Politics & Policy

Home Is Where The Tax Break Is

Tom Daschle declared D.C. his primary residence.

In his race to capture Tom Daschle’s U.S. Senate seat, John Thune has often highlighted one of his rival’s major disqualifications: He’s not really a South Dakotan.

”Throughout this campaign we’ve pointed out that Daschle says one thing in South Dakota, and does another thing in Washington, D.C.,” says Dick Wadhams, a spokesman for the Thune campaign. “He’s out of touch with the people and issues of this state.”

It looks like their criticisms may be less metaphorical, and more legally troubling for Daschle, than previously thought.

When Tom and Linda Daschle purchased their $2 million home in Washington, D.C., in April 2003, they filed for the District’s “homestead deduction“–a tax break that saved the Daschles a whopping $288 in property taxes last year.

Unfortunately for the South Dakota senator, however, the homestead exemption is applicable only to properties that serve as primary places of residence. By signing the application form for the deduction, and thereby claiming eligibility for the tax break, Daschle identified the mansion at 2830 Foxhall Road NW as his primary residence.

In order to receive the deduction under D.C. code section 47-850, Daschle had to qualify the house as “the principal place of residence within the District of an individual, shareholder, or member, who is domiciled in the District” (D.C. ST § 47-849).

And it’s the definition of “domiciled” that poses problems for Daschle. In District of Columbia v. Murphy, the Supreme Court held that “persons are domiciled here [in the District of Columbia] who live here and have no fixed and definite intent to return and make their homes where they were formerly [314 U.S. 441, 455] domiciled.”

What’s more,

In order to retain his former domicile, one who comes to the District to enter Government service must always have a fixed and definite intent to return and take up his home there when separated from the service. A mere sentimental attachment will not hold the old domicile. And residence in the District with a nearly equal readiness to go back where one came from or to any other community offering advantages upon the termination of service is not enough.

So, by filing and signing–under penalty of a $1,000 fine and/or 100 days’ imprisonment for knowingly swearing to any false information–the application form for the homestead exemption, Daschle affirmed that he qualifies for the homestead deduction. This means that, under D.C. law, he considers the 2830 Foxhall Road mansion his “domicile”–which means that he lives in D.C., and has no intention of returning to where he was formerly domiciled (i.e., Aberdeen, S.D.).

This is all well and good for Daschle the Taxpayer. But it could be disastrous for Daschle the Voter–or Daschle the Senator.

That’s because, under South Dakota law, Daschle may have rendered himself ineligible to vote in his home state by claiming the D.C. exemption. Under South Dakota code, statute 12-1-4,

For the purposes of this title, the term, residence, means the place in which a person has fixed his or her habitation and to which the person, whenever absent, intends to return.

A person who has left home and gone into another state or territory or county of this state for a temporary purpose only has not changed his or her residence.

A person is considered to have gained a residence in any county or municipality of this state in which the person actually lives, if the person has no present intention of leaving.

If a person moves to another state, or to any of the other territories, with the intention of making it his or her permanent home, the person thereby loses residence in this state

(emphasis added).

By moving to the District–and making the house there his permanent home–Daschle has, apparently, technically lost his South Dakota residency. And because he may have forfeited his resident status as per statute 12-1-4 (above), Daschle may not be “resident of this state” as per 12-3-1, meaning that he may not meet the qualifications for voter registration in South Dakota–meaning that, under the law set forth by statute 12-4-1, he may not legally be allowed to vote there. (Not to mention the fact that, under the U.S. Constitution, “No Person shall be a Senator who . . . shall not, when elected, be an Inhabitant of that State for which he shall be chosen.”)

But none of this stopped Daschle and his wife, Linda (a wealthy Washington lobbyist who also filed for a homestead exemption after the District updated its form), from casting early ballots in Aberdeen, S.D., on Wednesday–for a candidate who may no longer be a South Dakotan.

This may be because Daschle sees no problem with what he’s done. Although his residential duplicity raised eyebrows almost immediately after he committed it, he has faced the most political heat about it this week, when John Thune pointed to his opponent’s D.C. residency claim as evidence that “Tom Daschle is a lot more about Washington than he is about South Dakota.” Daschle dismissed the allegations as ” . . . just another personal attack that has no basis in fact.”

Activity in the D.C. tax office, however, suggests otherwise. The reason the issue has come to a head this week is that the form Daschle signed was just made public, the result of a Freedom of Information Act request filed by Talon News during an investigation by Jeff Gannon. In response to Talon’s request–on September 29, the date it was filed–the D.C. Office of Tax and Revenue rescinded the homestead exemption, which was then reinstated the next day. South Dakota blogger Jason Van Beek suspects Daschle’s allies in the tax office of covering for him. And although that’s only speculation, the timely fluctuations in Daschle’s homestead-exemption status do suggest something more than a mere “personal attack that has no basis in fact.”

Whether there is, in fact, “something more” to the Daschle story ought to be the target of legal inquiry, says New York attorney Mark Smith. “Where there’s smoke, there’s fire,” he explains. “If Tom Daschle represented under the penalty of perjury that he was a resident of the District of Columbia when in fact he was not, that could be a basis for civil and possibly even criminal penalties…. When you sign a document concerning your tax status that you know is false, then you have a problem. You’re not supposed to lie to the government.”

Smith adds that, while it’s unclear what the outcome of a legal inquiry into Mansiongate would be, “if there’s a dispute or a controversy as to whether he’s a resident of South Dakota, someone needs to look into it.” Although Daschle may claim he is a South Dakotan publicly, Smith argues, the tax records are statements of fact–and fact-finders should be dispatched to determine definitively where Daschle “domiciles” (and whether he has committed any kind of fraud). “This is clearly a legitimate question that people ought to be asking, and it would be nice to have an answer before the election.”

To the Thune campaign, Daschle’s double-domiciling “shows how arrogant and cavalier he has become in his role as a U.S. senator representing South Dakota.” Beyond the legal case, Dick Wadhams sees presumption in Daschle’s D.C.-residency status: “It shows that he never has any intention of leaving Washington under any circumstances.”

Of course, Thune’s people see a bigger problem for Daschle in claiming the Foxhall property as his domicile: “When he’s a former senator on November 3, he won’t be able to return to his principal residence.”

Meghan Clyne is an NR associate editor.

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