Itemized deductions often come with a hefty price tag. Members do pay taxes on their Congressional salaries, but they have given themselves some extra perks that elevate them above normal taxpayers. If itemized deductions were instead repealed—not limited, as President Obama wants—then tax rates across the board could be cut. The Joint Committee on Taxation has estimated that for 2013 the amount of revenue lost because of the three deductions the Obamas took (which happen to be among the most popular deductions taken) will be: $90 billion for mortgage interest, $47 billion for charitable contributions, and $46 billion for state and local income taxes. It presents pieces by leading thinkers and doers across the worlds of business, public service, academia, and elsewhere. I want to posit another explanation: One part of the minority that benefits from itemized deductions is members of Congress. In addition, Members of Congress DO NOT draw the “same pension” as their pay in the last year of office as suggested in a … All Rights Reserved, This is a BETA experience. That ought to be enough to concern any taxpayer. Forbes Leadership Forum is our home for articles written by people who aren't regular Forbes Leadership contributors with their own pages. News, Commentary, and Advice About Leadership, EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change. This article is by Dorothy Brown, a professor of tax law at Emory University Law School. That means only one third of Americans benefit from the myriad of deductions available in our tax code. You may opt-out by. We could then compare the information with what the IRS already produces about the American taxpaying public in general, and hopefully encourage voters to demand change. Member of Congress began to pay into Social Security in 1983, as part of a government-wide pension overhaul. Since 1991, representatives and senators have been prohibited from accepting honoraria—payment for professional services that are usually rendered free of charge. Members do pay taxes on their Congressional salaries, but they have given themselves some extra perks that elevate them above normal taxpayers. Opinions expressed by Forbes Contributors are their own. MYTH: Members of Congress get free housing in Washington, D.C. The 535 Report would be similar in concept to what the IRS currently produces for the tax returns of the 400 highest-income individuals.
The Obamas are unlike most Americans, however, because most Americans do not itemize their deductions. We cover the rest as taxpayers. Every time someone mentions limiting the mortgage interest deduction, that lobby comes out with gloom-and-doom predictions and beats back the effort. One answer might be special interest groups. David Cay Johnston reported in The New York Times in June 2003 that the 400 report was begun in response to a professor asking for it. They continued a longstanding tradition of sitting presidents releasing their returns, even though no law requires that they do so. We subsidize taxpayers who choose to live in high-income-tax states, but not those who live in low-income-tax states. Normally, a taxpayer in a lawmaker's income bracket could be subject to reductions in the value of his or her mortgage interest write-off for residences. The tradition began under the late President Richard Nixon. Lawmakers do pay 8 percent of their salaries into their pension system, although this only compensates for about 1/5 of the typical lifetime benefit. For example, they wrote into the law a $3,000 annual income tax deduction for maintaining a second residence. We subsidize taxpayers who choose to live in high-income-tax states, but not those who live in low-income-tax states. Forbes Leadership Forum is our home for articles written by people who aren't regular Forbes Leadership contributors with their own pages. The current salary for rank-and-file members of the House and Senate is $174,000 per year. For this reason, Congressional pensions can and frequently do exceed a Member’s final salary, but only after a few years in retirement, when COLAS begin to kick in. Years Salary; 1789–1815: $6.00 per diem: 1815–1817: $1,500 per annum: 1817–1855 McClatchy newspapers reported last July that of the 535 members asked to release their most recent tax returns, just 17 did. Yes of course. A few, like Senator Dick Durbin, have a longstanding practice of releasing their tax returns, but he is a rare exception. Additional information concerning pay and perks is available in NTUF Policy Paper 131. Given that I do not expect members of Congress to change their ways, one way to move closer to reform would be for the Internal Revenue Service to issue a new kind of report, which I call the “535 Report.” It would provide in summary fashion the information from the tax returns of all members of Congress. The U.S. tax code states that everyone who receives revenue must pay an income tax, including Representatives and Senators. Yet no bipartisan repeal effort has occurred. Compare that to only a third of the American public, and the numbers would suggest that repeal is the best way forward. That covers income derived from private business, government salaries, military pay, and even unemployment checks. Senate Salaries since 1789. This raises the question of how we can have a system that disadvantages two-thirds of us.
Surviving spouses: Surviving spouses and family of a lawmaker who has died will receive a full year’s worth of salary.
We subsidize donations only for itemizers, and thus exclude most low-income donors. Although Presidents have voluntarily released their tax returns for the last several decades, nothing could be further from the truth when it comes to members of Congress.
A quick review of the Obamas' tax return tells us how much the Obamas gave to charity, how much they paid in mortgage interest, and how much they paid in state and local income taxes.
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