Sunday, February 22, 2009

Obama: Tax the rich?

Obama Stimulus Saves Microsoft Billionaire Hundreds Of Millions

Nicholas CarlsonFeb. 19, 2009, 8:00 AM

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 Cable 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 Cable 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.

We're not clear how a corporate tax benefit would be passed through to Paul's personal tax payments, but that's what Willens seems to be saying. Any tax experts out there care to clarify?
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.

So what will Paul do with that money until 2014? Invest it in technology that reduces our dependence on foreign oil and creates new "green collar" jobs for America, per the goals of Obama's stimulus plan, of course.

Obama tax plan

Make Mine Freedom - 1948

American Form of Government

Who's on First? Certainly isn't the Euro.