americans who maintain a primary residence in the Virgin Islands, run a local business and spend an average of 183 days a year there qualify for a low tax rate.

The House Ways and Means Committee voted last week to limit to three years the time that the IRS could go back and audit individuals it suspects have been falsely claiming to meet those residence requirements. Currently the audits can reach back many more years, and many pending cases do.

The provision, which was backed by the committee’s chairman, Rep. Charles B. Rangel (D-N.Y.), would lose $38 million for the U.S. Treasury over 10 years, according to estimates by the nonpartisan Joint Committee on Taxation…

A spokesman for Rangel called the provision a “fundamental matter of fairness.”

Other lawmakers disagreed. “Congress rarely takes action that affects ongoing IRS audits, so it’s striking that House leaders are proposing changes in the statute of limitations for U.S. taxpayers who are newly claiming residency in the Virgin Islands,” said Sen. Charles E. Grassley (Iowa), the senior Republican on the Senate Finance Committee, the Senate’s tax-writing panel. “It raises questions of tax fairness” and “whether or not these filers are simply seeking a tax shelter.”

A spokesman for the Treasury Department declined to comment.

One reason the IRS has been auditing tax returns that go back longer than three years is that for a while, the agency did not consider that the statute of limitations had begun to run until after tax returns were filed with the U.S. government.

Many people claiming residence in the Virgin Islands had filed their returns with the Virgin Islands government and had to refile with the IRS.

Mind you, this is the same gentleman who wants to give us the “Mother Of All Taxes Increases Reforms.” (His words.)

This is almost as ironic as John Kerry’s recently introduced bill to close down offshore tax breaks, which he announced in this breathless press release:

Kerry, Emanuel Introduce Bill to Close Down Offshore Deferred Compensation

Legislation to Restore Fairness to the Tax Code; Creates Level Playing Field for U.S. Taxpayers

WASHINGTON, DC – Today, U.S. Senator John Kerry (D-Mass.) and U.S. Representative Rahm Emanuel (D-Ill.) introduced legislation to curb the ability of high-income taxpayers to defer unlimited amounts of offshore compensation.  The Offshore Deferred Compensation Reform Act creates a new section in the Internal Revenue Code that eliminates the ability of U.S. taxpayers to defer nonqualified compensation in offshore tax havens…

Lest we forget, Mr. Kerry had no problems enjoying the fruits of such tax shelters — before he married Teresa, and still had to worry about such piddling things as taxes.

From the Boston Globe:

Kerry took a loss in tax shelter in 1984 to avoid political fallout

By Brian C. Mooney, Globe Staff, 6/19/2003

Democrats were pushing for tax reform in 1984, and Lieutenant Governor John F. Kerry, candidate for US Senate, had some ideas.

“You need a major overhaul of the tax structure,” Kerry told a panel of reporters on a May 6 broadcast of WBZ-TV (Channel 4). “You need to close crazy loopholes that are non-productive.”

Though he did not share it at the time, Kerry had recently learned a costly lesson about loopholes in the tax code.

Weeks before that interview, Kerry, by his own account now, had jettisoned an investment of between $25,000 and $30,000 in an exotic tax shelter after his accountant questioned its legitimacy. In an interview with the Globe, Kerry acknowledged that fear of political embarrassment was a factor in his decision to swallow the loss.

Until now, Kerry has never disclosed details of this tax shelter, which utilized offshore companies registered in the Cayman Islands and a “straddle” scheme of forward contracts to buy and sell commodities, apparently worth up to $238,527.

At the time Kerry invested, tax shelters were proliferating as wealthy Americans tried to avoid high marginal tax rates. Separated from his wife, Julia, and raising two daughters, Kerry had been struggling financially. But in 1983, a $225,105 windfall came Kerry’s way. He had stopped practicing law when he became lieutenant governor but received a share of proceeds from cases that were settled after he left the law firm of Kerry and Sragow.

Kerry said he wanted to protect some of the money at tax time, and, on advice of some of his fund-raisers, jumped into the commodities investment…


But what do we expect?

They are Democrats.

This article was posted by Steve on Wednesday, November 7th, 2007. Comments are currently closed.

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