Wednesday, October 22, 2008

THE big news story of the day

Working out in the health club this morning, I could see (from screens tuned to CNN and even Fox) that the big news story of the day, hands down, is Palin's $150,000 clothing budget from the RNC.

It is of course comical that a story like this should be so prominent, or should matter at all. Of course the RNC would want to outfit her (or any other candidate) appropriately to create the right visuals - the campaign consultants are paid to think through all this stuff.

What makes it a big story, of course, is the combination of (a) the trivially personal turn that presidential elections have taken for some time now (e.g., Edwards' haircut, evidently deemed the most important campaign story of 2007), (b) the Republicans' history of ruthlessly playing up these issues whenever it's a Democrat, inviting payback, and (c) the evident hypocrisy given Palin's over-the-top faux populism. So I'm enjoying it, but if this kind of story ceased to matter politically (symmetrically as between the parties) we all might be better off, albeit a hair less entertained.

As a matter of federal income tax law, by the way, the clothes are unambiguously taxable income to Palin if she keeps them. See Pevsner v. Commissioner, 628 F.2d 467 (5th Cir. 1980), in which an Yves St. Laurent sales manager was deemed taxable on her YSL-made business apparel, even though she wore it in the store for business reasons. (Pevsner arose as a business deduction issue when she paid for the clothes, rather than an income inclusion issue from someone else's doing so, but this makes no legal difference.) It was undisputed that Pevsner considered it important to show the flag by wearing the clothes to work, given her job, and that they were more expensive than what she would have purchased otherwise. But the court stated:

"The generally accepted rule governing the deductibility [= includability for Palin] of clothing expenses is that the cost of clothing is deductible as a business expense only if: (1) the clothing is of a type specifically required as a condition of employment, (2) it is not adaptable to general usage as ordinary clothing, and (3) it is not so worn." In other words, baseball players' or firefighters' uniforms and the like, but definitely not Palin's stylish threads (if she keeps them).

While the law seems crystal-clear, I admit that I don't know what constitutes ordinary practice for politicians, movie actors who keep the clothes they were given for a film shoot, etcetera.

UPDATE: From looking at other reactions to this story, I see inklings that (a)it potentially violated campaign finance laws, (b) some Republicans think it was a Palin-directed shopping spree rather than the work of the RNC image consultants, which if true would certainly increase the story's informational content about Palin's character, and (c) the McCain campaign claims, at least now that it has all come out, that they're planning to give all the loot to charity after November 4.

No comments: