Not really, no, but Politico’s report this morning certainly makes it sound that way. Not only did Michael Bloomberg welch on his promise of a full year’s pay, his staff has just gotten socked with massive tax bills thanks to the structure of their compensation. How much of that is Bloomberg’s fault, however?
In recent weeks, aides to the former Democratic candidate started receiving tax forms that in some cases list incomes that are tens of thousands of dollars more than they were compensated in salary. The added amounts account for paid housing and other generous benefits they received last year, but the price tag is coming to many as an unwelcome surprise.
In interviews, former Bloomberg aides said they were stunned by the high amounts, examples of which were reviewed by POLITICO. One staffer was shown to have been compensated more than $50,000 than they earned. In another case, a former staffer’s gross amount was about $25,000 more. Others had incomes that were in the range of $10,000 more than what they were paid.
In some instances, Bloomberg representatives have assured the aides that the additional taxes they now owe the government were taken care of by the campaign. A Bloomberg campaign spokesman told POLITICO that the aides were paid more during the campaign to account for the higher tax burden, though not all of the ex-aides said they were aware of the arrangement at the time. The spokesman added that Bloomberg’s accountants had no choice but to lump fringe benefits in with the salaries given their interpretation of tax law.
It’s not as if the former Mayor of New York could win a prize for Employer of the Year. In his abortive bid for the Democratic presidential nomination, Bloomberg promised campaign staffers that they would get paid for the full year regardless of whether he stayed in the race or not. That promised lasted a grand total of two months for many of them, although Bloomberg eventually tried shifting some into new organizations. Others sued Bloomberg over the broken promise of employment, and it’s not clear what the status of those suits are at the moment. As late as September of last year, courts allowed at least one to proceed. Politico’s Christopher Cadelago notes in this article that “several” are still in process.
In this case, however, it’s tough to lay this all on Bloomberg. Employees had to know that most compensation becomes taxable income even if not paid in the form of money. (Health insurance is still an exception, but it’s one of the few.) It sounds as though the campaign did communicate the issue to at least some of the people now complaining to Politico — hence the “not all of the ex-aides say they were aware of the arrangement” proviso in their reporting, emphasis mine. That sounds as though a significant number of them were aware of that issue, although they might now be unpleasantly surprised by the scope of the compensation. But just what did they think would happen when they got “paid housing and other generous benefits,” especially while campaigning for a tax-and-spend candidate like Bloomberg?
Bloomberg said they didn’t have much choice in the matter anyway:
But Bloomberg’s tax accountants determined there wasn’t a way for them to provide benefits—namely rent-free housing—without it being tagged as income for the employee. They pointed to an IRS publication stating that employer-provided lodging was only non-taxable if the housing met all three conditions: that it was on the premises of the employer, furnished for the convenience of the employee and a condition of employment — meaning they had to accept it to properly perform their job.
Politico’s report also suggests that the housing support was optional. One can understand why people would take it if offered, but that counts as taxable compensation. Perhaps Bloomberg could have tried harder to help them dodge the taxes, but given Bloomberg’s agenda of big spending and big taxes to pay for it, that would have looked incredibly hypocritical.
It’s still easy to feel some sympathy for these staffers, at least until you get to this complaint:
Staffers raised concerns that the bloated gross incomes they have to declare in their taxes will cause them to lose out on a long list of government programs and benefits — from Obamacare subsidies to possible student loan debt forgiveness to the $1,400 checks President Joe Biden is proposing as the centerpiece of his coronavirus rescue package.
So they want to get a freebie on non-monetary compensation as income so they can qualify for even more freebies? Er … suuuuuure. Let’s not forget that they all actually received this compensation, after choosing to work for a multi-billionaire’s late-stage vanity run for president. They didn’t get cheated out of anything, but simply didn’t choose to deal with reality. On several levels, as it turns out.
Still, it’s tough to put aside all sympathy. Bloomberg and his team managed to screw up the lives of their staffers more than once, whether they had much choice in it or not. With that in mind, this sentence from Christopher Cadelago rings true:
Beyond the personal headaches, others viewed the tax issue as the latest indignity in a campaign experience filled with them.
It’s yet another reminder of the wisdom of Psalm 146: Put not your trust in princes. That’s a lesson we all could learn lately.