Thursday, November 08, 2007

Dumpster Pwns Michele Bachmann! Er, Wait. No...That's a FAIL

Former Stribber and current propagandist has a modest scoop, brought to him by a rediculous looser:

Guest Poster Karl Bremer of Stillwater, a marketer and free-lance journalist [Curious...developing...READ MY BLOG! --ed.], considers himself U.S. Rep. Michele Bachmann’s least favorite constituent. He has attempted to ask her questions by phone, email and letter and has never received an answer, including his queries relating to this piece.

Looking at Bachmann’s financial disclosure statement, he found that Bachmann holds a substantial interest and receives income from a Wisconsin farm. Further down the paper trail, Bremer found that the Bachmann family farm received more than $125,000 in federal subsidies between 2001 and 2005. (The farm is very likely still receiving them, although the 2006-2007 records aren’t available online.) Bachmann generally opposes such big government excesses. So, is it hypocritical for her to benefit from them? Here’s Bremer’s report, you decide
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While Rep. Michele Bachmann was voting with one hand against the 2007 farm bill that would extend federal farm subsidies programs through 2012, she has been harvesting federal farm subsidies with the other, and slipping them into her own pocket.

A 949-acre Wisconsin farming operation — in which Bachmann owns up to a quarter-million-dollars interest — collected $47,128 in federal farm subsidies between 2004-2005. That same operation—the Bachmann Farm Family Limited Partnership — has collected as much as $127,868 in federal farm subsidies since the partnership was established in 2001
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Only a truly brain dead Dumpster (sorry for the redundancy) would accuse a Congresswoman who VOTED AGAINST HER OWN PECUNIARY INTEREST of being a hypocrite. I suggest Karl apply that same standard to other office holders.

I anxiously await his findings (yet I will play it safe and continue drawing breath in the meantime).

Gotta borrow a page from Fark on this one:



And while the Dumpster acknowledges that there's nothing illegal about taking government subsidies while VOTING AGAINST THEM in Congress, he does jump through hoops to try and insinuate that there's something nefarious about Ms. Bachmann's business dealings (in a paragraph that literally made my head explode given my knowledge about business law):

Michele Bachmann has done nothing illegal by collecting federal farm subsidies. The establishment of a limited partnership for a farming operation no doubt is to reduce her tax liability—i.e., a tax shelter. And it conveniently keeps Michele’s own name out of the farm subsidy database.

As it would if her family LP was organized as an LLC a GP, a LLLP, an LLP, an S Corp or a good old-fashioned C Corp. That's the nature of a business organization. It's a juridic entity that stands in place of its owners.

***WARNING: ACCOUNTING PORN FOLLOWS***

There is a tax advantage to organizing a business as a non corporate entity (i.e. an LLC, or a partnership). Partnerships and LLCs are "pass-through entities". That means that any income attributed to a partner is taxable as ordinary income on the partner's individual tax return. If a business were organized as a C corp, then revenues are subject to double taxation (first on the corporate profits, and then again on the dividends paid to the shareholders as ordinary income.)

So, you have a business. Would you rather be taxed twice or taxed once?

If you are a Dumpster and answer "once, please", then I guess you are a big fat hypocrite.

Second, and probably most importantly, is the nature of a Limited Partnership. An LP must have at least one general partner and at least one limited partner. The general partner's role is analogous to that of the board of directors of a corporation - and in many cases that of management as well. The general partner makes all the "big picture" decisions regarding the conduct of the business. In contradistinction to the general partner's role, the limited partner is nothing more than a passive investor. In fact, by statute, a limited partner is prohibited from getting involved in the business of the partnership.

Given the facts as the Dumpster laid them out, I'd be surprised if Bachmann was not a limited partner, and thus powerless to make the business decision of accepting the government subsidies that she voted against.

Which brings us to the big bad evil loaded term "tax shelter." Do you have a 401(k)? A Roth IRA? You do? Then, congratulations! You too have a "tax shelter".

Simply put, a "tax shelter" is anything that eliminates the need to pay taxes on current income, and defers taxation of that income for as long as possible. In today's parlance you don't hear the term "tax shelter" much anymore since all of the major ones are encouraged because they promote personal savings for retirement.

Back in the days before Reagan's evil tax reforms thatmadetherichgetriccherwhilethepoorgotpoorer, investors pooled some of their current incomes as limited partners into LPs that conducted some business that involved buying high depreciation assets, like say, an equipment rental business. The depreciation on the equipment (which was calculated as a front loaded amortization like your typical mortgage), would far outstrip the revenue generated by the business resulting in a loss. That loss passed through to the limited partners which they could then use as a writeoff on their personal income taxes. This was the archetypal "tax shelter". The Tax Reform Act of 1986 (I think that was the one anyway) seriously restricted the writeoffs that individual taxpayers could write off from these so-called "passive activity losses" to the point where you don't see this sort of practice any more.

In fact the only time you hear "tax shelter" any more, is when it is used in its anachronistic loaded sense to slime people. As we see here.

So, the Dumpster is a moron, and gets one more of these:

Nice try though.

Oh, and that fail also goes to Eric Black for his gatekeeping.

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