Why Elizabeth Warren effective tax rate is 22% and not 30% on $900k income Today US Senator Elizabeth Warren released her family's tax returns, as reported here by LA Times. Article says that: Democratic presidential candidate Elizabeth Warren has released her tax return for 2018, reporting that she and her husband paid more than $200,000 in taxes on a joint income of about $900,000 last year. That comes down to about 22% tax rate. When I take into account marginal tax rate total tax comes up to about $275k = $164k+0.37*$300k which is effectively 30%, following this table: Is that calculation correct? Does it mean Senator's family got deductions worth $75k in taxes?
Not all income is taxed at the rates you cite. Special rates apply to long term capital gain and qualified dividends (maximum rate 20%). There are $1,349 of qualified dividends in this case and $3000 of capital losses that can be taken in the current year (this is the cap for capital losses against ordinary income). The benefit the Warren receives from these special tax rates is negligible. There are also above the line deductions ($59,348) and itemized deductions (they claimed $60,128 of them that reduce their taxable income), credits (which reduce taxes dollar for dollar of which they claimed $13,936) and the carry forward of losses that couldn't be claimed in full in a prior year for some reason (which is functionally similar to a deduction) of which the Warrens have $102,276 but could only use $3,000 in the current year. While they doesn't appear to be included in the $905,742 of gross income figure cited, certain kinds of income are also exempt from inclusion on a tax return such as qualified municipal bond interest, certain income in the form of wages and salaries earned abroad, certain disability payments, personal injury settlements (exclusive of interest components) and alimony received under a post-2017 divorce decree, to name a few. None of these items are relevant for Warren. According to @JackFleeting in his answer: they had gross income of $905,742, AGI of $846,394, taxable income of $786,266 and tax liability of $230,965 Per the chart, the tax due on ordinary income of $786,266 is $229,058 by my calculation. This is reduced by a $13,936 residential energy credit (because she installed solar panels on her home), and $8,696 of additional federal tax as self-employment taxation, and $6,137 of self-employment and Obamacare taxes netted against overwitholding of Medicare taxes. The itemized deductions were $60,128 which consists of state and local income tax payments (limited to $10,000 of $78,086 incurred in 2018) and charitable deductions of $50,128 (about 5.5% of her income). Warren herself, like most middle and upper middle class people in the Northeast, fares very badly with respect to deductions in 2018 compared to all prior years when they were not subject to a $10,000 cap. For reference purposes, the disallowed itemized deductions increased her tax bill by $25,192 (itemized deductions don't impact the amount of FICA, self-employment tax and Obamacare tax due). On the other hand, she benefits from the lower tax brackets in 2018 compared to those in 2017. Overall the 2017 tax law reduced Warren's taxes by about $2,713 (a little more than 1.1% of her total tax bill and about 0.3% of her family's gross income). There are "above the line" adjustments to income in the amount of $59,348, there is a self-employment adjustment to correct for the self-employed paying both employee and employer FICA ($4,348) and adjustment for a retirement plan contribution in the maximum allowed amount of $55,000. Notably, she took no business expenses as deductions against her writing income. Her husband had a whopping $18 of self-employment income and took $803 of professional organization dues as a business expense. Her self-employment income does not qualify for the pass though entity tax break created by the 2017 tax law. Above the line deductions simply convert your self-employment income to the numbers they were be if you were an employee of someone else with the same benefits. The marginal tax rate that Warren pays on each additional dollar of self-employment income (e.g. writing) is about 40.94% from all applicable taxes combined.
I'm not familiar with this law, but if it works like other tax confidentiality laws I'm familiar with, it would be interpreted so broadly that there would effectively be no difference between "facts," "particulars" or "information." People receiving tax returns under this law would be prohibited from disclosing any of them. Anything that is in the return would be considered secret.
In California, everything that counts as taxable income for federal purposes, and then some. The form is here, the corresponding explanation is here starting p. 18. It includes things that are income but not taxable (see p. 24), such as tax-exempt interest. Potential profit i.e. unrealized capital gains coming from increased value in a home or increased share values is not income in the relevant sense. FAM §4058 is the statutes that lists some of what counts as income, but it says &quot;includes, but is not limited to, the following&quot;. The courts' use of IRS tax forms as defining &quot;income&quot; is not mandated by the legislature, so if unrealized capital gains become taxable income at the federal level, the courts will have to decide how such &quot;income&quot; is to be treated.
The legal requirement to hand over the returns is found in 26 U.S. Code § 6103: (f) Disclosure to Committees of Congress (1) Committee on Ways and Means, Committee on Finance, and Joint Committee on Taxation Upon written request from the chairman of the Committee on Ways and Means of the House of Representatives, the chairman of the Committee on Finance of the Senate, or the chairman of the Joint Committee on Taxation, the Secretary shall furnish such committee with any return or return information specified in such request, except that any return or return information which can be associated with, or otherwise identify, directly or indirectly, a particular taxpayer shall be furnished to such committee only when sitting in closed executive session unless such taxpayer otherwise consents in writing to such disclosure. Enforcement is found in 26 U.S. Code § 7214 (a) Unlawful acts of revenue officers or agents Any officer or employee of the United States acting in connection with any revenue law of the United States— ... (3) who with intent to defeat the application of any provision of this title fails to perform any of the duties of his office or employment; or ... shall be dismissed from office or discharged from employment and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both. The court may in its discretion award out of the fine so imposed an amount, not in excess of one-half thereof, for the use of the informer, if any, who shall be ascertained by the judgment of the court. The court also shall render judgment against the said officer or employee for the amount of damages sustained in favor of the party injured, to be collected by execution. These punishments are essentially identical to those in Section 7213, which describe the punishments for those who unlawfully release returns. I've seen that section quoted in some articles as the basis for punishing failure to provide requested returns to the Chair of the House Ways and Means committee, but I'm not really seeing how that section covers non-compliance. Non-compliance seems only covered by Section 7214, which requires the "intent to defeat" (or various other issues, such as not disclosing known violations to the Secretary, etc.). That may be hard to prove in this scenario, and part of the stalling by Mnuchin may in part because they are exploring if they can build a strong case that it wasn't his intent to defeat the title. The quote of his you note is particularly on point on this, as he explicitly says he intends to obey the law; he's just questioning the constitutional issues involved.
Yes Presidential pardons only deal with breaches of Federal law. So, if the punishment is a fine then that penalty is waived. However, if the fine is punishment for breach of state law, the pardon does not touch it - he would need a pardon from the relevant state Governor(s). But Anthony Levandowski is not being punished with a fine, he was punished with a jail term. What he owes Google is damages for breach of contract or a tort, both civil matters and almost certainly under California law, not a punishment for an offence. This is not something he can be pardoned for by a President (if under Federal law which is unlikely) or a Governor (if under state law). His actions constituted both an offence against the state, which can be pardoned, and caused damage to another person (Google) which can’t. He owes this money as a debt just as if he had bought something from them or borrowed money from them.
Suppose you could. Now the proceeds of the sale belong to the shell company. What good does that do you? If you want to use the money to buy stuff for yourself, the shell company has to pay it back to you as a dividend or salary or something, and that payment will be taxable income to you personally. This might even come out worse for you: if you had held the bitcoins for more than a year, and sold them yourself, you could benefit from the lower long-term capital gains tax rate. But if you collect the funds as salary or dividend, you pay the higher ordinary income tax rate.
Until the estate is settled and the interest in the house is definitively resolved, the estate has to pay property taxes. There is no requirement for the house to be insured, unless there is a mortgage and insurance is mandated by the lender. The duties of the personal representative generally include taking reasonable steps to protect the assets of the estate, which would include reasonable insurance coverage -- which the estate would pay for. Necessary maintenance would also be included in the things that are to covered by the estate, for example the cost of repairing a broken water pipe (which can cause serious loss, if not repaired). Freshening up the paint in preparation for selling the house, assuming that the house is to be sold and the assets divided, would also be covered by the estate. Utilities, on the other hand, are not within the realm of things that need to be done to protect the interests of the beneficiaries: that is a benefit to whoever lives there, making it their responsibility. The question is foot-dragging is a separate issue, one that should be resolved with the aid of your lawyer. I do not understand why he would maintain that the estate is responsible for paying the utilities.
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