Unconstitutional?

The WaPo provides space to two scholars who argue that Obama's acceptance of the Nobel Peace prize is unconstitutional without an act of Congress.  Yeah, yeah, as if the ordinary rules applied to Barack.

Normally I would deplore their racism and move on, but this struck me:

Second, the president has indicated that he will give the prize money to charity, but that does not solve his legal problem. Giving that $1.4 million to a charity could give him a deduction that would reduce his income taxes by $500,000 -- not a nominal amount.

Well.  Normally, the President would report an additional $1.4 million of income, namely, the prize money; his taxable income would be increased by that amount but then reduced by the $1.4 million deduction, so the net tax impact of the prize money would be zero.

However!  Obama has been calling for a change in the rules for charitable deductions, so that the deduction only applies at the 28% rate regardless of the taxpayer's top bracket.

Let's keep it simple and imagine that Obama's $1.4 million prize is taxed in a 35% bracket but he could only claim a deduction at the 28% percent rate.  The President and First Spouse would be out of pocket by 7% of $1.4 million, or $98,000.  Not chump change even for Mr. and Mrs. Date Night.

But the real fun would come when the White House tried to explain that Obama was donating to charity somewhat less than the full $1.4 million, in order to hold back some of the cash to pay the tax bill (I estimate the "tax-neutral" contribution to be $1,264,000).  Watching Obama square his own behavior with his previous assurances that charitable donors don't care about the tax impact of the charitable deduction would be priceless.  

Oh, well - that tax "reform" hasn't happened, yet.

MEANWHILE, BACK ON THE ISSUES: Jack Balkin dismisses the legal argument and provides plenty of precedent beyond Wilson and Roosevelt, including this:

It's also worth noting that Charles Dawes won the Nobel Peace Prize in 1925 when he was Vice-President, and he continued to serve in that capacity until 1929.

I would have thought that Charles Dawes was better known for penning that oldies classic "It's All In The Game".  My goodness, was there anything Dawes couldn't do, other than get elected President?

Apparently the Dawes Nobel, like the Kissinger one, does not inspire confidence in the wisdom of the Nobel Committee:

For his work on the Dawes Plan, a program to enable Germany to restore and stabilize its economy, Dawes shared the Nobel Peace Prize in 1925. Unfortunately, the Dawes Plan was unworkable and was replaced with the Young Plan.

Comments

[steve sturm]

Per this article, it looks like Obama doesn't have to declare the income at all if he immediately passes it on to some charity.

[matt]

He can use Timmy geithner and Turbo Tax to figure it all out. We're in the best of hands....

[Thomas Collins]

In my opinion, the tax treatment shouldn't control the resolution of the emoluments clause issue. I think the issue is that if Obama selects the charity or charities to receive the prize, has he in effect received an emolument by reason of having dominion and control over the disposition.

[Extraneus]

Are they setting up an excuse to refuse the albatross prize?

[Ignatz]

--The WaPo provides space to two scholars who argue that Obama's acceptance of the Nobel Peace prize is unconstitutional without an act of Congress.--

How does congress pass a law annulling a clause in the constitution?
I mean, come on, everybody knows it's the job of the courts to go around annulling the constitution.

[What do you love most about Obama?]

Off topic, but re the Louisiana JP who wouldn't perform interracial marriages, Dr. (hard to believe given how dumb she is) Nancy Snyderman quoted the JP as saying "interracial marriages never work out" or something. Then smug, smug Nancy tells the audience "I guess he never looked at Barack Obama's parents." Yeah, that marriage was made in heaven. Commie heaven. Or maybe it was Commie Hell and Barack is Damian. But either way, that wasn't a great example Nancy. One of Obama's two autobiographies even talks about how his dad wasn't around. Or so I'm told.

[bgates]

Ignatz, the sentence they're talking about states "And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince or foreign State."

Which consent has generically been granted already. Wilson would have disregarded the flawed old document if it stood between him and the prize from our betters, but I don't think TR would have.

Besides, I think it's clear all three branches are competent to void sections of the Constitution at will.

[narciso]

lol, bgates, if it was good enough for TR, and Wilson, there shouldn't be a problem.
No he's not remotely in the same league, but the precedent is the same

[Many Democrats are perfectly happy with transnational governance, the poor fools.]

Watts Up at the Link Under Name, LUN in case you are acronym challenged, covers a speech by Lord Monckton warning us that Obama intends to sign away sovereignty at Copenhagen. He brings up interesting Constitutional questions. His concern is that Obama and this Congress will bypass accepting it as a treaty and make it effective by ordinary legislation instead. Worth reading for critique, and alarm.
========================================

[Jack is Back!]

But is the $1.4 million already declared income? Can not the Nobel committee write the check to ACORN themselves, thereby giving the Once a framed certificate of the award but no cash? $1.4 million is a hellva honorarium just to hear some guy say I and Me a few hundred times with the words, "mistake", "arrogant", "unilateral" and "divisive" thrown in between.

And one other thing about "ghost-writers" and Obama (and for that matter Palin), how come the subject of speech-writers never comes up? Does the Once write all his speeches. No! So why is it such a taboo to speculate on who wrote his books or Palin's books or Hillary's books. In fact, there are as many speech writers in DC and NY as there are ghost writers - some of them the same people.

[Sara (Pal2Pal)]

I don't think giving to charity helps on the PR front unless it is a neutral charity that everyone agrees is a neutral charity and not an ACORN affiliate charity or some such.

If he has any decency, he will give it to Wounded Warriors or Soldier's Angels or one of the other charities that helps our returning Vets and their families.

[Rob Crawford]

And one other thing about "ghost-writers" and Obama (and for that matter Palin), how come the subject of speech-writers never comes up?

It did, briefly, when the picture of his primary speech writer and a cardboard Hillary popped up.

[JM Hanes]

Sara:

My first thought was that he will give it to one of his own "service" organizations.

bgates:

I"m not sure what you're referring to when you say consent has already been generically granted.

Thomas C:

I couldn't care less about the taxes either, though it certainly wouldn't bother me if the issue became something of an embarrassment. Accepting millions -- to dole out as he pleases -- from any foreign entity without the consent of Congress, such as it is, concerns me a great deal. The promise to donate it to charity is really a distraction from the fact that he could give it to Tony Rezko if he wanted to.

Next thing you know, the Chinese Society of Hoops will be giving him a $5 million prize for advancing the popularity of basketball. Then there's the $10 million Chavez Prize for Media Management, and the $666,666 Mullah Award for Most Promising Diplomat....

[David Walser]

Tom,

Obama's tax problem (assuming he were to accept the award and then give it to charity) is worse than you describe. Under current law, a taxpayer's charitable contribution deduction cannot exceed 50% of Adjusted Gross Income ("AGI"). (That's a simplification of the law, but it'll do for our purposes.) Assume the First Family have AGI of $500,000 before the $1.4 million award. That would give them an AGI of $1,900,000 and a maximum charitable contribution deduction of $950,000. If the President were to give the full $1.4 million to charity, his taxable income would still be $950,000 (ignoring any other itemized deductions and the phase out such deductions). At a 35% tax rate, his tax would be $332,500 on economic income of $500,000 -- a real tax rate of 66.5%! Reducing the benefit of his deduction to 28% would make a horrible tax problem only marginally worse.

(Note: The $450,000 of charitable contributions that could not be deducted because of the 50% of AGI limitation could be deducted in future tax years subject to the same 50% of AGI limitation. Any portion of the contribution that cannot be deducted expire after 5 years.)

[bgates]

JMH, IANAL, so I depend on Volokh, who says
"the President may indeed accept both the money and the prize, but if they are treated as being from a “foreign State,” then both will be “deemed to have been accepted on behalf of the United States and, upon acceptance, shall become the property of the United States.” Congress seems to have authorized that prospectively, as to all presents generally, and that satisfies the constitutional mandate."

The comments section probably has further description of the legislation (along with remarks about how stupid and terrible Republicans are, Christians especially, and why Israel is a threat to world peace).

[Sara (Pal2Pal)]

I'm visualizing the scene from the movie "No Way Out" where Kevin Kostner is frantically searching thru reams of computer printout lists for a gold box donation listed by the State Dept.

[sbw]

Obama intends to sign away sovereignty at Copenhagen. He brings up interesting Constitutional questions.

The treaty would have to be approved by the Senate and that's unlikely. And, if the unlikely did occur, I want more popcorn.

[Neo]

his taxable income would be increased by that amount but then reduced by the $1.4 million deduction, so the net tax impact of the prize money would be zero.

Say what ? Wrong.

This kind of money would not be deductible on the front side of his income, like a business expense would. So it would go to Schedule A.
This means that he will pay taxes.

Schedule A has a abatement section at the end. With an income that large, he might lose half, if not more, of the preliminary Schedule A value. So while the charity contribution is laudable, it's going to cost him.

I'd say he will pay about $200,000 in taxes, if the Nobel Committee doesn't send the money directly to the charity, in his name.

[cathyf]

Hey, Neo and matt and David have the same avatar as me! I thought I was all alone with the lame-o-rama one...

[Thomas Collins]

Steve sturm's LUN above (first comment on this thread) has a link to the IRS website with a discussion of the circumstances under which taxpayers can avoid taking awards such as the Nobel Prize into gross income in the first place. If Obama meets these standards, he may not have to face the limitations on charitable contribution deductions.

I hasten to add that I have not done the necessary due diligence updating to confirm that what is linked is still the current standards of the IRS. Anyone with an individual income tax question should consult a trusted tax professional and not rely on blogs (sorry for the lawyer blah blah talk, but because I practice law in the tax area, I am especially careful to point out that one gets one's tax advice through quick internet research at one's peril).

[sbw]

Tom Collins is right.

I hasten to add that I have not done the necessary due diligence updating to confirm that what is linked is still the current standards of the IRS. Anyone with an individual income tax question should consult a trusted tax professional and not rely on blogs (sorry for the lawyer blah blah talk, but because I don't practice law in the tax area, I am especially careful to point out that one gets one's tax advice through quick internet research at one's peril).

[Jack is Back!]

All this talk about taxes and we have forgotten that as a member of the Obama administration he is under no obligation to pay them. Such short memories we all have.

[fwi]

Please follow up with what he actualy does, not what he says.

[AST]

According to http://www.andrewtobias.com/bkoldcolumns/990115.html the $1.4 million is not taxable since it's a civic, educational or literary achievement. He could keep it, assuming that the Congress votes to let him accept it, with no tax consequences. Prizes won in a lottery, TV show, etc. are taxable income, but awards like the Nobel aren't.

Liberals take care of each other very well, especially through book deals.

[Frau Lehrerin außer Dienst]

cathyf - "Hey, Neo and matt and David have the same avatar as me! I thought I was all alone with the lame-o-rama one..."
Tessellation is nothing to sneeze at,cathyf. Think Escher, da Vinci, Moorish castles, old linoleum floors.

On the tax topic, I agree with my avatar relative Jack. This is Chicago Rules time. Besides, Michelle will need designer Girl Scout clothes for her newest role. And, you know, she doesn't get a salary as FLOTUS ...yet

[JM Hanes]

Thanks, bgates.

[hit and run]

cathyf:
Hey, Neo and matt and David have the same avatar as me! I thought I was all alone with the lame-o-rama one...

Harrumph

[Barry Dauphin]

The president plans to use the 1.4 million dollars to buy a stake in the St. Louis Rams. The IRS has declared that their on-field performance is so bad, they are not a real football team, but a charity.

[PeterUK]

Obama could get advice on tax from your Treasury Secretary.

[Charlie (Colorado)]

Oh, boy, Juan Williams is going absolutely batshit about being called a house negro last night. They're never gonna let him back on NPR.

Catch the O'Reilly reply tonight.

[Charlie (Colorado)]

Sorry, "O'Reilly replay".

[Pops]

1.4 Million for 11 days work....The pay czar should demand he turn it down.

The Bank of America guy should have told the pay czar to treat his salary the same as he would any government employee who pocketed 1.4 million for 11 days work.

[Pops]

Loved the black guy on O-Reilly calling Juan Williams the House N-gg-r and told him to get back up on the porch.

And its Rush that supposedly is the racist.

Do these people even hear what comes out of their own mouths..

[Pops]

Or better yet, the BoA guy should have said he wanted to give his entire pay to go to Al Gore to save the polar bears, but Baracks pay czar said they couldn't have it...

Barack killed the last polar bear....

[PD]

So why is it such a taboo to speculate on who wrote his books or Palin's books or Hillary's books.

It's not taboo in Sarah's case, and in fact we know that she has a collaborator, Lynn Vincent, because no one is hiding anything. Obama could take some lessons in transparency from America's Sweetheart.

[daddy]

2 years back read a history of Smithson, the bastard English aristocrat who bestowed an enormous sum to America to create institutes of learning, etc, which culminated in The Smithsonian. Was interesting to learn that many in Congress wanted to refuse the money, considering it wrong to accept foreign money, and especially wrong to create hi-falutin' institutions in Washington DC, which might then serve to haughtily inculcate in our citizens a disdain for basic American values and common sense that had served us so well so far. Think it was President John Quincy Adam's who finally pushed it's acceptance through a leery Congress.

And Congrat's Porchlight on Dash 3!

[Thomas Collins]

AST, the award is only free from tax if Obama doesn't keep it. See item 4 in the Tobias site you mentioned (prize must be assigned to a governmental agency or charity).

[glasater]

14
140,000,000

Obama's monies in relation to the debt figure which came out today.

Don't know if I got all the zeros in 1.4 trillion right but knocked off the zeros on both figures. So I hope some brilliant child helps me out.

[Charlie (Colorado)]

Almost:
1,400,000 : 1.4 million
1,400,000,000,000 : 1.4 trillion
so
14,000,000

In other words, coincidentally, 1.4 million is one one-millionth of the deficit.

[JM Hanes]

It's really even scarier when you put it that way, Charlie.

[cathyf]

Smootches, hit -- but your avatar doesn't count because you have figured out how to get whichever one you want. (And, unlike me, aren't too lazy to do it!)

[narciso]

Don't know how this works

[Dave (in MA)]

Purty.

[glasater]

I figured someone would bail me out.

Thanks Chaco:)

[Janet]

lUN interesting site about some of Shepard Fairey's plagiarized works.

[Jane]

Morning kids!

[Jack is Back!]

Awaiting the obligatory TM "Yankees Win" thread. 10,9,8,....

[DGS]

Re "Pops" entry at 8:15 PM, given what we have seen of his performance, I doubt if all 11 of those days were working days.

The tax situation will all be resolved when the Wizard of O says, "Pay no attention to that money behind the curtain". Then we will see the Munchkins follow him.

[DGS]

Regardless of what the avatar shows, I'm not Jack.

[narciso]

The Young plan, had a 70 year loan payoutm, with respect, that was worse than the Dawes
plan

[BR]

Dave, that's beauuuutiful! A quilt of avatars!

[JHE]

"Watching Obama square his own behavior with his previous assurances that charitable donors don't care about the tax impact of the deduction would be priceless."

Assuming the idiot press actually asks the question and follows up on Gibb's answer/lie.

[allen]

If it hasn't been said yet, the taxes are due if he receives it, even for a milisecond. In order to avoid taxes, he has to ask the nobel committee to give it to a charity in his name, and they have to give the money directly to the charity. If he recieves the money in any way, he's got to pay the taxes.

[CNN fact checker]

The WaPo provides space to two scholars who argue that Obama's acceptance of the Nobel Peace prize is unconstitutional without an act of Congress. Yeah, yeah, as if the ordinary rules applied to Barack.

Not sure what part of this is racist. Just sayin'.

[Fat Man]

First the URL for the WaPo op-ed: washingtonpost.com/wp-dyn/content/article/2009/10/15/AR2009101502277.html

"An Unconstitutional Nobel" By Ronald D. Rotunda and J. Peter Pham on Friday, October 16, 2009.

The op-ed, however, does not mention

law.cornell.edu/uscode
5 U.S.C. § 7342 "Receipt and disposition of foreign gifts and decorations":

"(c)The Congress consents to—

"(B) the accepting by an employee of a gift of more than minimal value ... when it appears that to refuse the gift would likely cause offense or embarrassment or otherwise adversely affect the foreign relations of the United States,

"except that—
(i) a tangible gift of more than minimal value is deemed to have been accepted on behalf of the United States and, upon acceptance, shall become the property of the United States;"

You can quibble all you want about the applicability of this statue to the instant situation. Bad quibble: The President is not an employee -- see Sec. (a)(1)(E) expressly declaring otherwise. Good quibble: the Prize is not awarded by a foreign government. But it is just a quibble, if it isn't, there is no problem. Imponderable quibble that will lose in court: The statute is not valid as the contemplated consent must be given one at a time, and not by general law.

The President's stated intention to donate the Prize money to Charity contradicts the statute, which says it belongs to the US. But, either way there is no tax issue under
IRC § 74. Prizes and awards:

"(b) Gross income does not include amounts received as prizes and awards made primarily in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievement, but only if—
(1) the recipient was selected without any action on his part to enter the contest or proceeding;
(2) the recipient is not required to render substantial future services as a condition to receiving the prize or award; and
(3) the prize or award is transferred by the payor to a governmental unit or organization described in paragraph (1) or (2) of section 170 (c) pursuant to a designation made by the recipient."

Again quibbling is possible, but not likely, nor profitable. The section is an exclusion from gross income so the inclusion deduction problem does not arise, The money will not appear on BO's 2009 1040.

Bottom line. WaPo article was badly researched. BO has neither a constitutional nor a tax problem. However, he is a wimp, an empty suit, a socialist, and an utter failure.

[AST]

Thanks, Thomas Collins. I seem to remember that when I was in law school such prizes were non taxable, but I wasn't sure if that was really the case or whether the law had been changed.