Monday, July 11, 2011

How to get around campaign finance laws

Pay a gift tax and a generation-skipping transfer tax on excess contributions. That's what Bunny Mellon did after she gave John Edwards $725,000 so that the press would stop harping on the price of his haircuts.  The WSJournal quotes an expert estimate of the combined tax burden at $799,000. 

According to the reports, the fact that Mellon reported the gift and paid the taxes on it may save Edwards in his upcoming trial on campaign finance law violations.  (She had to pay the GST because she's more than 37.5 years older than Edwards.)


JLM said...

Although Bunny Mellon was willing to pay gift tax, donors to advocacy groups known as § 501 (c)(4) organizations are not. IRS efforts to collect gift tax, now halted, were taken as a jab at the Koch brothers and other conservatives. Not so, claims the agency. In any case, the IRS change of heart also benefits liberals contributing to groups such as Priorities USA.

Jim Gust said...

A gift to a group seems very different from a gift to a person. Although I would happily eliminate the charitable deduction for all gifts to groups, I would not advocate a gift tax in such circumstances.

My feeling is that both Mellon and Edwards clearly violated the campaign finance law, which just goes to show how stupid that law is. If Mellon wants to pay for Edwards' haircuts, the government should stay out of it.