Tuesday, December 13, 2011

Commercial Appeal: Gov. Haslam Way Overstated His Tax Rate

Posted By on Tue, Dec 13, 2011 at 11:53 AM

A report by the Commercial Appeal finds that Gov. Haslam actually paid a much lower tax rate than he led on. "So low, in fact," writes the CA's Marc Perrusquia, "Haslam's tax data provides fodder for an emerging national debate over how federal income tax policy benefits the rich." To wit:

The mother lode of Haslam's wealth flows from Pilot Flying J, a nationwide chain of convenience stores and truck stops ranked as one of the most lucrative private companies in the country. Haslam has never disclosed his earnings from Pilot.

Instead, Haslam gave reporters a summary that listed just his non-Pilot income — $28.5 million earned between 2003 and 2008 from a range of investments.

An analysis by The Commercial Appeal found Haslam used a variety of tax breaks to greatly reduce the taxes he paid on that portion of his annual income.

While most taxpayers rely on wages progressively taxed up to 35 percent, the tax on much of Haslam's publicly disclosed income — much of it capital gains involving stocks, real estate and private equity deals — is capped at 15 percent. That's step one.

In a second tax-saving step, Haslam used deductions to write off nearly a third of that non-Pilot income — shielding $9.2 million from taxes, the newspaper found.

What emerged was an effective federal income tax rate that at times was lower than that paid by many middle-class families.

In 2008, for example, Haslam's effective federal income tax rate on his non-Pilot income was just 4.8 percent, lower than the rate of a typical upper middle-class family of four earning $152,000 and nearly as low as a family earning half that.

Haslam's report, which used methodology questioned by one expert, and and which attempted to weigh the impact of both state and federal taxes, claimed a tax rate of 22.2 percent that year.

So it looks like our governor has paid taxes at rates as low as 4.8 percent in recent years, on income he told the good people of Tennessee was taxed at rates as high as 48 percent. Hey, what’s a decimal place or two among friends, right? I think the "emerging national debate" done emerged.

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