Harold Ford Tennesee Tax Resident, New York Political Resident
Harold Ford, who is seeking to get elected to the United States Senate from New York has been filing his taxes in Tennessee instead. Or, more accurately, not filing them since the Volunteer State doesn’t have income taxes.
Gawker‘s John Cook:
Ford claims to have moved to New York three years ago, and says paying “New York taxes” makes him a New Yorker. But his spokeswoman confirms to Gawker that he’s never filed a New York tax return — meaning that he’s never paid New York’s income tax, despite keeping an office and a residence in New York City as a vice chairman of Merrill Lynch since 2007: “He pays New York taxes and will file a New York tax return in April for the first time,” Ford’s spokeswoman Tammy Sun told Gawker. “He will file all necessary personal disclosure and tax forms that candidates are required to file if he chooses to run.” (According to Sun, Ford admitted to the tax dodge yesterday at a press availability in Albany, but we can’t find any news accounts mentioning the remarks.)
Ford presumably decided that his real home was Tennessee, which conveniently has no income tax. Which means that, despite the fact that New York law requires part-time and nonresidents to pay income tax on money they earn in the state, Ford has shielded his entire Merrill Lynch salary from New York’s tax collectors for the past three years. In fact, it seems like Tennessee’s lack of an income tax may be the best explanation for Ford’s rather complicated two-state life since 2007 — he clearly wanted to live in New York, and married a woman in 2008 who did live in New York. But he made sure to keep a foot in a state whose tax code is friendly to rich guys like himself.
When Merrill Lynch announced Ford’s hiring in 2007, it said he would be keeping offices in Nashville and New York City. Ford has said that he’s basically lived in New York since then, though he never technically lived here until last year since he didn’t “spend the requisite number of days” staying at his wife Emily Ford’s breathtakingly yellow apartment in the Flatiron district. (“Moved is such a legal term,” he told the New York Times). Ford was clearly thinking of New York’s 184-day rule, which requires that part-time residents who spend 184 or more days living in the state pay New York taxes on all their income.
What he seems to have forgotten is that New York has gone to great pains to prevent wealthy people like him from spending time and earning money in the state and then jetting off to a tax haven come April 15: It also requires nonresidents and people who live there fewer than 184 days to pay New York income taxes on whatever portion of their income they earned in the state.
Open Left‘s Adam Bink:
I believe John is mistaken when he says there is no income tax return to file in Tennesse- there is- it’s just that Tennessee’s state law exempts salaries and wages from income tax. You only pay it on interest and dividend earnings. That may mean Ford did file in Tennessee, but that despite maintaining a residence and a job in New York State, he has not paid state taxes on his multi-million dollar income altogether since 2007. Or hasn’t file state returns at all.
TPM’s Rachel Slajda:
Ford’s platform, as described last month to the New York Times, includes cutting taxes for corporations and employers.
“I think immediately, we need to lower the corporate tax rate from 35 to 25 percent. We need to make clear that dividends and capital-gains taxes not go up — we do not want to see decisions made that are rash. We should have a broad payroll-tax cut. A three month payroll-tax holiday for businesses and workers,” he said.
“I think tax cuts for employers, particularly small businesses, is critically important right now,” he said. “I think there ought to be a huge-tax cut bill for business people, not only in New York but across the country.”
This is all potentially quite embarrassing politically and possibly even illegal. But it’s pretty standard stuff.
States and localities have written interesting tax laws in recent years to extract as much money as they can from people who can’t vote. Thus, the rise of ridiculously high hotel taxes, commuter taxes, and the like. They especially love to target athletes and entertainers, so that, for example, players from the Dallas Cowboys owe 1/16th their annual salary to New York for the three hours they play the Giants. It’s criminal but has stood up to legal challenges.
Ford’s situation is much less sympathetic, since he was getting what one presumes was a handsome salary from a New York firm whilst working in their New York offices and living part of the year in New York. But he was still, presumably, a Tennessee resident — whether out of outright tax calculation or because he wanted to maintain political viability there. (He had, after all, been elected to Congress and narrowly lost a Senate bid from there.)
Claiming residency is a tax haven while living in a high tax state isn’t somehow an exclusive province of the rich, either. Certainly, I know a lot of people in the Army who were residents of Texas, Tennessee, Florida, and other states that either had no income tax or exempted military personnel living outside the state from paying taxes. And many, if not most, of those people were not originally from those states — they either established residency while assigned there by the Army or simply claimed a post office box or the like in one of those states as “home.”