From the NY Times piece:
Quote:
The campaign said Mr. Edwards created the tax shelter, a so-called S Corporation, on the advice of his accountant, who cited its legal liability protections as well as its tax advantages, about two years after he left a larger firm to start his own practice with a partner.
His use of the tax shelter surfaced in his 1998 run for the Senate against Lauch Faircloth, the incumbent Republican, whose campaign manager called it a "deceitful ploy."
But accountants and tax-law specialists say that S Corporations have grown increasingly popular with lawyers, contractors and entrepreneurs. The IRS received 3,191,108 such filings last year. If anything, these experts said, Mr. Edwards used it rather conservatively.
While most of his income, which included some investments, was labeled dividends on the S Corporation, for which he paid no Medicare tax, Mr. Edwards did designate $360,000 a year as wages on which he was taxed for Medicare.
But even those whose business it is to collect taxes said they could find no fault with what Mr. Edwards did. "Let's face it," said Veranda Smith, a government affairs associate with the Federation of Tax Administrators. "I work for the state tax agencies, and I'm perfectly happy to say that anyone who puts in a structure that pays more taxes than necessary is nuts."
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This is old news, apparently. I think that many people in similar circumstances would just follow the advice of their financial advisors.
Regardless, I'm not a huge fan of tax shelters and I'm sure that this won't be the last that we hear of this story, but you still can't assume that the economic plan of Kerry and Edwards will be designed to minimize their own taxes while maximizing the middle classes. There is no evidence of that.