TAX NEWS - 2010

US Tax: Tax deductions based on business losses

For several weeks, Illinois Governor Pat Quinn (D) has been attacking his Republican opponent Senator. Bill Brady for taking tax deductions based on business losses to avoid paying any income taxes.  What Brady did was legal and it is done by everyone who files a tax return.  He was maximizing deductions.  But Quinn has tried to paint Brady as some kind of tax dodging maniac.

On the other side of the aisle, US Congressman and candidate for US Senator Mark Kirk (R) has been steadily attacking his Democratic opponent Alexi Giannoulias for the failure of Broadway Bank which was owned by the Giannoulias family and taken over by the federal government.  Giannoulias, like Brady, sustained losses from the bank failure and promptly took a tax deduction which resulted in him not only not paying taxes but also in receiving a sizable tax refund. 

The symmetry between the two campaigns is amusing but all of the discussion would have ended there had Kirk and Quinn not decided to drag their own party members into the debate. 

Quinn, who apparently cares about his own election and not the US Senate race maintained today that anyone receiving a public salary should pay taxes.  Giannoulias is the Illinois State Treasurer and therefore receives a public salary.  Of course, Quinn conveniently ignored the fact that Giannoulias like Brady received allowable IRS tax deductions that any other taxpayer would take if it benefited their financial situation. 

Quinn did not refer to Giannoulias by name.  But when reporters asked Quinn whether there was a difference between the tax situations of Brady and Giannoulias, the governor said, "My principle: I don't think there should be a Brady loophole where people who make millions of bucks then end up paying no taxes whatsoever."

In order to make it clear that he does not approve of Giannoulias taking deductions, Quinn had advice for Giannoulias regarding the Treasurer's promise to send his tax refund check to charity.  Quinn indicated that instead of the treasurer sending his $30,000 income tax refund check to charity, it should go to the state, which is facing a $13 billion deficit and $5 billion in unpaid bills.

"I think a good charity would be the people of Illinois. We have a lot of good causes," Quinn said.

Quinn's statements are yet more proof that the party structure no longer exists wherein loyalty is expected and rewarded.

Kirk really didn't do his running mates any favors either just a day earlier.  Kirk said it wasn't right that Brady, the Republican governor candidate, didn't pay taxes falling into a trap that Quinn had set a month earlier by stating that Brady didn't pay taxes when he actually took deductions.  Truthfully, half of American tax filers don't pay any taxes.

Mark Kirk also didn't leave his criticism to just one fellow Republican.  Instead, Kirk, who apparently is only concerned with his own election, went after Lt. Governor candidate Jason Plummer also.   Kirk said he didn't think it was right that Brady didn't pay any income taxes last year and that Plummer hasn't made his tax returns available to the public.  

Kirk said he thinks all public officials who collect government paychecks should find a way to pay some taxes.

"I think that if you are depending on a salary paid by taxpayers you ought to pay taxes," Kirk said.

When asked if that philosophy also includes Brady, a developer who also lost enough money last year to also not pay state or federal income taxes, Kirk repeated: "If you depend on a salary paid for by taxpayers, you ought to find a way to pay taxes."

Kirk, who surely is gaining favor with editorial boards for his one man attack squad, knows that his fellow Republican, Jason Plummer, and many Republican voters don't agree with the idea of releasing tax returns.  But in order to make points for his own race, he went after Plummer. 

It is an upside down world when Republicans are attacking Republicans and Democrats attack Democrats. 

Maybe the truth is that these aren't real issues and the attacking parties want to divert our attention from the real issues.