As the Associated Press recently reported, it’s not clear that all of the issues related to Newt Gingrich’s income taxes were resolved with his release of his and Callista Gingrich’s personal joint return on Jan. 20, which showed that they paid taxes of 31.5 percent on $3.1 million in income. That’s because the return reveals that most of their income came from his corporation, Gingrich Holdings Inc—which apparently took in the money from his various books, documentaries, and consulting, and most of his speeches. His company is a kind of personal holding corporation with “subchapter S” status (making it for tax purposes almost one and the same with the individuals who operate it), and that is why the income from it flows directly to Gingrich and shows up as one big number on line 17 on the IRS 1040 personal tax return.
Because only Newt and Callista Gingrich’s personal return was disclosed, we only know the amount in profit, after the personal holding company’s “expenses,” that flowed to them personally; what we don’t know is what kinds of expenses Gingrich Holdings paid on Newt’s and Callista’s behalf before that profit was calculated. What amounts for meals or luxury hotels, for example, were picked up by the personal holding company and therefore became a pre-tax benefit not subject to income tax? What about cars, or even clothing, or rent on an apartment somewhere? Suppose, for example, that that $3.1 million in income was net of, say, $2 million in these kinds of expenses? Then, the tax rate would arguably have been 19 percent, not 32 percent.
Nor, of course, do we know who paid Gingrich Holdings for what.
So, assuming Gingrich stays in the race for a while, who’s going to be the first reporter to ask for the Gingrich Holdings tax return?