Pressure mounted in recent days on Linda McMahon, a candidate in the Republican primary for Connecticut’s open U.S. Senate seat, to release her tax returns from the last two years, as former Rep. Chris Shays (R), her opponent in August’s primary, raised the issue as a matter of transparency. McMahon, who co-founded World Wrestling Entertainment with her husband, has used her wealth to run for public office — she spent more than $21 million on her ill-fated 2010 Senate campaign and has already dumped millions into this campaign.
McMahon finally released her 2010 tax return last week, and it showed that her and her husband made $30.6 million for the year. Because most of the income came from investments, she paid just $4.7 million in federal taxes, according to the Associated Press, meaning that her effective tax rate was roughly 15 percent — far lower than the income tax rate for her income level.
That much of her income came from investments allowed McMahon to take advantage of tax breaks on both capital gains and carried interest, both of which would be partially eliminated under Senate Democrats’ tax reform plan. Under current tax law, both capital gains and carried interest are taxed at a 15 percent rate, but under the Democrats’ plan, the rates would rise to 20 percent. Letting the Bush tax cuts on high incomes fully expire, as President Obama plans to do at the end of the year, would mean capital gains would once again be taxed as normal income.
McMahon, predictably, opposes the expiration of those tax cuts. She also opposed the Buffett Rule, which would have established a minimum tax rate on millionaires like herself. A Congressional Research Service study released this year found that the capital gains tax cut, because it primarily benefits the wealthy, is the biggest driver of America’s skyrocketing level of income inequality.