Detail, east Portland photo, courtesy Miles Hochstein / Portland Ground.



For old times' sake
The bojack bumper sticker -- only $1.50!

To order, click here.







Excellent tunes -- free! And on your browser right now. Just click on Radio Bojack!






E-mail us here.

About

This page contains a single entry from the blog posted on May 24, 2008 3:18 AM. The previous post in this blog was As it's written in the Bible. The next post in this blog is My day at the office. Many more can be found on the main index page or by looking through the archives.

Archives

Links

Law and Taxation
How Appealing
TaxProf Blog
Mauled Again
Tax Appellate Blog
A Taxing Matter
TaxVox
Tax.com
Josh Marquis
Native America, Discovered and Conquered
The Yin Blog
Ernie the Attorney
Conglomerate
Above the Law
The Volokh Conspiracy
Going Concern
Bag and Baggage
Wealth Strategies Journal
Jim Hamilton's World of Securities Regulation
myCorporateResource.com
World of Work
The Faculty Lounge
Lowering the Bar
OrCon Law

Hap'nin' Guys
Tony Pierce
Parkway Rest Stop
Utterly Boring.com
Along the Gradyent
Dwight Jaynes
Bob Borden
Dingleberry Gazette
The Red Electric
Iced Borscht
Jeremy Blachman
Dean's Rhetorical Flourish
Straight White Guy
HinesSight
Onfocus
Jalpuna
Beerdrinker.org
As Time Goes By
Dave Wagner
Jeff Selis
Alas, a Blog
Scott Hendison
Sansego
The View Through the Windshield
Appliance Blog
The Bleat

Hap'nin' Gals
My Whim is Law
Lelo in Nopo
Attorney at Large
Linda Kruschke
The Non-Consumer Advocate
10 Steps to Finding Your Happy Place
A Pig of Success
Attorney at Large
Margaret and Helen
Kimberlee Jaynes
Cornelia Seigneur
Mireio
And Sew It Goes
Mile 73
Rainy Day Thoughts
That Black Girl
Posie Gets Cozy
{AE}
Cat Eyes
Rhi in Pink
Althouse
GirlHacker
Ragwaters, Bitters, and Blue Ruin
Frytopia
Rose City Journal
Type Like the Wind

Portland and Oregon
Isaac Laquedem
StumptownBlogger
Rantings of a [Censored] Bus Driver
Jeff Mapes
Vintage Portland
The Portlander
South Waterfront
Amanda Fritz
O City Hall Reporters
Guilty Carnivore
Old Town by Larry Norton
The Alaunt
Bend Blogs
Lost Oregon
Cafe Unknown
Tin Zeroes
David's Oregon Picayune
Mark Nelsen's Weather Blog
Travel Oregon Blog
Portland Daily Photo
Portland Building Ads
Portland Food and Drink.com
Dave Knows Portland
Idaho's Portugal
Alameda Old House History
MLK in Motion
LoveSalem

Retired from Blogging
Various Observations...
The Daily E-Mail
Saving James
Portland Freelancer
Furious Nads (b!X)
Izzle Pfaff
The Grich
Kevin Allman
AboutItAll - Oregon
Lost in the Details
Worldwide Pablo
Tales from the Stump
Whitman Boys
Misterblue
Two Pennies
This Stony Planet
1221 SW 4th
Twisty
I am a Fish
Here Today
What If...?
Superinky Fixations
Pinktalk
Mellow-Drama
The Rural Bus Route
Another Blogger
Mikeyman's Computer Treehouse
Rosenblog
Portland Housing Blog

Wonderfully Wacky
Dave Barry
Borowitz Report
Blort
Stuff White People Like
Worst of the Web

Valuable Time-Wasters
My Gallery of Jacks
Litterbox, On the Prowl
Litterbox, Bag of Bones
Litterbox, Scratch
Maukie
Ride That Donkey
Singin' Horses
Rally Monkey
Simon Swears
Strong Bad's E-mail

Oregon News
KGW-TV
The Oregonian
Portland Tribune
KOIN
Willamette Week
KATU
The Sentinel
Southeast Examiner
Northwest Examiner
Sellwood Bee
Mid-County Memo
Vancouver Voice
Eugene Register-Guard
OPB
Topix.net - Portland
Salem Statesman-Journal
Oregon Capitol News
Portland Business Journal
Daily Journal of Commerce
Oregon Business
KPTV
Portland Info Net
McMinnville News Register
Lake Oswego Review
The Daily Astorian
Bend Bulletin
Corvallis Gazette-Times
Roseburg News-Review
Medford Mail-Tribune
Ashland Daily Tidings
Newport News-Times
Albany Democrat-Herald
The Eugene Weekly
Portland IndyMedia
The Columbian

Music-Related
The Beatles
Bruce Springsteen
Seal
Sting
Joni Mitchell
Ella Fitzgerald
Steve Earle
Joe Ely
Stevie Wonder
Lou Rawls

E-mail, Feeds, 'n' Stuff

Saturday, May 24, 2008

Doin' all right

John McCain's wife, Cindy, finally gave up the first two pages of her most recent federal tax return yesterday. It's her 2006 return; she reportedly hasn't filed 2007 yet.

The beer distributor heiress made about $6 million in income, and she paid about $1.72 million in federal income taxes -- including no self-employment tax. She took a salary of around $300,000, but nothing else she made was subject to Social Security or Medicare taxes. Apparently the family company of which she is an owner is an S corporation, where rich people (including John Edwards) go to avoid paying Medicare taxes on business profits.

In contrast, her husband reported around $339,000 of income that year, on which he paid around $96,000 in taxes. His overall tax rate was 28.4 percent; hers just happened to turn out to be the same, even though they filed separate returns. She also paid around $24,000 in "household employment taxes," which implies some quite hefty butler and maid service. Hey, she can afford it. She also got a credit of nearly $8,700 for taxes paid to unspecified foreign governments.

It's interesting that Ms. McCain got to take a $3,300 deduction for a personal exemption when her adjusted gross income was more than $6 million. That's a function of the Bush tax cuts. Under prior law, once one's income exceeded a much smaller amount (far less than $200,000), no exemption deduction at all was allowed. Perhaps the tax savings from the deduction (around $1,000, I would guess) allowed her to buy the maid a nice Christmas present.

All sorts of revealing schedules and attachments are left out of the newly released document. One wonders if those will ever see the light of day -- John Kerry's wealthy spouse's didn't. In the meantime, one goof is apparent on the top of the first page of Ms. McCain's return: The accountant noted, "EXTENSION GRANTED TO 10/15/06," but he or she meant 10/15/07. The return was signed by the preparer on October 4, 2007; for some reason, the date on which Ms. McCain signed it has been redacted. Did she file late?

The release of the return is a direct flip-flop from the Presidential candidate's earlier refusal to disclose any tax information about his spouse. Last month, the campaign issued a statement that included this:

Since the beginning of their marriage, Senator McCain and Mrs. McCain have always maintained separate finances. As required by federal law and Senate rules, Mrs. McCain has released significant and extensive financial information through Senate and Presidential disclosure forms. In the interest of protecting the privacy of her children, Mrs. McCain will not be releasing her personal tax returns.
Two weeks ago, Ms. McCain repeated this position on "The Today Show."

Of course, the change of heart was well timed, to get lost in the Memorial Day weekend. We'll have to remember to link back here on Tuesday. [Via TaxProf Blog.]

Comments (12)

What no AMT? Under the AMT, the personal exemption phases out completely. We made more than McCain and 1/22 of Cindy's income and we didn't get to claim any personal exemptions (well, we claimed them but the AMT ate them). I guess it must be that living in a low tax state.

No charitable contributions. No schedule A or B or D.

"Apparently the family company of which she is an owner is an S corporation, where rich people (including John Edwards) go to avoid paying Medicare taxes on business profits."

No Jack, an S-corp is where any business owner with half a brain goes when they own a business. I would hardly call myself rich, but I have several s-corp businesses. It's called tax planning.

What no AMT?

Also my first thoughts. Any theories here Jack?

"she paid about $1.72 million in federal income taxes"

Clearly this is not enough.

And with the have-nots needing more from the haves the AMT should be at least doubled.

And as an added equalizer some of the have-nots should be allowed to pilfer her residence.
She's obviously got too much stuff. That's not fair.

Peace

It's called tax planning.

Tax avoidance, tax planning -- it's the same thing.

What no AMT?

The AMT doesn't usually hit the super-rich, who wind up in very high brackets under the regular tax. For example, as I recall, the Cheneys don't pay it. It hits upper-middle-class taxpayers the hardest.

an S-corp is where any business owner with half a brain goes when they own a business.

Actually, many (if not most) small businesses these days are operated as LLCs, not S corporations. S corporations are advantageous for a couple of particular tax dodges, but in many cases, those with half a brain -- or even a whole brain -- prefer the taxation scheme that one gets with an LLC.

"The AMT doesn't usually hit the super-rich, who wind up in very high brackets under the regular tax."

So how come Cindy's marginal tax rate is lower than mine. How come John's marginal rate is higher than Cindy's?

I wanna know what scams she's running to elude any AMT. I'm betting it has something to do with "earned" vs "unearned" income. But that's just a guess. I'm not a tax lawyer. I'm not even a lawyer or an accountant. But my marginal rate in 2007 was between Cindy's and John's. Go figure.

Both the McCains' marginal rates (the tax they paid on their last dollar of income for the year) are the highest under the federal income tax: 35 percent. You hit that level at about $175,000 of taxable income if you're married filing separately.

As I understand the AMT dynamic, it kicks in only if your overall (effective) tax rate -- the average rate over all your income -- drops below a certain level. The AMT is imposed at rates of 26 and 28 percent, with deductions and credits different from those allowed under the regular income tax. If your overall (effective) tax rate under the regular income tax gets up over 28 percent, your chances of having to pay AMT are probably a lot lower than they would be if it were, say, 20 percent.

You are right Jack, the LLC is the legal entity you choose. However, you must still choose how you want to be taxed. The choices are: disregarded entity(self employed), C Corp, S Corp, or Partnership. When I said I had several S-corps, I meant they were LLC's taxed as an S-corp.

Although that may save you on Medicare taxes (as it did for Edwards and apparently for Ms. McCain), it could have some negative ramifications down the road. If you ever have an appreciated asset that you want to take out of the company, or if you ever want to bring in new money with some sort of preferred equity class, Sub S won't let you do it. Foreign investors are also out.

There's also a way to exploit S corporations with ESOPs, but that one's a little beyond my level of expertise.

(BTW, this comment does not constitute legal, accounting, or tax advice, and reliance on it won't help you avoid penalties with the IRS. See a professional tax advisor!)

(BTW, this comment does not constitute legal, accounting, or tax advice, and reliance on it won't help you avoid penalties with the IRS. See a professional tax advisor!)

Since I am an accountant, should I attach those words to any posts where I make an accounting related statement?

The complaining over Cindy McCain not paying the AMT is a classic example of people confusing marginal tax rates with the effective tax rate (as Jack Bog references above) and of the tendency to believe that whatever happens,you're getting screwed while the "rich" are making out like bandits.

Cindy McCain didn't pay AMT, while many of us did, because her overall tax rate is already higher than ours--even after her $3,300 personal deduction, thanks to President Bush.

Just imagine how much closer the federal budget would be to balancing if, after the IRS accepted Cindy McCain's check for $1.72 million in taxes, she had graviously said, "Oh, and by the way, here's another $1,000 for what I saved by my personal deduction. I just don't feel right accepting this."


Sponsors


As a lawyer/blogger, I get
to be a member of:

In Vino Veritas

If You See Kay, Red 2011
Turnbull, Old Bull Red 2010
Cherry Tart, Cherry Pie Pinot Noir 2012
Trader Joe's Grand Reserve Cabernet, Oakville 2012
Benton Lane, Pinot Gris 2012
Campo Viejo, Rioja, Reserva 2008
Haden Fig, Pinot Noir 2012
Pendulum Red 2011
Vina Real, Plata, Crianza Rioja 2009
Edmunds St. John, Bone/Jolly, Gamay Noir Rose 2013
Bookwalter, Subplot No. 26
Ayna, Tempranillo 2011
Pete's Mountain, Pinot Noir, Haley's Block 2010
Apaltagua, Reserva Camenere 2012
Lugana, San Benedetto 2012
Argyle Brut 2007
Wildewood Pinot Gris 2012
Anciano, Tempranillo Reserva 2007
Santa Rita, Reserva Cabernet 2009
Casone, Toscana 2008
Fonseca Porto, Bin No. 27
Louis Jadot, Pouilly-Fuissé 2011
Trader Joe's, Grower's Reserve Pinot Noir 2012
Zenato, Lugana San Benedetto 2012
Vintjs, Cabernet 2010
14 Hands, Hot to Trot White 2012
Rainstorm, Oregon Pinot Gris 2012
Silver Palm, North Coast Cabernet 2011
Andrew Rich, Gewurtztraminer 2008
Rodney Strong, Charlotte's Home Sauvignon Blanc 2012
Canoe Ridge, Pinot Gris, Expedition 2012
Edmunds St. John, Bone-Jolly Gamay Noir Rose 2012
Dark Horse, Big Red Blend No. 01A
Elk Cove, Pinot Noir Rose 2012
Fletcher, Shiraz 2010
Picollo, Gavi 2011
Domaine Eugene Carrel, Jongieux 2012
Eyrie, Pinot Blanc 2010
Atticus, Pinot Noir 2010
Walter Scott, Pinot Noir, Holstein 2011
Shingleback, Cabernet, Davey Estate 2010
Coppola, Sofia Rose 2012
Joel Gott, 851 Cabernet 2010
Pol Roget Reserve Sparkling Wine
Mount Eden Chardonnay, Santa Cruz Mountains 2009
Rombauer Chardonnay, Napa Valley 2011
Beringer, Chardonnay, Napa Reserve 2011
Kim Crawford, Sauvignon Blanc 2011
Schloss Vollrads, Spaetlese Rheingau 2010
Belle Glos, Pinot Noir, Clark & Telephone 2010
WillaKenzie, Pinot Noir, Estate Cuvee 2010
Blackbird Vineyards, Arise, Red 2010
Chauteau de Beaucastel, Chateauneuf-du-Pape 2005
Northstar, Merlot 2008
Feather, Cabernet 2007
Silver Oak, Cabernet, Alexander Valley 2002
Silver Oak, Cabernet, Napa Valley 2002
Trader Joe's, Chardonnay, Grower's Reserve 2012
Silver Palm, Cabernet, North Coast 2010
Shingleback, Cabernet, Davey Estate 2010
E. Guigal, Cotes du Rhone 2009
Santa Margherita, Pinot Grigio 2011
Alamos, Cabernet 2011
Cousino Macul, Cabernet, Anitguas Reservas 2009
Dreaming Tree Cabernet 2010
1967, Toscana 2009
Charamba, Douro 2008
Horse Heaven Hills, Cabernet 2010
Lorelle, Horse Heaven Hills Pinot Grigio 2011
Avignonesi, Montepulciano 2004
Lorelle, Willamette Valley Pinot Noir 2011
Villa Antinori, Toscana 2007
Mercedes Eguren, Cabernet Sauvignon 2009
Lorelle, Columbia Valley Cabernet 2011
Purple Moon, Merlot 2011
Purple Moon, Chardonnnay 2011
Horse Heaven Hills, Cabernet 2010
Lorelle, Horse Heaven Hills Pinot Grigio 2011
Avignonesi, Montepulciano 2004
Lorelle, Willamette Valley Pinot Noir 2011
Villa Antinori, Toscana 2007
Mercedes Eguren, Cabernet Sauvignon 2009
Lorelle, Columbia Valley Cabernet 2011
Purple Moon, Merlot 2011
Purple Moon, Chardonnnay 2011
Abacela, Vintner's Blend No. 12
Opula Red Blend 2010
Liberte, Pinot Noir 2010
Chateau Ste. Michelle, Indian Wells Red Blend 2010
Woodbridge, Chardonnay 2011
King Estate, Pinot Noir 2011
Famille Perrin, Cotes du Rhone Villages 2010
Columbia Crest, Les Chevaux Red 2010
14 Hands, Hot to Trot White Blend
Familia Bianchi, Malbec 2009
Terrapin Cellars, Pinot Gris 2011
Columbia Crest, Walter Clore Private Reserve 2009
Campo Viejo, Rioja, Termpranillo 2010
Ravenswood, Cabernet Sauvignon 2009
Quinta das Amoras, Vinho Tinto 2010
Waterbrook, Reserve Merlot 2009
Lorelle, Horse Heaven Hills, Pinot Grigio 2011
Tarantas, Rose
Chateau Lajarre, Bordeaux 2009
La Vielle Ferme, Rose 2011
Benvolio, Pinot Grigio 2011
Nobilo Icon, Pinot Noir 2009

The Occasional Book

Norman Mailer - The Naked and the Dead
Maria Dermoȗt - The Ten Thousand Things
William Faulkner - As I Lay Dying
Markus Zusak - The Book Thief
Christopher Buckley - Thank You for Smoking
William Shakespeare - Othello
Joseph Conrad - Heart of Darkness
Bill Bryson - A Short History of Nearly Everything
Cheryl Strayed - Tiny Beautiful Things
Sara Varon - Bake Sale
Stephen King - 11/22/63
Paul Goldstein - Errors and Omissions
Mark Twain - A Connecticut Yankee in King Arthur's Court
Steve Martin - Born Standing Up: A Comic's Life
Beverly Cleary - A Girl from Yamhill, a Memoir
Kent Haruf - Plainsong
Hope Larson - A Wrinkle in Time, the Graphic Novel
Rudyard Kipling - Kim
Peter Ames Carlin - Bruce
Fran Cannon Slayton - When the Whistle Blows
Neil Young - Waging Heavy Peace
Mark Bego - Aretha Franklin, the Queen of Soul (2012 ed.)
Jenny Lawson - Let's Pretend This Never Happened
J.D. Salinger - Franny and Zooey
Charles Dickens - A Christmas Carol
Timothy Egan - The Big Burn
Deborah Eisenberg - Transactions in a Foreign Currency
Kurt Vonnegut Jr. - Slaughterhouse Five
Kathryn Lance - Pandora's Genes
Cheryl Strayed - Wild
Fyodor Dostoyevsky - The Brothers Karamazov
Jack London - The House of Pride, and Other Tales of Hawaii
Jack Walker - The Extraordinary Rendition of Vincent Dellamaria
Colum McCann - Let the Great World Spin
Niccolò Machiavelli - The Prince
Harper Lee - To Kill a Mockingbird
Emma McLaughlin & Nicola Kraus - The Nanny Diaries
Brian Selznick - The Invention of Hugo Cabret
Sharon Creech - Walk Two Moons
Keith Richards - Life
F. Sionil Jose - Dusk
Natalie Babbitt - Tuck Everlasting
Justin Halpern - S#*t My Dad Says
Mark Herrmann - The Curmudgeon's Guide to Practicing Law
Barry Glassner - The Gospel of Food
Phil Stanford - The Peyton-Allan Files
Jesse Katz - The Opposite Field
Evelyn Waugh - Brideshead Revisited
J.K. Rowling - Harry Potter and the Sorcerer's Stone
David Sedaris - Holidays on Ice
Donald Miller - A Million Miles in a Thousand Years
Mitch Albom - Have a Little Faith
C.S. Lewis - The Magician's Nephew
F. Scott Fitzgerald - The Great Gatsby
William Shakespeare - A Midsummer Night's Dream
Ivan Doig - Bucking the Sun
Penda Diakité - I Lost My Tooth in Africa
Grace Lin - The Year of the Rat
Oscar Hijuelos - Mr. Ives' Christmas
Madeline L'Engle - A Wrinkle in Time
Steven Hart - The Last Three Miles
David Sedaris - Me Talk Pretty One Day
Karen Armstrong - The Spiral Staircase
Charles Larson - The Portland Murders
Adrian Wojnarowski - The Miracle of St. Anthony
William H. Colby - Long Goodbye
Steven D. Stark - Meet the Beatles
Phil Stanford - Portland Confidential
Rick Moody - Garden State
Jonathan Schwartz - All in Good Time
David Sedaris - Dress Your Family in Corduroy and Denim
Anthony Holden - Big Deal
Robert J. Spitzer - The Spirit of Leadership
James McManus - Positively Fifth Street
Jeff Noon - Vurt

Road Work

Miles run year to date: 225
At this date last year: 71
Total run in 2013: 257
In 2012: 129
In 2011: 113
In 2010: 125
In 2009: 67
In 2008: 28
In 2007: 113
In 2006: 100
In 2005: 149
In 2004: 204
In 2003: 269


Clicky Web Analytics