In last Thursday’s debate, Newt Gingrich released his 2010 Gingrich Foundation tax return and the Gingrich Joint Tax return. See Kim Dixon & Marcus Stern, Gingrich tax return out, but much remains unseen, Reuters (Jan. 20, 2012); Paul West, Gingrich tax return details sources of income, alimony payment, L.A. Times (Jan. 19, 2012); Jon Ward, Newt Gingrich Releases His Tax Returns, Huffington Post (Jan. 19, 2012; updated Jan. 20, 2012) (the Gingrich press release, with links to both returns, is also accessible from a link at bottom of this brief article).
The private foundation’s return lists Callista Gingrich (presumably in her role as President) as having custody of the books at the Foundation’s address in Washington. It lists Newt Gingrich as the only manager who contributed more than 2% of the contributions received during the year, and another form (Schedule B) lists Gingrich Holdings as the contributor of $152,609. Callista Gingrich is listed as the president (with zero compensation) and Newt Gingrich as a board member (with no compensation). A treasurer is listed with $1800 of compensation, a secretary with no compensation, and two other uncompensated board memberes.
The Foundation supported the following organisations with a total of $120,000: Mount Vernon Association, Basilica of the National Shrine, Shiloh Point Elementary in Cumming GA, Amerivan Museum of Natural History in New York, The Washington Opera, The Atlanta Ballet, A Learning Foundation inAtlanta, the Arthritis Foundation, Mount Paran Christian School in Kennesaw GA, the Walker School in Marietta GA, Luther College in Decorah IA, Susan Chambers Dance in Sugar Hill GA, Breast Cancer Research in New York, and Alzheimer’s Association in Washington.
The joint tax return shows income in 2010 of more than $3 million, with about $450,000 in compensation income and about $2.5 million of Schedule E income through his S corporations Gingrich Holdings inc and Lubbers Agency Inc. and partnerships Draper Fisher Jurvetson Fund VIII and FLC XXXII Partnership LP. (He apparently restructured these businesses before entering into the Republican nomination contest, perhaps foreseeing better than Mitt Romney did that voters might react to the very idea of a giant holding company through which one receives one wealth.) The Salaries and Wages report shows that $450,000 in compensation income arising as follows: 252,500 in wages to Newt from Gingrich Holdings, Inc., and to Callista 5918 from National Shrine and 191,827 from Gingrich Productions, Inc. According to the Reuters story, Gingrich’s earlier disclosure said the Gingrich Holding income was mostly a distributive share (the tax term for a pass-through payment from an entity taxed as a partnership) from Gingrich Productions. His Schedule SE shows only 847 of self-employment taxes in connection with the various schedule C, K-1 etc. income, while Callista’s shows 268.
Also revealed on the tax return are the following: $41,625 in speaking and board of director fees (showed as business income on line 12), $6,853 in rental income, $26,655 in taxable interest, $11,892 in ordinary dividends (not eligible for the 15% net capital gain rate), $5,990 in qualified dividends (eligible for the 15% net capital gain rate), $4,184 in net short-term capital gains and $32,133 net long term capital losses and $33,124 of taxable refunds, credits or offsets for state and local income taxes The couple claimed a total itemized deduction of $215,095. They made $81,133 in contributions to various charities and paid $122,844 in state and local income taxes, $11,656 in real property taxes, and $2,422 in personal property taxes, as well as 8505 in tax preparation fees. They also enjoyed $10,754 of tax-exempt interest (not part of their taxable income). The Gingrich couple paid almost a million in taxes, giving them an effective tax rate on the 3.1 million of income of around 31%.
- Re those net short term capital gains: Gingrich bought and sold shares in Campbell Soup in 2010 (losing 74), bought shares in Celgene Corp in 2009 and sold them in 2010 (making 2591), sold in 2010 shares in American Funds Capital bought at various times, for a 346 gain, and similarly sold shares in Nuveen High Yield fo a 1225 gain.
- Re those net long term capital losses: Gingrich sold shares bought at various times of Martek Bioscience, American Funds capital, Ishares Trust s&P smallcap 600 and Ishares Trust Russell 1000 Value, which combined with the long-term totals from Schedule D-1 of 1.023 million (from sales of various funds and closing out of $600,000 worth of CDs) yielded an aggregate of 1.257 million with a claimed loss of $35,636. Using his capital gain distribution from Schedule D-1 of 1018, that left a net LTCL of 32,541.
There are several things worth noting about Gingrich’s release of the couple’s tax information.
1) this is only a single year’s return–2010. George Romney, Mitt’s father, famously began the more transparent information sharing about presidential candidates by releasing 12 years’ of his own tax returns. Gingrich should follow that example, even if Mitt isn’t sure he will. Multi-year returns are necessary for tax experts to even begin to pierce the veil of tax secrecy by seeing trends and patterns in types of income. One year of returns tells you very little. Gingrich should release returns back to his volatile period in Congress and his scuffle with the ethics inquiry, and should release returns relating to the period when he earned what he calls “consulting” fees based on his being a “historian” for Freddie Mac (see item 3).
2) we don’t have tax returns for Gingrich Holdings or Gingrich Productions, or even the informative financial statements that publicly traded companies are required to provide. Those privately held corporations are therefore able to function as “blockers” to maintain a good deal of secrecy about Gingrich’s own income even with the release of his return. Back before Nixon, corporate tax returns were public information and were not kept secret by the Service. We should go back to that, because corporations, whether publicly traded or held privately, are benefitting from the public trust and the state’s willingness to allow them to form. There seems to be little justification for maintaining any business entity returns as confidential documents, with some redaction allowed to maintain trade secrets. But until we do, we won’t know anything more than what Gingrich tells us (or reporters can get “deep throat” sources to divulge).
3) Gingrich’s return labels him a “consultant” but we know very little about his client list or his activities for his clients. We know he worked for Freddie Mac: he claims he wasn’t a lobbyist but that is a hard one to swallow whole. It is difficult to imagine Freddie Mac paying the consummate politician as though he were a mere historian doing historical research but it is very easy to imagine Freddie Mac paying a well-connected lobbyist, shoes that Gingrich’s role as House Speaker ensures that he would have fit into easily. We know that he worked as a “consultant” during the passage of the Medicare Part D prescription drug provision. Again, that sounds more like lobbying than “consulting”. The problem is that Washington has written weasel rules for lawmakers who “consult” so that they can claim they are not “technically” a lobbyist, as Gingrich is doing. But voters should want to see what kinds of reports he provided on the Medicare and Freddie Mac issues, as Romney is insisting. Otherwise, he is just hiding behind the very thin curtain of the fuzzy line between obvious lobbying and “not required to register-wink/wink lobbying”.
4) Congressmen pay themselves nice little pensions even while the GOP is making an ideology out of its desire to cut private pension benefits for unionized workers (in the name of ‘saving’ business but really in the name of passing along even higher profits to managers and owners) and its intention of “reforming” Social Security (meaning leaving beneficiaries who depend on this system that they’ve paid into all their lives with less money than they should be able to have). Gingrich’s return reports more than $76,000 in 2010 from his Congressional pension.