Well what do you know? Despite the rhetoric from President Obama and Congressional Democrats, it looks like the rich are set to reap more than their fair share from the Obama-Reid-Pelosi debt spending plan:
Billionaire Paul Allen is a Microsoft cofounder, the owner of the NFL’s Seattle Seahawks and the owner of the NBA’s Portland Trailblazers.
And, thanks to the stimulus bill President Obama signed this week, he’s also about to be as much as a billion dollars richer.
Here’s how:
- Allen owns a majority stake in cable provider Charter Communications.
- Charter Communications this month said it would reduce its debt load by $8 billion and enter Chapter 11.
- Normally, partners at a firm like Charter Communications would have to pay taxes on the amount of debt forgiven in this process, which is, in a sense a one-time income windfall. Tax law calls it a “deemed distribution.”
But under the new bill, companies like Charter Communications will be able to avoid paying taxes on forgiven debt until 2014. Even then, Paul will have until 2018 to pay it completely off.
Paul owns about half of Charter, so his share of the Charter Commuincations’ $8 billion debt forgiveness is around $4 billion. At a tax rate of 25%, Allen could avoid paying as much as $1 billion in taxes until 2014, tax expert Robert Willens told the WSJ.
Not clear how a corporate tax benefit would be passed through to Paul’s personal tax payments? A reader informs us:
“It’s not a ‘corporate tax’ since it’s a partnership rather than a corporation. The partners pay tax on their share of a partnerships income, which is why partnerships are referred to as “pass-through” entities.”
For what it’s worth, one of Paul’s representatives told the WSJ the billionaire didn’t lobby for the windfall. It just fell into his lap, lucky dog.
Now I’m not sure if Allen’s gain comes from the same provision that Carl Levin and Debbie Stabenow inserted into the bill at the last minute — ostensibly to help General Motors. But both companies are benefiting from more favorable tax treatment after unloading a healthy chunk of debt. It sounds like the same provision. Of course, if Congressional Democrats had actually given Americans more than 10 hours or so to read the bill and examine the provisions, we might have figured out that Levin and Stabenow were making a billionaire richer by hundreds of millions.
Having delivered one of America’s wealthiest men an extraordinary windfall, will Congressional Democrats now fix this oversight? Or will they give us reason to suspect that this might have been an intentional ‘oversight?’ After all, the Democrats are racing to fix the mistake they made with H1Bs – apparently due to rushing the bill without appropriate review. There’s no reason to expect they won’t do the same to fix the Paul Allen mistake too, right?
And there’s one other person who owes her constituents an explanation: Nevada Representative Dana Titus, who says she read the whole bill. I don’t expect her to have guessed that Paul Allen would get a lot richer because of her vote, I just want to know how she failed to ask questions about the provision. I mean, she read the bill, right? Is she telling us she didn’t even understand what she had read?
Via Instapundit
Steve Maley
Moe Lane
Dan McLaughlin
Neil Stevens
I don't believe that ANY Congress Critter
USNJIMRET (Diary) Thursday, February 19th at 10:13PM EST (link)House or Senate has read the whole thing, yet. Or that any one of them is likely to.
And, even if one-or more, should actually take the hours and hours it would take to sit and read that monster, there’s not a soul in the freakin’ country that could possibly understand all of it.
Cobbled together from plans that have been sitting on the shelf for years, awaiting the perfect economic/political storm, it’s such a hodge-podge of special interest favors and desires, that it probably conflicts with itself all over the place.
But it’s the law now, awaiting only more legislation to ‘fix’ errors pointed out by everyone BUT the legislators who passed it, judicial review to tell us what the Congress really meant, and interpretation by various government agencies as to implementation.
A monster, evolving and growing with every passing second.
I don't believe that ANY Congress Critter
USNJIMRET (Diary) Thursday, February 19th at 10:13PM EST (link)House or Senate has read the whole thing, yet. Or that any one of them is likely to.
And, even if one-or more, should actually take the hours and hours it would take to sit and read that monster, there’s not a soul in the freakin’ country that could possibly understand all of it.
Cobbled together from plans that have been sitting on the shelf for years, awaiting the perfect economic/political storm, it’s such a hodge-podge of special interest favors and desires, that it probably conflicts with itself all over the place.
But it’s the law now, awaiting only more legislation to ‘fix’ errors pointed out by everyone BUT the legislators who passed it, judicial review to tell us what the Congress really meant, and interpretation by various government agencies as to implementation.
A monster, evolving and growing with every passing second.
Dems really hate paying those taxes
Jack_Savage (Diary) Thursday, February 19th at 10:14PM EST (link)And they really, really hate for their little buddies to pay taxes.
Thanks Brian for this post I was just going to throw the link...
JadedByPolitics (Diary) Thursday, February 19th at 10:34PM EST (link)up in the open thread because this is the kind of story that just JERKS your brain in a violent way!
If we do NOT stand up and do something enmasse to STOP this RAPING of our hard earned dollars WE deserve to have it happen again and again….let us PLEASE stand up and be HEARD!
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I wonder
trishg Thursday, February 19th at 10:53PM EST (link)what other little gems are hidden in this bill and if they will receive proper media attention.
Also, in an attempt to find humor in this situation and because I’m an avid Seahawk fan, I wonder if Paul will use some of this money to buy an offensive line!
I'm sure this was an 'honest' mistake, this little help to Allen....NT
USNJIMRET (Diary) Thursday, February 19th at 11:11PM EST (link)Nothing Stab[y]enow[andagainlater] does that surprises Michiganders
JLenardDetroit (Diary) Thursday, February 19th at 11:23PM EST (link)it is what happens when you have a Socialist mindset State that Michigan is (with enough controlling votes for Federal level Offices anyway due to just a handful of Counties that over-ride the rest of the states votes) that the Socialists are FEARLESS… they know they cannot be removed no matter how pathetic they get!
Levin and Stabenow… pathetic forever…. and our CANADIAN GOVERNOR will look for her shot at the Senate should one of them get removed (jailed)…
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Wayne (Diary) Friday, February 20th at 2:16PM EST (link)Levin will retire in two years and let Jennifer appoint herself to his seat, or heaven forbid, John Cherry will appoint her to fill his seat.
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What makes this more interesting
woodsman (Diary) Thursday, February 19th at 11:37PM EST (link)is a recent story in which I believe Charter is about ready to file for bankruptcy. I saw the story a few days ago but do not remember where I saw it.
So if they do proceed with the bankruptcy and on top of that receive a tax break it does seem to be a windfall for Charter.
Can we at least be honest
lapert Thursday, February 19th at 11:46PM EST (link)Why would conservatives want to feed the populist nonsense. Charter is not a partnership, it is a public corporation and the income (or loss) does not flow to Allen’s perosnal taxes.
Maybe this business tax cut will help him a bit, but, based on the reports I’ve read of the Chapter 11 filing (haven’t looked at the actual filing yet) he is losing substantial equity in the restructuring of a company that hasn’t turned a profit in years anyway.
Why do you say...
DONTREADONME (Diary) Friday, February 20th at 12:03AM EST (link)“Why would conservatives want to feed the populist nonsense” did you have an Gotcha moment… Just asking?
I do not disagree with you here, it seems pretty obvious this is not a windfall for Allen, rather it is a way to save some of the value of his 35% stake in Charter Communications.
no gotcha
lapert Friday, February 20th at 12:08AM EST (link)I’m just wary of some of the populist strains that have shown up in the name of conservatives since the primary season and this story (at least as presented in the linked blog) seems to have that tinge to it – I mean he even shows the pictures of those ‘big boats’. I think encouraging it, even in an attempt to make democrats look bad (as if that is hard) is ultimately counterproductive.
I didn't see your point until...
DONTREADONME (Diary) Friday, February 20th at 12:11AM EST (link)I just did some research on Charter Com. Not a very good cable company from what I can remember at the in-laws Nothern NY homestead. Anyway, I agree I do not see how this is anything but coincidental with the spending bill and his losses. I just wouldn’t call this a tax cut, tax deduction from loss maybe?
Fair point
lapert Friday, February 20th at 12:14AM EST (link)Your right, it isn’t really a tax cut, didn’t really pay attention ot that when I wrote it. More of a temporary defferment.
In Agreement -nt
DONTREADONME (Diary) Friday, February 20th at 12:18AM EST (link)Hey...
jcheney Friday, February 20th at 12:17AM EST (link)…I thought it was just Bush who gave “breaks” to those bad rich people?