Did Gingrich avoid paying Medicare taxes?
By Suzy Khimm,
Forbes interviewed some tax experts who perused Gingrich’s newly released 2010 tax returns and flagged one potential anomaly: SOURCE: GETTY IMAGES
Republican Presidential candidate Gingrich and his wife, Callista, treated only $444,327 of what they got from Gingrich Holdings. Inc. and Gingrich Productions as compensation to them, while reporting a whopping $2.4 million of their earnings from these corporations as profits or dividends. Medicare taxes are levied at a rate of 2.9% on an unlimited amount of compensation and self-employment income (say, from a consulting contract, speeches or a book) but not on profits from a business...
“It appears that he is not paying his fair share of Medicare tax,’’ Robert E. McKenzie, a partner in the Chicago law firm of Arnstein & Lehr LLP concluded, in an email to Forbes, after reviewing Gingrich’s 2010 tax return...The IRS says on its web site that distributions to an S corp. owner should be treated as compensation to the extent they are associated with his personal services or services to the firm. Earnings that come from an investment of capital and equipment, or from the work of others, can be treated as profit. On his July 2011 financial disclosure form, Gingrich valued his holdings in Gingrich Productions at between $500,000 and $1 million, suggesting he has far too little capital invested in the firm to justify booking $2.4 million as profit. On Gingrich Productions’ web site, there is no suggestion it profits from the work of anyone other than the Gingriches.