Our guest blogger is Michael Ettlinger, Vice President for Economic Policy at the Center for American Progress Action Fund.
On Friday, the McCain campaign released Cindy McCain’s 2007 tax returns. Sadly for the McCains, Mrs. McCain shows over $1.8 million dollars less tax return income in 2007 than 2006. Of course, she still reported over $4 million of income ($4,197,028) which — when added to the Senator’s tax return income in 2007 ($405,409) — brought their total to over $4.5 million ($4,602,437 to be precise).
A large source of income for the McCains came in the form of capital gains. This is an example of how, though many people have capital gains income sporadically throughout their lives, the wealthy have them quite consistently and they constitute an important source of income. In 2006, the McCains reported a total of $743,476 in capital gains. In 2007 they reported $746,395.
Last week, as part of his new Pension and Family Security Plan, Sen. McCain proposed temporarily cutting the capital gains tax from 15 percent to 7.5 percent. The proposal — had it been in effect in these years — would have reduced the McCains’ taxes by $55,761 in 2006 and $55,980 in 2007 (a two-year total of $111,740).
This is on top of the more than $350,000 that they would have saved in 2006 due to McCain’s other tax proposals.
One other note: the campaign refuses to release anything but Mrs. McCain’s 1040 tax form, which provides only a fraction of the information that she is reporting to the IRS. Most of the McCains’ decline in income between 2007 and 2006 was in “Schedule E” income. Schedule E is a form where income from a wide variety of sources is reported – including trusts and a type of closely held (often family owned) business.
There is a great deal of income legally sheltered from taxation in the machinations underlying the schedule E. Without having Mrs. McCain’s complete records, it’s impossible to know for sure whether the McCains actually did better or worse in 2007 than in 2006 – their accountants may just have had more ways to legally shelter income.