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Fast Money & Foreign Objects
Bernie Sanders' Tax Return Has Some Odd Deductions
Ryan Ellis ,
CONTRIBUTOR
When tax and fiscal policy meets political reality.
Opinions expressed by Forbes Contributors are their own.
Democratic presidential candidate, Sen. Bernie Sanders, I-Vt. speaks during a campaign rally in Erie, Pa., Tuesday, April 19, 2016. (AP Photo/Mary Altaffer)
Late on a Friday afternoon, Bernie Sanders finally released his tax returns. For the most part, they are (to use his term) “boring.” But as Jim Geraghty writing for NRO pointed out, there’s more than a little hypocrisy to be found in that “boring” 1040.
While Jim’s piece was very well-researched and exhaustive, there’s a few more nuggets I would add on. Besides doing tax writing and policy activism, I have owned my own tax preparation business in the Washington, D.C. area for the past dozen years and I’m an IRS “Enrolled Agent” (think a tax-only CPA).
So the nerdiness is strong here.
Below are three more weird parts of Bernie Sanders’ tax return:
Social Security benefits taxation
Bernie Sanders is, to put not too fine a point on it, old. As a result, he collects Social Security benefits. In 2014, he collected $46,213 in Social Security benefits. Because of his income level, 85 percent of this ($39,281) is taxable. So he’s following what the tax law calls for.
But Sanders has quite a strong position on Social Security. He is adamant that “the rich” pay their “fair share” into Social Security. Now, by that he means taxing all wages and self-employment profits with the Social Security payroll tax (right now just the first $118,500 in wages and self employment earnings are liable).
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But there is no reason why he can’t apply this principle on the other end. He should be for “rich” seniors like him paying taxes on all their Social Security benefit, not just 85 percent of it. According to the Social Security Administration, these taxes are earmarked for the Social Security and Medicare “trust funds,” so it would be a direct benefit to the programs he loves so much. And it certainly seems more “fair” to tax wealthy retirees with empty nests and paid off mortgages than it does to tax people raising families earlier in life.
There is nothing–absolutely nothing–stopping Sanders from adding in the rest of his Social Security benefit as taxable income. At his marginal tax rate, it would generate another $1733 in taxes if he did, taxes which would pay directly for Social Security and Medicare benefits for seniors poorer than he.
Business meals
Sanders also deducts $8946 in business meals. Most Americans don’t get to write off their lunch, but Sanders chose to.
Assuming each meal averaged around $100, that’s about 90 business meals throughout the course of the year. Now, this is probably legitimate and legal. The IRS standard for a business meal can be found in IRS Publication 463. In it, we find that a business meal must be an ordinary and necessary expense in your line of work. In addition, the meal must basically have a direct business purpose that’s substantial and is expected to lead to business activity. It’s not a high standard.
If a legitimate business meal deduction was on a Republican’s tax return, you can bet that Sanders would be railing against it as just another “fat cat” ripping off the U.S. Treasury. So why is he deducting almost $9000 worth of business meals himself?
Tax me more fund
There’s good news for Bernie–it’s not too late. He can either amend his 2014 return to include his missing Social Security benefits and exclude his business meals, or he can write a check to Uncle Sam directly.
Americans for Tax Reform has long documented how guilt-ridden rich people like Bernie Sanders can very easily give more of their own money to the federal coffer. They can either make a gift to the United States, or they can make a voluntary payment toward the national debt. It’s up to Bernie.
Bernie Sanders' Tax Return Has Some Odd Deductions
I think it's time for Bernie to do some explaining. Bernie should also release further tax returns say 10 years like Hillary Clinton has.
Ryan Ellis ,
CONTRIBUTOR
When tax and fiscal policy meets political reality.
Opinions expressed by Forbes Contributors are their own.
Democratic presidential candidate, Sen. Bernie Sanders, I-Vt. speaks during a campaign rally in Erie, Pa., Tuesday, April 19, 2016. (AP Photo/Mary Altaffer)
Late on a Friday afternoon, Bernie Sanders finally released his tax returns. For the most part, they are (to use his term) “boring.” But as Jim Geraghty writing for NRO pointed out, there’s more than a little hypocrisy to be found in that “boring” 1040.
While Jim’s piece was very well-researched and exhaustive, there’s a few more nuggets I would add on. Besides doing tax writing and policy activism, I have owned my own tax preparation business in the Washington, D.C. area for the past dozen years and I’m an IRS “Enrolled Agent” (think a tax-only CPA).
So the nerdiness is strong here.
Below are three more weird parts of Bernie Sanders’ tax return:
Social Security benefits taxation
Bernie Sanders is, to put not too fine a point on it, old. As a result, he collects Social Security benefits. In 2014, he collected $46,213 in Social Security benefits. Because of his income level, 85 percent of this ($39,281) is taxable. So he’s following what the tax law calls for.
But Sanders has quite a strong position on Social Security. He is adamant that “the rich” pay their “fair share” into Social Security. Now, by that he means taxing all wages and self-employment profits with the Social Security payroll tax (right now just the first $118,500 in wages and self employment earnings are liable).
Gallery
25 Best Places To Retire In 2016
Launch Gallery
26 images
But there is no reason why he can’t apply this principle on the other end. He should be for “rich” seniors like him paying taxes on all their Social Security benefit, not just 85 percent of it. According to the Social Security Administration, these taxes are earmarked for the Social Security and Medicare “trust funds,” so it would be a direct benefit to the programs he loves so much. And it certainly seems more “fair” to tax wealthy retirees with empty nests and paid off mortgages than it does to tax people raising families earlier in life.
There is nothing–absolutely nothing–stopping Sanders from adding in the rest of his Social Security benefit as taxable income. At his marginal tax rate, it would generate another $1733 in taxes if he did, taxes which would pay directly for Social Security and Medicare benefits for seniors poorer than he.
Business meals
Sanders also deducts $8946 in business meals. Most Americans don’t get to write off their lunch, but Sanders chose to.
Assuming each meal averaged around $100, that’s about 90 business meals throughout the course of the year. Now, this is probably legitimate and legal. The IRS standard for a business meal can be found in IRS Publication 463. In it, we find that a business meal must be an ordinary and necessary expense in your line of work. In addition, the meal must basically have a direct business purpose that’s substantial and is expected to lead to business activity. It’s not a high standard.
If a legitimate business meal deduction was on a Republican’s tax return, you can bet that Sanders would be railing against it as just another “fat cat” ripping off the U.S. Treasury. So why is he deducting almost $9000 worth of business meals himself?
Tax me more fund
There’s good news for Bernie–it’s not too late. He can either amend his 2014 return to include his missing Social Security benefits and exclude his business meals, or he can write a check to Uncle Sam directly.
Americans for Tax Reform has long documented how guilt-ridden rich people like Bernie Sanders can very easily give more of their own money to the federal coffer. They can either make a gift to the United States, or they can make a voluntary payment toward the national debt. It’s up to Bernie.
Bernie Sanders' Tax Return Has Some Odd Deductions
I think it's time for Bernie to do some explaining. Bernie should also release further tax returns say 10 years like Hillary Clinton has.
