Sunday, July 11, 2004

Fox Chapel Setting

The interesting email from Charlene is but a memory. Then Bob Glancy, RCAC Chairman posted.
"For months, western Pennsylvanians have seen a Fox Chapel mansion used as he staging area for John Kerry's presidential campaign, perhaps on the theory that a presidential candidate cannot have too many home states no matter how dubious his claim to live in any of them.

"Just last week, as hundreds of thousands of Allegheny County homeowners received their bills for school property taxes, that same Fox Chapel mansion was used to introduce Kerry's running mate to the public and the press.

"There, Kerry struck the themes that have shaped his entire political career: support for more government spending and opposition to middle class tax cuts. These, in fact, may be the only issues on which he's held a consistent position over the years.

"I am sure that countless middle-class homeowners disagree with John Kerry's contention that they neither need nor deserve a tax break. Until now, though, they might have imagined that Kerry and the liberal elitists around him were willing to pay their fair share of taxes.

"John Kerry doesn't have to worry about paying the property taxes on mansion in Fox Chapel, thanks in part to a seven-figure assessment reduction described in Sunday's Tribune-Review, a reduction based on the assessment of the Heinz-Kerry property as "farmland."

"This is more than an insult to the voters' intelligence. From a candidate seemingly unable to venture into public without railing about "tax loopholes," it is the rankest hypocrisy. The Heinz-Kerry estate is no more a farm than are the tens of thousands of back yards in Allegheny County in which a few square yards are dedicated to growing tomatoes or zucchini.

"If John Kerry is going to masquerade as a Pittsburgher, he should at least pay his fair share of taxes-or admit that he is a Boston liberal out of touch with the values of western Pennsylvania."

Snips of the POST-Gazette news:

"As a result, he's way off the mark. Mrs. Heinz Kerry does not receive the so-called 'Clean and Green' write-off because she has chosen not to apply for it."

But in a letter Heinz Kerry wrote, dated March 12, 2002, to former county Chief Executive James Roddey, she said she was "not writing to express my anger, but to point out that my property is being undertaxed."

She said two assessment notices sent in 2000 and 2002 both incorrectly reduced her property value and asked that "someone with the authority to do so will make the proper correction and bill me accordingly."

Romash said Heinz Kerry paid the higher amount.

Romash also turned the tables on Glancy and criticized President Bush, saying he saved $23,679 last year because of an agricultural exemption on his ranch in Crawford, Texas. In 2002, she said, Bush accepted an exemption that reduced the property from $2.1 million to $950,000.

Sam Wilson, head of assessment for Allegheny County, also characterized Glancy's criticism as "politics as usual" and said the Heinz estate is not assessed as farmland.

Although the county Web site lists it as a "general farm," Wilson said anything over 10 acres is put in that category, but it has no effect on the actual assessment.

"If it were underassessed, the school board and municipality would be in there beating it to death," he said. "Whatever's there is what a willing buyer and seller would transfer for that property."

He said Teresa Heinz Kerry has never applied for a reduction in taxes based on assessment of her property as a farm.

1 comment:

Anonymous said...

Liberal Loopholes * The Wall Street Journal

Tuesday, July 13, 2004

REVIEW & OUTLOOK (Editorial)

In embracing John Edwards, John Kerry has also
endorsed his populist "two Americas" rhetoric and has
put tax increases at the center of the election
campaign. So it's fair to ask the two Democrats: How
much of those tax increases will actually hit the
super-rich like yourselves, and how much will end up
on the backs of upper middle-class wage earners? For
an answer, let's look at what the two Senators have
themselves been paying in taxes. It turns out that the
Kerrys and Edwards have exploited plenty of tax
loopholes over the years. Of course, nobody is
obligated to pay more than what the letter of the law
requires. But the complex tax code benefits the
wealthy, who can afford tax attorneys and complicated
schemes to skirt the law. And high marginal rates give
them plenty of incentive to do so.

Senator Edwards talks about the need to provide health
care for all, but that didn't stop him from using a
clever tax dodge to avoid paying $591,000 into the
Medicare system. While making his fortune as a trial
lawyer in 1995, he formed what is known as a
"subchapter S" corporation, with himself as the sole

Instead of taking his $26.9 million in earnings
directly in the following four years, he paid himself
a salary of $360,000 a year and took the rest as
corporate dividends. Since salary is subject to 2.9%
Medicare tax but dividends aren't, that meant he
shielded more than 90% of his income. That's not
necessarily illegal, but dodging such a large chunk of
employment tax skates perilously close to the line.

The Internal Revenue Service takes a dim view of such
operations and "may collapse the structure entirely
and argue the S corporation is not truly a separate
entity," in the words of Tax Adviser magazine.
Attorney CPA magazine lists it as No. 11 of its "15
best underutilized tax loopholes," but warns that the
IRS "has successfully litigated cases against
individuals, particularly sole shareholders of
personal service S corporations, reclassifying such
deemed distributions as wages subject to social
security taxes."

As a political matter, the dodge is especially
hypocritical because the income limits on which
Medicare taxes are paid were lifted by Democrats in
1993 specifically to hit "the rich," as Mr. Edwards
likes to call people in his tax bracket. And the
supreme irony? Mr. Edwards has claimed that he set up
the subchapter S company to protect himself from legal
liability. You know it's time for tort reform when
even the trial lawyers say they're afraid of getting

Senator Kerry's personal finances are not so
complicated, since most of his income comes from his
government salary and a modest inheritance. But he
owes his jet-setting lifestyle and indeed some of his
political success to the wealth of his wife, Teresa
Heinz Kerry. Her personal assets have been estimated
at up to $3.2 billion, and the couple travel among
their five houses scattered around the U.S. on a $35
million Gulfstream V jet. During a tough election for
the Senate in 1996, Mr. Kerry sidestepped a
gentleman's agreement with opponent William Weld to
limit the spending of personal wealth on either side
to $500,000 by having his campaign borrow $1.7 million
from his wife.

Mrs. Heinz Kerry's finances remain largely a closed
book, since she has so far refused to release her tax
returns. What we do know so far is that she has
prepaid $750,000 in federal taxes on $5.1 million in
income for 2003 -- an effective tax rate of 15%. That
is because a significant portion of the income came
from tax-free municipal bonds, which is perfectly

Even so, her net income must be much higher. We know
that since the death of her husband John Heinz in
1991, Mrs. Heinz Kerry has invested shrewdly and
possibly even doubled her inheritance. Even if one
takes a conservative estimate of her net worth, say $1
billion, an income of $5.1 million means a paltry
return of just 0.5%. More likely, the majority of her
investment income is sheltered within trusts so that
tax is deferred until she or her family actually wants
to spend it. Again, perfectly legal, but this is a
luxury that the average middle-class professional
working for a wage does not have. These are the
non-rich who will pay the bulk of any Kerry tax

So when John Kerry and John Edwards say that they want
to tax the wealthiest Americans, let's be clear about
what they really mean. They want to tax the most
productive people at higher marginal rates and close
loopholes for corporations, while they themselves
dodge taxes by exploiting loopholes they plan to

Mr. Edwards is right that there really are two
Americas. The people who work for their money and want
to keep more of their own paychecks. And wealthy
politicians who want to raise taxes on the middle
class secure in the knowledge that they won't have to