"The subjects of every state ought to contribute toward the support of government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state."

-- Adam Smith

President Bush, Treasury Secretary Snow and House Democratic Leader Nancy Pelosi (D-CA) all sounded off on taxes on April 15, 2004.

President Bush was speaking in Iowa and issued yet another call to make the tax cuts permanent. He noted that home ownership was at a record level, jobs are now being created and inflation continues to be very low. President Bush stated, "I will argue that the tax relief made the recession one of the most shallow in American economic history."

Treasury Secretary John Snow was speaking in Philadelphia. He noted the tax reductions for married couples, the increase in the child credit to $1,000 per child, expanded retirement savings through larger IRA distributions and the increased dividends resulting from the lower tax on dividends. Secretary Snow also pointed out that 4 million families with children will pay zero income tax in 2004 as a result of the tax changes.

Democratic response was led by Rep. Nancy Pelosi (D-CA). She called the tax cuts "reckless" and expressed concern over the loss of "2.6 million jobs." Rep. Pelosi stated, "On the day that millions of Americans file their tax returns, how does President Bush respond? By advocating making permanent the tax cuts that have undermined the fiscal soundness of our country and have not created jobs. The President's reckless economic policies are responsible for the half trillion-dollar deficit. We cannot afford to mortgage our children's futures on more tax cuts for millionaires."

President Bush, Vice President Cheney and Democratic presidential candidate Kerry have all released their 2003 tax returns.

President Bush had adjusted gross income of $822,126. He and Mrs. Bush made charitable contributions of $68,360. The charities included Evergreen Chapel at Camp David, St. John's Church, Tarrytown United Methodist Church and the M. D. Anderson Clinic in Texas. Their giving was approximately 8.3% of adjusted gross income.

Vice President and Mrs. Cheney reported adjusted gross income of $1,267,915. Their charitable deductions were $321,141. Mrs. Cheney gives to charity royalties from her books America: A Patriotic Primer and A is For Abigail. Among the Cheney charities were the Capital Partners for Education in Washington, DC and other educational organizations. The Cheney's gave approximately 25% of adjusted gross income to charity.

Senator John Kerry reported adjusted gross income of $395,338. He gave $43,735 to charity. His charities included the Northeastern Shelter for Homeless Veterans, Liberty House and other charities. Senator Kerry gave 11% of adjusted gross income to charity.

Editor's Note: Leadership giving is extremely important for philanthropy. It is encouraging to see that all three individuals who will be on the national Republican and Democratic tickets in the Fall are faithful supporters of philanthropy in both word and deed. Generous charitable giving by these three leaders is an excellent example for all Americans.

Congress passed major tax cuts in both 2001 and 2003. These tax cuts have reduced total federal taxation by many billions of dollars.

However, these tax savings have come with a price in complexity. According to the non-partisan National Taxpayers Union (NTU), the average Form 1040 "long form" takes 29 hours to complete. Even a 1040A short form takes over 11 hours. It's interesting to note that ten years ago, the 1040 long form was completed on average in 11 hours. The time required to complete tax forms has more than doubled during the past decade.

With the increase in complexity, CPAs and other tax professionals now prepare 62% of returns. If returns completed through tax preparation software are included, the total percentage of returns by professionals is now over 88%.

Editor's Note: Will this ever end? The past two decades have clearly made the Tax Code, regulations and Treasury rulings far more voluminous and complex. If tax legislation continues to create more complexity, then the advocates of the drastic simplification of a flat tax may regain momentum.

Following an article in the New York Times questioning financial management at The Statue of Liberty-Ellis Island Foundation, Senate Finance leaders Charles Grassley (R-IA) and Max Baucus (D-MT) sent a letter to the foundation asking for extensive and detailed information about funding and activities. Foundation spokesperson Maria Langen indicated that The Statue of Liberty Foundation would fully cooperate with the Senators' requests.

The Statue of Liberty Foundation has now released on its web site a detailed response to many of the questions raised.

According to the web site, the foundation has properly raised funds to facilitate the reopening of The Statue of Liberty. The Foundation effectively operates under the control of the Federal Government, since the National Park Service has control over the monument.

The New York Times article asked why a foundation with $31 million of endowment was attempting to raise an additional $7 million for improvements and operations. In response, the foundation noted that the $31 million endowment was a restricted fund. This principal is permanently set aside and only the earnings and interests are available for future projects. Protection of the principal was a commitment made to donors who created the $31 million endowment. Finally, the foundation indicates that it will "account for every dollar it has ever raised or ever spent."

The IRS has announced the Applicable Federal Rate for April of 2004. The AFR under Section 7520 for the month of April will be 3.8%. The rates for March of 4.0% or February of 4.2% may also be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments, the lowest AFR is preferable. During 2004, pooled income funds in existence less than three tax years must use a 4.8% deemed rate of return. Federal rates are available at www.irs.gov/businesses/small/article/0,,id=112482,00.html.

Internal Revenue Bulletins are available at http://www.irs.gov/businesses/lists/0,,id=98230,00.html.