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McCain's Tax Returns

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from: Bonnie Goldstein

Posted Monday, April 21, 2008, at 4:06 PM ET

On April 18, John McCain released his 1040 forms for tax years 2006 and 2007. They show an adjusted income of $339,000 and $386,000, respectively (see below and Page 3). McCain paid $97,000 in taxes for 2006 and $118,000 for 2007 (Pages 2 and 4).

The tax returns of candidates Barack Obama and Hillary Clinton showed each receiving about $500,000 in royalties from their memoirs. McCain's literary efforts brought in about half as much—$257,000 in 2006 and 2007—though it should be remembered that McCain has by now written many more books than either Democratic contender and that his best-selling memoir, Faith of My Fathers, was released way back in 1999. In any case, one should resist concluding from McCain's tax returns that he's the pauper of the bunch. It seems that way only because he chose the IRS option "married filing separately," which allows him to exclude the income of his wife, heiress Cindy H. McCain. (Obama and Clinton's returns were filed jointly, and therefore reflect the incomes of their respective spouses, Michelle and Bill.) The combined salaries of Sen. and Mrs. McCain are disclosed, however, because Arizona, where the McCains legally reside, is a community property state where married couples who file separate returns are nonetheless required to report and pay state taxes on one-half of any income "acquired through the efforts" of their spouses (minus one-half of each partner's deductible expenses). For the two recent years, McCain reported his half of the $870,000 in salary his wife brought in as chairman of Hensley & Company, a family-owned beer distributorship (see Pages 5 and 6). He deducted his half of $115,00 in employment taxes for more than $400,000 in wages to household staff. Presumably, Cindy McCain also receives considerable investment income that she is required to disclose only in her own tax returns, which McCain did not make public.

Apart from Cindy's salary and her undisclosed investment earnings, the lion's share of McCain's cash receipts for the period came from the federal government: untaxed military retirement pay of more than $56,000 per year and annual wages of roughly $165,000 for representing the citizens of Arizona in the U.S. Senate. The 71-year-old McCain also draws about $20,000 a year in Social Security income.

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hot document
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from: Bonnie Goldstein

Posted Monday, April 21, 2008, at 4:06 PM ET
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Bonnie Goldstein is a former special investigator to the U.S. Senate and investigative producer for ABC News.
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