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Thank you for reading this post, don't forget to subscribe!Is Supreme Court Justice Clarence Thomas a tax cheat? His lawyer says this is not so. The available evidence suggests that this is a reasonable question.
“The loan was never forgiven,” attorney Elliot Burke said in a statement about the $267,000 loan from Thomas’ friend Anthony Welters, which helped the judge and his wife buy a luxury motor home. “Any suggestion to the contrary is false. The Thomases made all payments to Mr Welters on a regular basis until the terms of the agreement were fully satisfied.
It is difficult to reconcile this with the information provided in the Senate Finance Committee report on the transaction – and difficult to attribute in the absence of supporting information beyond Burke’s concluding claim.
Thomas – due to his multiple failures to disclose his wife’s employment, receipt of free private plane travel and tuition payments made on behalf of his grandson – has lost the benefit of the doubt. If Thomas, as Burke claims, is indeed “fully satisfied” with the terms of his loan agreement, let’s look at the “agreement.” Let us see canceled cheque.
Three cheers here for Congressional Oversight and Senate Finance Committee Chairman Ron Wyden (D-Ore.). Much of the staff work on that panel is based on an August New York Times article detailing how Thomas was able to purchase the motor coach with underwriting from Welters, a longtime veteran of his days as a congressional aide. Were friends. Welters’ help was critical because traditional lenders are reluctant to provide financing for high-end recreational vehicles.
to follow This is the opinion of author Ruth Marcus
Welters confirmed the loan was made in 1999, but did not provide details about its terms (including the total dollar value or interest rate charged), except that “the loan was satisfied”, a vague phrase that made it difficult to answer. Raised more questions.
The Finance Committee’s investigation filled in important blanks – and outlined reasons for doubt about the transactions and Thomas’s compliance with both tax law and financial disclosure rules.
Its analysis detailed that the agreed interest rate – 7.5 percent – appeared reasonable and was based on market rates at the time, even if the interest-only arrangement was unusual. Reports regarding the amount paid by Thomas to Welters were not positive; Welters could only provide a canceled check for $20,000. According to the report, a 2008 note handwritten by Welters states that Thomas has been paying Welters only interest on Thomas’s bus for several years.
Most importantly, there is no record that Thomas ever paid Any of loan principal. “The Welters’ note indicated that following Thomas’s upcoming payment, the Welters would no longer demand further payments on the loan from Justice Thomas because, according to the Welters’ note, the Welters believed that Thomas had just paid the purchase price. More than $500,000 was paid in interest, and that report said, the Welters did not feel it was appropriate to continue accepting the payments, even though they had the right to be paid. Still, the math didn’t exactly add up: The interest payments exceeded the purchase price. Will not done.
Here’s where taxes enter the equation: If the loan were forgiven, it would be, in IRS-speak, a “taxable event.” The amount forgiven will be income to the Thomases, and they will then have to pay taxes on it. Is he?
There is a subsidiary question about whether the canceled loan should have been disclosed in Thomas’s annual financial disclosure report. According to filing instructions given to federal judges, loans for “personal motor vehicles” are expressly exempted from the liabilities that must be reported on such forms. But if the loan waiver brings income to the Thomas family, it will have to be reported.
This is the last thing an already troubled court needs. Thomas, who has caused irreparable harm to the institution, must make all its agreements The public with any canceled check that meets the conditions of the welter and loan. The Senate should maintain pressure to obtain information, including from the judge himself. Burke claims that the loan was “never forgiven”, but this appears inconsistent with Welters’ note reviewed by the committee. He should be forced to elaborate.
Wyden told me in a statement, “The Committee’s finding is clear: the person who loaned Justice Thomas $267,000 provided numerous documents showing that a substantial portion of that loan was never repaid. ” “If Justice Thomas disputes that conclusion, he has an obligation to provide evidence to the committee. Carefully written statements by expensive lawyers are no substitute for facts.
The puzzle here is that there does not appear to be any moral problem with the underlying debt. Welters and Thomas are longtime friends. Welters have no business before the court. The interest rate was reasonable. So why not repay the loan – or, if not, pay the tax due on its profits?
The person tasked with interpreting the country’s tax laws must be able to follow them, and we have a right to know whether he has performed that duty.
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Source: www.washingtonpost.com
