Lady Gaga’s loophole
Remember Ralphie’s secret decoder ring in “A Christmas Story”?
In the Christmas classic, Ralphie was disappointed when the secret message he decoded turned out to be “Be sure to drink your Ovaltine.” Now Tom Coburn, the retiring Republican senator from Oklahoma, has issued a decoder ring of his own — with a far more valuable message.
It comes in the form of a new report called the “Tax Decoder.”
Over the course of 312 pages, Coburn’s report helps untangle an unfair and overly complicated tax code rigged in favor of those who can afford accountants and lawyers to exploit its many special breaks and loopholes.
No surprise, celebrities turn out to be among the great beneficiaries. Lady Gaga, for example, has a charity called the Born This Way Foundation that, the report says, “is advertised as an organization that connects youth with anti-bullying, mental health and other community resources.”
In 2012, says the Decoder, Lady Gaga’s group raised $2.6 million but only gave away $5,000 in grants to organizations or individuals.
Ditto for Kanye West: “In 2009, the Kanye West Foundation spent a total of $553,826 — but only $583 went to charity. The rest was eaten up by expenses such as salaries, travel, overhead and ‘professional fees.’ ”
Likewise Ani DiFranco, the Grammy-winning singer who “utilized multiple federal tax breaks” to help build new headquarters for her Righteous Babe record company.
Or, closer to home, the New York Yankees, who built one of the most expensive stadiums in baseball with the help of nearly $1 billion in tax-free financing.
Or the singer Kevin Jonas, who took advantage of an IRS quirk that allows people to rent out their homes tax-free for a short period of time. The time happened to be around Super Bowl XLVII, when Jonas rented out his Jersey home for $20,000 for 12 nights.
Not all of those who exploit these loopholes are celebrities. Coburn’s Tax Decoder points to loopholes and programs ranging from the plug-in-electric-car credit and special breaks for timber production to the student-loan interest deduction as examples of tax benefits that can have costly and perverse consequences.
The senator’s point isn’t that celebrities are making out like bandits. It’s that when you clog a tax code up with goodies, don’t be surprised when it’s not the most deserving who reap the most advantages. Flat tax, anyone?
Read more about this from the source.