Tax and Spend

Tirades against the Internal Revenue Service amount to a minor national sport.

Now even the Vice President is playing: in July, George Bush paid the IRS $198,000 in back taxes and interest, and he is planning to sue, if necessary, to get his money back. "I'm the guy that's been taken to the cleaners," Bush said last week. The payment to the IRS represents close to 10% of his net worth.

The Vice President's problem stems from the 1981 sale of his Houston home.

The Bushes made a profit of $596,000 on the sale, which they used to buy their $870,000 house in Kennebunkport, Me. Bush claims that he is entitled to the standard deferment of capital gains taxes for people who use their profits from the sale of their principal residence to buy another. The IRS ruled otherwise: because the official vice-presidential mansion in Washington, B.C., is where Bush spends most of his time, that is his principal residence. Under protest, Bush paid a back tax of $129,000. Another $54,000 was interest, and the remaining $15,000 was for taxes he owed on 1980 campaign monies that the IRS ruled he must treat as income.

Bush argues that because he is obliged to live in the Government house, he is caught in an unfair catch-22. Why did he not reveal his tax troubles months ago? "You didn't ask me about it," offered Bush. His dispute came to light last week when he released his recent federal income tax returns. For the past three years, the Bushes had a gross income of $810,000, of which they paid 37% in federal income tax, which is about average for people in their tax bracket.