APNewsBreak: Petri paid no state taxes for 4 years
MADISON, Wis. (AP) — Republican U.S. Rep. Tom Petri did not pay any state income taxes from 2002 through 2005, records obtained Wednesday by The Associated Press show, and his spokesman blamed it on losses incurred because of the 9/11 terrorist attacks.
Petri, who is regularly listed by the Center for Responsive Politics as one of the wealthiest members of Congress, was the only member of Wisconsin's eight-person U.S. House delegation who didn't pay state income taxes for any years over the past decade. Liberal advocacy group One Wisconsin Now provided the Department of Revenue tax records exclusively to The Associated Press.
Petri, 72, is running for a 16th term representing the 6th Congressional District in east-central Wisconsin. The district includes Oshkosh and Fond du Lac, where Petri lives. He faces Democrat Joe Kallas in November.
Petri's spokesman Niel Wright said in an email Wednesday that Petri paid no taxes those four years because of losses suffered by the Lloyds of London in the 9/11 attacks. Lloyds reported losses of nearly $2.9 billion following the attacks.
"Lloyds of London had tremendous losses as a result of the World Trade Center attack, and Rep. Petri was on the hook for those losses," Wright said.
Kallas said he was shocked that Petri paid no state income taxes for four years.
"Not too many people are going to shed a tear that he lost all this money," Kallas said. "It's just beyond the pale that someone like Petri could owe nothing in taxes. It's incomprehensible."
House disclosure records show that in 2002, 2003 and 2004 Petri reported that he was a partner in Lloyds of London and had assets in the company worth between $250,000 and $500,000 each year. In 2005, he reported having assets of between $500,000 and $1 million in the company. In 2011, he reported assets in the insurance company of between $1 million and $5 million and he still lists himself as a partner.
Wright said Petri was traveling and unavailable for comment.
"It is entirely reasonable to have years in which unrealized investments grow but realized losses leave you with no taxable income," Wright said.
It is possible that if Lloyds of London passed some of its losses on to shareholders and partners like Petri, it could have affected his tax liability, said Todd Berry, president of the nonpartisan Wisconsin Taxpayers Alliance.
"It's a reasonable explanation," Berry said.
But Scot Ross, executive director of One Wisconsin Now, disagreed.
"Tom Petri can shamelessly blame 9/11 for how he avoided taxes for his foreign portfolio, but it's 30 years of Republican tax policy that benefits rich investors over hard-working middle class Americans that's the real outrage," Ross said.
Petri paid no taxes despite the fact that he reported net worth of $5.6 million in 2002, $5.2 million in 2003 and $6 million in 2004. In 2005, Petri did not report his net worth but instead said in his House disclosure statements that he had investments worth between $5 million and $40 million.
The Department of Revenue records show that for 2001, Petri paid $7,488 in state taxes. He paid nothing for the next four years, than in 2006 he paid $45,935. Taxes he paid since then ranged from a low of $24,915 in 2011 to a high of $215,095 in 2009.
Kallas, a 63-year-old retired teacher and former farmer who lives near Princeton, said the revelation shows the need for income tax reform.
"The whole system is slanted toward the ultra-rich," Kallas said. "The working man carries the burden once again. This just screams for reform."
Petri defeated Kallas 71 percent to 29 percent in 2010 and has won re-election with at least 64 percent of the vote for the past 20 years. Petri has a huge financial edge over Kallas in this election as well, with $930,000 on hand compared with less than $5,000 for Kallas.
The revelation that Petri paid no state income taxes comes as Republican U.S. Senate candidate Tommy Thompson is refusing to release his income tax returns for the past 10 years as his Democratic challenger U.S. Rep. Tammy Baldwin has done. Thompson has repeatedly declined to release his tax records, while he has complied with federal requirements on reporting sources of income and other financial information for Senate candidates.
Department of Revenue records show that Thompson did pay state income taxes every year over the past decade. All seven of Wisconsin's other congressional representatives, including vice presidential nominee U.S. Rep. Paul Ryan, paid state income tax every year between 2001 and 2010. Not all of the tax records for the current year were available from the Revenue Department.
The issue of tax fairness is one of the major themes in the presidential race, with Republican Mitt Romney and Ryan arguing for extending all of the existing Bush-era tax cuts due to expire on Dec. 31. They also want to cut tax rates 20 percent across the board.
President Barack Obama also wants to keep the existing tax cuts in place — except for people with earnings of $250,000 a year or more.
Romney, like Thompson, has been dogged with questions over the release of his income tax records. He released his complete tax returns for 2010 and a summary of taxes he paid in 2011, but the issue has not gone away as he's refused to disclose any more than that.