Palin's Shopping Spree Will Bump Her Into Higher Tax Bracket

Here's another piece of legal arcana for Gov. Sarah Palin and the Republican National Committee to mull over. According to a prominent tax lawyer who spoke to the Huffington Post on background, even if the $150,000 worth of clothes provided to the GOP vice presidential nominee are donated to charity after the election, Palin will be bumped into a higher tax bracket when she pays taxes on their retail value.

"The circumstances under which clothing is not taxable are rather limited," the lawyer said, adding that "I don't think she has much of a case at all."

The RNC has thus far sought to defend the legality of its expenditures by calling them "gifts" to Palin, as opposed to an illegal transfer of campaign funds for personal use by the candidate. But as another tax expert pointed out to ABC's Jake Tapper earlier this week, such "gifts," while kosher for the RNC, would still need to be declared by the candidate as income on her 2008 tax return.

Taking Palin's 2007 declared salary ($124,000) as a baseline, the lawyer who spoke to the Huffington Post said the $150,000 in gifts -- even if donated to charity after the election -- would take Palin from the 25 percent tax bracket to 33 percent bracket. The lawyer estimated that would increase Palin's tax liability by approximately $45,000. "It gets a little complicated by the Alternative Minimum Tax, which she might get caught up in," the lawyer added.

Still, isn't there a charity deduction Palin could take if and when the clothes are donated, as McCain has guaranteed will happen?

According to the lawyer, that charity deduction would only cover 18 percent of the total value of all gifts needing to be declared. The lawyer estimated that deduction could marginally change Palin's tax bracket standing, and result in a $9,000 reduction in total liability -- meaning an overall additional tax burden of about $36,000 for Palin when she files next year.

An email to a McCain spokesperson asking whether Palin would commit to paying taxes on gifts donated to charity after the election was not immediately returned.

Comments

[rr52]

10:13 AM on 11/07/2008

Forgot to add that donations cannot be accounted for at retail value either. Anywhere from 60 to 75% reduction in value is expected.

[rr52]

10:08 AM on 11/07/2008

That's right. Gifts are limited to $10,000 per year. After that, all is taxable. If the clothes were donated, then they have to be counted as "In Kind" donations, which are anything but money. They are taxable for the recipient. Oh, oh, not even a treasure chest of clothes for her efforts. Like Letterman said: "I feel sorry for the moose in Alaska." I will add the unjustly hunted wolves.

People can make all the excuses they want for Sarah but there is an old saying that "Wisdom is knowing when you don't know something, and admitting it." Sarah should have stayed in Alaska, especially with all her family problems. Good mom, my foot, she's an opportunist in the worst way.

[sugarfree]

03:59 PM on 10/27/2008

Its funny that the GOP was all over John Edward $8 dollar hair-cut, and John McCain talking about
when Barack took his family to HI to see his family.
McCain and Palin are Preaching their BIG SPENDING message all while Palin is spending all this
money on cloth,shoes, and make-up. Well that message is to confuse the voters. B.S.

[liberalsrheros]

06:49 PM on 10/27/2008

shouldn't add to the gop talking point by inflating the cost. it was $400. next time you see a GOPer they'll be saying it was $1400.

[robbie44]

11:05 AM on 10/26/2008

They need to put Palin and McCain in one of those credit card commercials............................"Oh johhhhhhn!!!!!!!!!!!!............... I want to build my own credit card.........I'll put a picture of the bridge to nowhere on it!...........".I'll buy Todd a new snowmobile".........(McCain after being thrown under the bus)................"What's in your wallet"?

[bby328]

09:29 AM on 10/26/2008

Palin: 'I Don't Know' If Abortion Clinic Bombers Are Terrorists

(butt we do know, in this great country, who pals around with 'em, also)

[GrkAm]

08:48 AM on 10/26/2008

Higher tax bracket? A couple of thoughts. It all depends on who will be POTUS. Under an Obama presidency, she would be exempt from an increase if her adjusted NET (after IRS deductions) income is less than $250,000. Then again, it depends on how they would expend her latest purchases.

Under a McCain presidency, the average individual would be given, and charged taxes on $5,000 for health insurance, which would put Americans into a higher tax bracket to generate revenue.

I'm sure that the NEW John McCain would be fair to not only the Joe the Plumbers, but Sarah the VP candidate as well. Wouldn't he?

[alembic54]

08:24 AM on 10/26/2008

Higher tax bracket? You betcha!!!!!! Todd? Yes Mrs. Loopner. 2 IDIOTS

[bob8788]

07:57 AM on 10/26/2008

this woman is a fake

http://www.barackobamacans.blogspot.com/

[ibsteve2u]

02:31 AM on 10/26/2008

" [...] would take Palin from the 25 percent tax bracket to 33 percent bracket"

Gee, and I thought Palin's tax-centric attacks on Obama today were on behalf of "Joe the Plumber".

lolll...I should have known better.

Now, it seems far more likely that Palin got word of her own personal predicament regarding her "gifted" clothing and was unable to focus on anything else as a result.

[HonorJusticeTruth]

12:25 AM on 10/26/2008

Under Fuhrer Palin says she didn't know what the clothes cost when they were bought. I assume she tried them on first. Did someone remove the labels?

Or is this just another example of how the Republicans spend money on their pet projects, like "Star Wars?"

Tomorrow I will pray for sister Sarah. Obviously she is possessed by a demon.

[polarbearlost]

11:25 PM on 10/25/2008

Perhaps she should have sat down with the GOP - with PRECONDITIONS before she shopped.

[XME]

09:17 PM on 10/25/2008

RNC will probably say they were "loaned" to Palin, not a gift. Not sure if they can claim that as far as taxation, but I'm sure they'll try.

[liberalsrheros]

07:54 PM on 10/25/2008

LMAO. this just too funny not to laugh.

[iPlato]

07:51 PM on 10/25/2008

Hmmm..

An opportunity surely, to put those taxes on the RNC expense account! After all, they seem to be expenses "legitimately" incurred while in the execution of rhetoric....

[LLBee]

07:00 PM on 10/25/2008

This is pathetic. Much worse than the Dan Quayle days, and I thought then that it was about as bad as it could get.