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.]