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Daschle Hit On Tax Break

Wife Claims ‘Homestead’ Exemption

Aides to Sen. Tom Daschle (D-S.D.) and District of Columbia Mayor Anthony Williams emphatically rejected claims by a conservative group that the Senate Minority Leader is improperly claiming a D.C. tax deduction on his recently purchased $1.9 million Foxhall home.

Earlier this month, the anti-tax group known as the Club for Growth made Daschle’s “very, very, very nice house” a focal point of television ads in South Dakota, suggesting the Senate’s top Democrat had fallen out of touch with the people of his state.

Last week, the same critics shifted their focus to the decision of Daschle and his wife, a prominent Washington lobbyist, to claim the District’s “homestead deduction.”

Public records show that Daschle is in fact receiving the $30,000 tax deduction that reduces his property tax bill by a few hundred dollars annually as long as the property is the principal residence of the owner.

A Roll Call search of property records revealed that a number of other lawmakers — including Sens. Kay Bailey Hutchison (R-Texas), James Inhofe (R-Okla.) and Dianne Feinstein (D-Calif.) — are also receiving the homestead deduction.

Dave Keating, executive director of the Club for Growth, said he couldn’t speak for the others, but said he doesn’t believe it makes sense for Daschle to receive the tax break.

“I don’t profess to be a D.C. property tax expert, but it appears from what they have on the Web site that it would be improper because it’s supposed to be your main residence and these politicians profess to their constituents, ‘I represent you,’” Keating explained. “It would seem strange to take a property tax break aimed at D.C. residents.”

Talon News, a conservative Web-based publication that first reported the charges last week, suggested in its story that Daschle “may not even qualify for the tax credit, since one of the requirements is that the property must be the owner’s primary residence.”

But both Daschle aides and a spokesman for Williams dismissed the charges as baseless, partisan attacks and said the South Dakota Democrat is in complete compliance with the law because his wife, Linda, qualifies for the tax break.

“The Daschles are most definitely entitled to the homestead deduction, just as I am,” Williams’ spokesman Tony Bullock said, adding that the notion that the tax break is somehow a targeted program for low-income households is erroneous.

“It’s available to all homeowners in the District, regardless of the value of their property or their level of income,” Bullock continued. “The reason the Daschles’ are entitled to it has everything to do with Mrs. Daschle and nothing to do with Mr. Daschle. She pays District income taxes, so she qualifies.”

Daschle campaign manager Steve Hildebrand echoed Bullock’s assertion.

“Linda Daschle pays income taxes in Washington, D.C. That makes Linda Daschle eligible to receive this homestead tax on behalf of the Daschles,” explained Hildebrand, who noted that the Daschles also own a home in Aberdeen, S.D., and pay their property taxes every year.

“He has a South Dakota driver’s license. He’s registered to vote in South Dakota. He has South Dakota plates on his car. This is and always will be his residence — and the fact that they own a home in Washington, D.C., changes none of that,” Hildebrand said.

But Bullock — who characterized the attention to Daschle’s homestead deduction as a “personal and politically motivated attack” on the Senator “in an election year” — and others in the D.C. office of taxation admitted that most lawmakers don’t qualify for the tax break and some have been tripped up by settlement attorneys who don’t fully understand the requirements.

“Ninety-eight percent of the time it would be impossible for [a Member of Congress] to qualify as a resident of their home state and also be a resident of the District of Columbia,” Bullock explained. “The other ones would only be entitled if their spouse were” employed and paying income taxes in D.C.

Bullock said he personally knows of “many other Senators and Congresspeople” who have had problems with the homestead deduction rules because some real estate lawyers don’t fully understand the exemption. To qualify, a homeowner must occupy the home as their primary residence and also pay D.C. taxes.

Sen. Lindsey Graham (R-S.C.), who is partial owner of a home on Capitol Hill, got tripped up on the rules last year after Democrats accused him of having “lied” about where his legal residence was to get a tax break.

“It is clear that Lindsey Graham has claimed to be a legal resident of both Oconee County for a tax break and Washington, D.C., for a tax break,” state Democratic Party Chairman Dick Harpootlian charged at a press conference last October, weeks before Graham was elected to the Senate.

But Graham spokesman Kevin Bishop said his boss, who has since lost his D.C. deduction, was simply caught unaware when the District of Columbia changed the law and he no longer qualified for the tax break.

While Graham purchased his property in 1997, the requirement that one be a legal resident of the District was not put into effect until several years later.

“Up until two years ago, there wasn’t a requirement to be domiciled here,” explained a representative of the D.C. office of tax and revenue, who said that essentially the only federal lawmakers who should be receiving the deduction are those with a spouse who is working and living in the city.

A search of D.C. property records showed that several lawmakers’ spouses are listed as owning homes in the city and currently receiving the homestead deduction. They include: Jackie Clegg, wife of Sen. Chris Dodd (D-Conn.); Rita “Peatsy” Hollings, wife of Sen. Fritz Hollings (D-S.C.); and Paul Pelosi, husband of House Minority Leader Nancy Pelosi (D-Calif.).

Bullock said he is growing weary of calls about lawmakers’ tax exemptions.

“We’re frankly a little bit tired of being put in the middle of these things,” Bullock said, adding that usually the cases they have dealt with involving Members of Congress are been “quietly resolved” because it’s the “appropriate thing to do.”

“We don’t want to embarrass any Member of Congress or any administration official,” he said.

Nonetheless, Graham’s aide partly blames the city for the confusion.

“Part of it was the District of Columbia. Their record-keeping and accounting practices aren’t very good,” said Bishop, who insisted that South Carolina’s freshman Senator “doesn’t have any problem” paying whatever taxes he owes.

“He is happy to pay whatever he has to pay.”

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