Cheer Up, Taxes Boggle the Clintons, Too

March 30, 1994|By JOAN BECK

CHICAGO — Chicago. -- You can choose your own moral for the story about the Clintons and their income taxes.

It's not an idle exercise. What you conclude may help determine how successful a term President Clinton has and whether he gets a second one.

The president and his wife may, or may not, have underpaid the IRS over the last decade or more, either accidentally or deliberately. Mr. Clinton admits the possibility that their joint returns may have mistakes.

''I don't think we owe any extra taxes, but I'm not sure yet,'' the president told reporters. ''If we do owe, we'll make it good.''

At issue is more than the size of their tax-loss deductions from Whitewater, although that's the largest and most controversial of the sums in question.

Money magazine has analyzed the Clintons' federal income-tax returns for 1980 through 1992 and estimates that for those years they may have underpaid the IRS by $16,358. With interest, that would come to $45,411 now as the IRS would figure it, Money says. But even if the numbers are right, the president and his wife wouldn't be legally liable for all of the money. The statute of limitations on audits runs out in three years.

The Clintons made three major mistakes, Money says. ''Though both are sophisticated lawyers, they didn't keep adequate records, they tended to overestimate certain deductions and they relied far too much on their tax preparer to get everything right.''

Money analysts say the Clintons overstated their contributions to charity. They claimed to have given $177,047 in cash gifts to good causes between 1980 and 1992 and $16,161 in non-cash contributions, most of it used clothing and old household goods. Money recalculated the Clintons' estimates of the used stuff, figuring only a $30 value for a pair of brown shoes the couples had written off as $80, and knocking down long underwear from $15 to $2, for example.

The researchers also questioned some of the claims Mr. Clinton made for expenses relating to his office as governor of Arkansas. They found fault with how Hillary Rodham Clinton -- and the tax preparer -- handled business deductions on an Oldsmobile she used part-time for her law firm.

Money analysts sorted through the murk of Whitewater loans, transactions, capital losses, interest payments and deductions and concluded the Clintons shortchanged the IRS by $8,441 because of incorrect Whitewater claims. But many Whitewater records are missing, Money noted. Tax experts have conflicting opinions on what is known about these deals. No one can be sure how IRS auditors would have ruled.

Anyone who has started struggling with Form 1040 this spring may feel a twinge of sympathy for the Clintons. Tax laws are complex -- all 4,000 pages of the tax code -- and often open to contradictory interpretations even by the IRS itself. Tax forms are confusing. Even professional tax preparers make mistakes. Bill and Hillary Rodham Clinton are very busy people with a lot on their minds. How close attention should they be expected to pay to the minutiae of the income tax?

So maybe the moral of the story is that all of us are in jeopardy of making inadvertent mistakes on Form 1040, that the sums involved weren't so big over 13 years and that the media should back off this one. (The ethics and legal aspects of Whitewater are different issues.)

But it's big-government wonks like the Clintons who led us into the swamp of the IRS, enlarging the role of government in our lives and sending us the bills for it. President Clinton has added to the confusions of Form 1040 this year and next by the tax changes he pushed through. He's made the tax bite worse for millions of people, not only the rich but the middle-income elderly, and necessitated more confusing changes in tax forms for millions more.

It's the Clintons who are determined to expand the role of government in our lives by their plans for massive changes in health care. It's the Clintons whose programs will cost us all more in taxes and consumer prices, in new bureaucratic controls and new risks to the economy.

Maybe the moral is that they deserve some IRS flak to remind them how much the government now intrudes on the lives of people who are supposed to be free. What happened to innocent until proven guilty, when the IRS can treat us as guilty unless we can prove otherwise?

Where is the right of privacy when the IRS demands to know how much used clothing we give to a church rummage sale and how big our mortgage payments are and how much our safety deposit box costs? What business is it of the government what Bill Clinton did with his old underwear?

Why have the politicians -- including the Clintons -- allowed this country's tax structure to grow so complicated that at least half of us -- including that pair of bright Yale Law School graduates -- can no longer do our own tax returns and have to pay preparers to do them?

How much non-productive time are we all forced to spend saving receipts, keeping records, filling out forms, trying to keep up with tax changes that affect how we manage personal business? The Clintons aren't the only people with better things to do with their time.

Maybe the moral is this: Beware of big government and those who would make it bigger at our expense.

Joan Beck is a columnist for the Chicago Tribune.

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