OC Register looks into tax loophole that benefits lawmakers
The Orange County Register used a graphic to explain how California legislators benefited from a tax loophole.
- Brian Joseph
Brian Joseph, Sacramento bureau chief for the Orange County Register, looks into California laws that allow legislators to “sometimes pocket hundreds of thousands of dollars in profit” on the sale of their homes.
The story looks closely at the tax-free allowance of $141.86 a day paid to lawmakers to compensate them for being away from home during the legislative session. He writes that many legislators “netted more than $37,000 in tax-free money last year, when the per diem was as high as $173 per day….And that’s on top of state lawmaker’s annual salaries, which were cut from $116,208 annually to $95,291 in December.”
While most lawmakers use the per diem to rent in Sacramento, ”overlapping laws allow savvy California politicians to leverage their tax-free allowance to buy homes, secure tax deductions and sometimes pocket hundreds of thousands of dollars in profit,” he writes. Using land and legislative records, Brian found at least about 30 current lawmakers own homes in the Sacramento area and received a tax-free per diem in 2009. They are allowed to live one place and vote in another — the district they represent — because of an exception granted legislators in California law.
Today’s Tip: Check the tax benefits of politicians and business leaders.
As we enter tax season, team up with a tax expert to see if your state has any loopholes that could allow a specific class of people or companies to benefit. The Federation of Tax Administrators lists the Web site for each state’s revenue department. The U.S. Public Interest Research Group has information on some corporate tax loopholes.
