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Wednesday, January 08, 2003


Pilot Thomas D. Tuka tried to claim that the $83,046.54(!) he recieved in disability benefits for carpal tunnel syndrome(!) should not be taxable. Disability benefits are taxable if they are paid by the employer or if they are attributable to contributions by the employer that are not included in gross income. Tuka claimed that he had actually paid for the benefit plan through wage concessions made by the pilot's union in exchange for the disability plan in contract negotiations. The Tax Court didn't buy it. They wisely pointed out that concept here is that disability benefits are excludable if they were paid for by the employee with after-tax dollars, and the pilots never paid taxes on the phantom dollars they were demanding at the bargaining table before lowering their demand in exchange for disability benefits.

Somehow Tuka's accounting reminds me of President Bush's claim that Democrats who want to lower the scheduled tax cuts are trying to "raise" taxes by reducing a cut that has not gone into effect, but the analogy is far from perfect.

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