This is a tale of two taxpayers.
The first is a close friend of mine I’ll call “Ted.” Ted is self-employed, and he suffered a big drop in business during the recession that began in late 2008. As a result, he fell behind on his taxes. Now, he has to pay fees and penalties that amount to nearly 50 percent annually on the money he owes the IRS.
The second is Alexi Giannoulias, the Democratic nominee for the U.S. Senate. Giannoulias has also had a rough ride during the recession. Broadway Bank, the family business started by Giannoulias’s father 30 years ago, was seized by federal regulators after many of its loans went bad.
“Hundreds of community banks are now struggling and being forced to close their doors," Giannoulias said in April. " Sadly, like 50 others this year alone, Broadway is no exception."
Giannoulias lost $2.7 million in 2009 -- a significant portion of his net worth. Fortunately for Giannoulias, it wasn’t the portion he uses to pay his living expenses. He still lives in a Gold Coast building where condos sell for $1 million.
The IRS is sympathetic to banking heirs who lose $2.7 million, even when they have millions left over. As a result of his misfortune, Giannoulias is receiving an almost full refund of the $30,000 in taxes he paid on his $135,669 salary as state treasurer.
(Giannoulias’s opponent, Mark Kirk, who didn’t have a bank to lose, paid $32,000 in taxes last year.)
Giannoulias joins GOP gubernatorial nominee Bill Brady in the upper class of politicians too rich to pay taxes. We suspect Brady’s running mate, Jason Plummer, is in there, too, but we can’t be sure, because Plummer won’t release his tax returns.
Giannoulias has promised to donate his refund to charity. This is an excellent plan. He might consider donating the money to the Chicago Public Schools, so they won’t have to lay off any more teachers. Or the Illinois Department of Health, so it can pay the money it owes doctors and pharmacists. There are plenty of worthwhile organizations in this state that are suffering from a loss of tax revenue.
Meanwhile, Ted will be paying off his tax bill for quite awhile. His fees and penalties should pick up a little of Giannoulias’s slack.