If Romney somehow becomes the Republican nomeny Clinton will be looking for issues to hit him with. Do you think that the LDS tax dodges will be used? I suppose that will depend on whether he ever advised or helped to set up any of those tax dodges. Then again this type of tax dodge might be quite common among tax exempt corporations and the politicians would want to tough it.
Why does the Mormon Church like owning real estate? In one word, the answer is "income taxes" (technically, I guess that's two words).
A tax exempt entity like the Mormon Church pays U.S. federal income taxes on "for profit" businesses that it may acquire. The public policy behind this idea is to prevent tax-exempt entities from unfairly competing in the business world with "for profit" tax-paying enterprises. In contrast, a tax exempt entity does not pay income tax on "passive income" such as dividends, "rents" and royalties. The public policy behind this idea is to promote the work of tax exempt entities by exempting income tax on passive income.
With these rules in mind, the system can be manipulated very easily. By way of a hypothetical example, the church might buy a privately-owned cattle ranch in Florida which is highly profitable and which was paying significant amounts of federal income tax in the hands of its private owners. After the purchase of the cattle ranch, the church moves the fee simple ownership of the land (the deed to the land) under the umbrella of church ownership and then leases the land back to the "for profit" cattle ranch which the church continues to own (e.g. through an equity ownership by way of shares in a "for-profit" corporation). The passive rents paid by the ranch operation to the church are deductible as a cost of doing business thereby lowering the profits of the operation to zero (or turning profits to losses which carryforward almost indefinitely). In turn, the rent payments to the church are passive and, therefore, free of income tax to the church. When the dust settles after the purchase of the "for profit" ranch, the ranch operation isn't paying any income tax (you don't pay income tax unless you're making a profit) and the church isn't either (it doesn't pay income tax on passive rental income).
Note that the fact that the ranch in Florida might contain 300,000 acres next to Orlando (and worth hundreds of millions of dollars) is immaterial. The only loser is the federal government through lower tax collections (and all of us tax-paying suckers since other taxes have to go up to compensate for the church's tax dodge).
Of course, there's no reason to limit the tax dodge to land in Florida. Why not a multi-billion dollar mall in Salt Lake? How about thousands of acres of farm land in Missouri under the guise of the church fulfilling its mandate to "redeem" Zion? How about pineapple plantations in Hawaii? For that matter, why not the Polynessian Cultural Center in Hawaii itself? The Center lost part of its tax exempt status a number of years ago (it was making way to much money despite the church's contention that the purpose of the center was tax-exempt missionary work).
One last important point. Since the magnitude of the above tax dodge is potentially very great, it is very important for the church to maintain a policy of never releasing financial information because the extent of the tax dodge would become readily apparent.
I think the LDS church would become unglued if this because foughter for polical debate. What do you think?
I am not sure that Hillary attacking Romney based on his religion will play. I suspect that if Romney gets the nomination despite being Mormon, it is because the public will have decided that his religion really doesn't matter. In addition, those likely to have a problem with Romney's religion are probably the Republican Christian Right, not democrats.
mocnarf wrote:If Romney somehow becomes the Republican nomeny Clinton will be looking for issues to hit him with. Do you think that the LDS tax dodges will be used? I suppose that will depend on whether he ever advised or helped to set up any of those tax dodges. Then again this type of tax dodge might be quite common among tax exempt corporations and the politicians would want to tough it.
Why does the Mormon Church like owning real estate? In one word, the answer is "income taxes" (technically, I guess that's two words).
A tax exempt entity like the Mormon Church pays U.S. federal income taxes on "for profit" businesses that it may acquire. The public policy behind this idea is to prevent tax-exempt entities from unfairly competing in the business world with "for profit" tax-paying enterprises. In contrast, a tax exempt entity does not pay income tax on "passive income" such as dividends, "rents" and royalties. The public policy behind this idea is to promote the work of tax exempt entities by exempting income tax on passive income.
With these rules in mind, the system can be manipulated very easily. By way of a hypothetical example, the church might buy a privately-owned cattle ranch in Florida which is highly profitable and which was paying significant amounts of federal income tax in the hands of its private owners. After the purchase of the cattle ranch, the church moves the fee simple ownership of the land (the deed to the land) under the umbrella of church ownership and then leases the land back to the "for profit" cattle ranch which the church continues to own (e.g. through an equity ownership by way of shares in a "for-profit" corporation). The passive rents paid by the ranch operation to the church are deductible as a cost of doing business thereby lowering the profits of the operation to zero (or turning profits to losses which carryforward almost indefinitely). In turn, the rent payments to the church are passive and, therefore, free of income tax to the church. When the dust settles after the purchase of the "for profit" ranch, the ranch operation isn't paying any income tax (you don't pay income tax unless you're making a profit) and the church isn't either (it doesn't pay income tax on passive rental income).
Note that the fact that the ranch in Florida might contain 300,000 acres next to Orlando (and worth hundreds of millions of dollars) is immaterial. The only loser is the federal government through lower tax collections (and all of us tax-paying suckers since other taxes have to go up to compensate for the church's tax dodge).
Of course, there's no reason to limit the tax dodge to land in Florida. Why not a multi-billion dollar mall in Salt Lake? How about thousands of acres of farm land in Missouri under the guise of the church fulfilling its mandate to "redeem" Zion? How about pineapple plantations in Hawaii? For that matter, why not the Polynessian Cultural Center in Hawaii itself? The Center lost part of its tax exempt status a number of years ago (it was making way to much money despite the church's contention that the purpose of the center was tax-exempt missionary work).
One last important point. Since the magnitude of the above tax dodge is potentially very great, it is very important for the church to maintain a policy of never releasing financial information because the extent of the tax dodge would become readily apparent.
I think the LDS church would become unglued if this because foughter for polical debate. What do you think?
Tax dodges? What tax dodges?
The post above is rife with errors and inaccuracies. Like many NFPs the LDS Church owns for profit corporations that operate their for profitr entities. The stupid ranch example fails because LDS Farm Management Corp is a for profit company and pays income tax.
And guess what else. The Internal Revenue Code imposes this amazing thing in tax exempt entities called Unrelated Business Income Tax or UBT for short. If a NFP Corp generates income that is not related to it purpose, operation or activities the tax exempt corp pays tax on that income.
So they are no tax dodges here and the stupid fools at the Mormon Curtain clearly have their heads up the butts when it comes to tax issues for tax exempt entities.
Also why would you even thing Romney would be involved in tax issues?
I seriously doubt this would even be a consideration.
I can not imagine a candidate being held responsible (or being asked to answer) for whatever the Church they belonged to did or didn't do regarding taxes. That just seems like such a non-issue. There are so many other issues that obviously would Trump attacking Romney for anything the LDS Church does.
Of course if people get desperate during an election all bets are off the table. But really if Romney's religion is even brought into the debate it will most likely center about his beliefs (and LDS teachings) rather than anything about Church finances.
Am I missing your point mocnarf?
by the way, Clinton is a self proclaimed Methodist: