I just happened to hear an outrageous claim, made by radio talk show host Rush limbaugh: he stated today, that John Edwards managed to evede paying federal Medicaid taxes on $50 million of earned income (from his law practice).
How was this done? Edwards set up a subchapter “S” corporation, in which he was the majority shareholder. he then converted the law firm’s earnings into dividends, whcih are not subject to the fedral medicaid taxes.
Again, I am repeating a claim…I do not know if this is correct…any tax experts care to comment?
And, assuming that what was done was completely legal, should this loophole be closed? 
Not sure how debatable this is, but I’d rather the biggoted drug addict back up such an indictment with evidence–like some evidence of Edwards’ income for the period specified and corresponding tax filing docs. This is the USA, after all, and one is presumed innocent until proven guilty. If Rush really does have something on Edwards that the Repubs & the Federal Gubmint has overlooked, then he has a civic duty to present the particulars to the proper authorities.
Otherwise I’d suggest he’s just engaging in his usual routine of slander/libel.
It wouldn’t surprise me if he did.
Edwards is rich. Rich people tend to find every loophole they can to avoid paying taxes. I’m sure that Edwards has financial advisors and tax specialists who work for him and would attempt to find such things.
It is a bit funny when something like this happens to a liberal, though. It’s somewhat hypocritical to be in favor of raising taxes on the people while at the same time taking steps to avoid paying taxes yourself.
Given Rush’s reputation for accuracy in reporting (read: a total lack thereof), the odds are it’s false.
Given the right-wing noise machine’s propentisity to fabricate damaging news when the fit hits the shan (read: Bush got whupped in last week’s debates), the odds are the Republicans will try to spin out this “controversy” up through election day.
I think I’d need a cite from ole Rushy before I’d buy THAT one (hell, I’d need a cite by him before I’d buy ANYTHING straight out). That said, he’s probably exaggerating a tax loophole Edwards used. Edwards IS pretty wealthy, and he’s a lawyer to boot…wouldn’t surprise me if he used a (legal) tax loophole to shelter some of his money. It is ironic when it happens to a liberal, but not surprising…liberals are wealthy too, and they have a vested interest in protecting their wealth (while attempting to steal mine :)).
Probably nothing to see here.
-XT
If you want to require politicians to suffer the consequences of their political decisions, I know a couple guys that need to head down to the Army Recruitment office.
Personally, I don’t hold people to that standard.
Daniel
If Rush said it was daylight, I’d go outside to check. :rolleyes:
But, yes, that is a pretty standard way of seeting up a small business, it is very common amoung Professionals, and it is completely legal. It isn’t “evading” taxes at all, nor is there a “loophole”. In order to evade Liability most Professionals at that level set up a Sub-S corp- there are scads of them. Only Wages (and SE income)pay medicare taxes, you don’t on Dividends. But Medicares taxes are so damn small, that no one sets up as a Sub-S for the purpose of evading them. You do it for the Liability issues. There are C-Corps, Sub-S corps, Partnerships and Individual (Sell-employed) - and all are a way of organizing a business. They all have disadvantages and advantages- tax AND Liability-wise. Edwards (if he did this, and it’s plausible) did not do it for the tiny tax savings :dubious: (and there are other tax increases, note), he did it to protect himself from Liability issues.
So- even if Rush is right, he’s full of shit.
Rush is a many-times proven liar. Anything he says is gonna need a cite. And anyway who says it is so will need a cite, too. Without corroborating evidence, it’s safest to assume the guy is just lying again.
What sort of legal entity is Limbaugh’s “Excellence in Broadcasting Network”? Is it a legal thing at all, or does he actually work for ABC?
Why are we even talking about something Rush said? Why is this man still walking the streets and broadcasting his nonsense? Why isn’t this man in jail for his drug dealings?
You can disagree with Rush, detest him, etc. but making up shit and attributing it to him so that you can attack him for things he hasn’t said just sucks.
I was listening and Rush made an informative point.
If you are very wealthy you don’t care about tax rates, because you are not structured in such a fashion that you don’t produce earned income.
Higher income taxes hurt the people in the accumulation phase, they don’t hurt the wealthy.
He gave some examples, like Theresa Heinz Kerry paying $750,000 in estimated taxes while she has a net worth estimated at well over a billion, meaning she was making a return of about 1/2 of 1 percent if it was earned income.
The fact is that it’s in municipal bonds and trusts and other instruments that do not necessarily produce tax consequences. She essentially has no earned income so income tax rates don’t matter.
If you are extremely wealthy income taxes don’t matter compared to if you are in the wealth accumulation phase.
Therefore, he posits, “tax the wealthy with higher income taxes” is a fallacy. It doesn’t hurt the wealthy. It just makes it harder to become wealthy, and is therefore an elitist tactic disguised as a progressive one.
Whether this is true or not, or how you feel about it is another debate. He gave several examples to illustrate it, one of which was the Edwards example, stressing the what Edwards had done was both legal and appropriate (although I think the OP has it somewhat wrong,)
So, it wasn’t what you think. He was making a larger point and no slander was given against Kerry or Edwards for what they did and no suggestion that it was illegal, but was simply illustrating that “Taxing the wealthy” by raising income taxes is a fallacy.
Well, how much you pay in "estimated taxes’ is a meaningless number. The real tax figure could be a 100 times that- or a tenth that. So- since he quoted a meaningless number to make Mrs Kerry look bad, that’s a lie. And of course, if you raised income tax rates back to where they were (such as making Dividends ordinary income) then Edwards would pay more taxes. So would Rush. He’s full of shit there.
And since he is wealthy, and likes tax cuts for the rich, and is against raising the taxs on the filthy rich back where they were- his argument is hardly unbiased.
It’s also wrong. But that’s another thread entirely, I don’t want to hijack this into a debate about regressive vs progressive income taxes.
Buahahahahahahaha!!!
Darn that John Edwards for taking advantage of the loophole that George W. Bush so vigorously (and frequently, btw) defends!
Now, according to Bush, Kerry and Edwards think it’s a bad loophole, but Bush supports it. So, Mr. Limbaugh, Mr. Big Fat Idiot, who is worse: the guy who defends the loophole and wants to make sure rich people can keep on using it forever, or the guy who opposes it and wants to shut it down, but uses it while it’s there?
Sorry if I got carried away there. While I’ve been going through Bush’s speeches for repeats of the whole “rich people don’t pay taxes” meme, I’ve run into Bush’s defense of the Subchapter S “loophole” (damned if I know whether it really is one or not; just taking Rush Limbaugh’s word (chortle!) for now) more times than Bush said “hard work” last Thursday.
Well, c’mon, Bush and Cheney! Are you FOR the Subchapter S tax protections, or AGAINST them?
Maybe they’re just against them when John Edwards is using them. 
At the very least, Rash is guilty of “fussy math”.
Here’s what he says on his website:
"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 shareholder. 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% "
Take these figures and see if you can come up with $591,000?
I get $738,340
What’s wrong here? We know he announced these figures without doing simply math or worse yet, has deliberately left something out to mislead or perhaps just made some of the figures up.
Yes
and if the hairs on my body were assholes, I’d be holier than thou.!!
Try that line on the IRS. They’ll bitch-slap you with interest and penalties.
This came up briefly during the debate last night, and Edwards acknowledged taking advantage of the Subchapter S provisions. Nothing wrong with that - he’d be a damned fool not to.
Calling such an act evasion is mere political mudslinging.
Not really. Nothing funny about it at all. Edwards paid his taxes. To call paying all taxes owed to the government “tax evasion” is simply dishonest.
Opposition to Republican tax policy imposes no obligation to pay more tax than is due. There’s nothing hypocritical about it. I opposed the tax policies of the Bush administration. I don’t add a zero or two to my tax check out of the goodness of my heart, though. Nonetheless, I have real problems with a tax code that seems to be trying to replace the income tax with a salary tax.