Make HuffPost Your HomePage
Get Email Alerts
John McCain Lives In Subsidized Housing
It's bad enough that John McCain doesn't know how many homes he and wife Cindy own. But does he realize that he lives in subsidized housing?
The McCains, like other wealthy homeowners, can take advantage of American tax laws that provide substantial tax breaks for the rich . The McCains can take deductions on the interest from outstanding mortgages up to a total of $1 million on two homes. Because they are in the top (35%) tax bracket, they can get a tax break of as much as $25,000 a year. (This assumes a fixed-rate 30-year mortgage at a 7% interest rate). In addition, they can get deductions on their property taxes and on capital gains (up to $500,000) when they sell a home. (Since they file separate tax returns, and Cindy's the wealthy member of the couple, it's most likely that she gets the tax breaks).
According to recent reports, John and Cindy McCain own at least 10 houses in Arizona, California, and Virgina worth an estimated total $13.8 million. These include two beachfront condos in Coronado, California, a condo in La Jolla, California, a two-unit condominium complex in Phoenix, Arizona, three ranch houses outside of Sedona, Arizona, a high-rise condo in Arlington, Virginia, a rental loft, and a loft they bought for their daughter.
Last year, according to a report (pdf) by the Congressional Joint Committee on Taxation, homeowner tax breaks cost the federal government $119 billion. (Economists call these "tax expenditures"). These include $73.7 billion in mortgage interest deductions, $16.8 billion in property tax deductions, and $28.5 billion in exclusion from capital gains taxes when homes are sold.
This would be OK if the tax breaks helped most middle- and working-class people, who need the cash. But they don't. Half of all homeowners, mostly those on the bottom-half of the income ladder, don't claim deductions at all. Among homeowners who itemize deductions, most get only a few hundred dollars a year in tax breaks. Renters, of course, don't even qualify.
But homeowners with the highest incomes and the most expensive homes (including second homes) get the largest subsidy. The richest 3% of Americans (those with incomes over $200,000) get about 28% of the homeowner tax breaks. As a result, a wealthy corporate executive , or an heiress like Cindy McCain, is likely to receive a much bigger homeowner tax break than a nurse, a factory worker, or a school teacher. Many economists believe (pdf) that the current system is both inefficient and unfair. It subsidizes the rich to buy huge homes without helping most working families buy even a small bungalow. As a result, it has little impact on expanding homeownership, since wealthy families like the McCains can afford to buy expensive homes without getting a subsidy.
Most Americans think that federal housing assistance is a poor people's program. In fact, only about one-quarter of all low-income Americans (those who have Section 8 rental vouchers or who live in government-assisted developments) receive federal housing subsidies. In contrast, most wealthy Americans -- many living in mansions -- get housing aid from Washington.
While millions of American families are facing foreclosure, or struggling to buy a home or keep the one they own, multi-millionaires like the McCains get a "mansion subsidy" from the government.
A few years ago, President George W. Bush's Advisory Panel on Federal Tax Reform recommended scaling back the tax breaks for very wealthy homeowners. One suggestion was to scrap the mortgage interest deduction and replace it with a 15 percent tax credit. Another idea, recommended for years by the Congressional Budget Office, was to lower the ceiling on mortgages eligible for tax breaks. But Bush nixed these proposals under pressure from the real estate industry.
John McCain has released his 2007 federal tax forms, but Cindy has refused to do so. (She did release her 2006 form). These forms are available on the Tax Analysts website: It is impossible to tell from the McCains' forms which of their many homes they use to receive mortgage interest and property tax breaks, or whether they've gotten any tax breaks from the sale of their homes. Indeed, with so many homes at their disposal, perhaps only their accountant knows which houses they report as their principle residence and which they use to obtain tax breaks. (This would be a good project for some investigative reporters). Barack and Michelle Obama , who file jointly, get a tax deduction on the one home they own in Chicago.
Throughout his presidential campaign, McCain has opposed providing government help for families facing foreclosure. He 's against a mortgage tax credit for families who don't itemize deductions, which Obama has endorsed. But McCain hasn't said anything about the huge tax breaks that multi-millionaires like he and Cindy get on their huge homes. He does favor, however, extending Bush's tax breaks for the very wealthy. According to an analysis by the Los Angeles Times, under McCain's tax plan, the wealthiest 1% of Americans (those with incomes over $619,561), would get an annual tax cut of $31,943. Under Obama's plan, they'd get a tax increase of $114,238. (Obama's plan would give much larger tax cuts than McCain to the bottom 80%, those with incomes under $117,000).
Both McCain and Obama hope that next January they'll get to live rent-free in the White House. But both candidates already live in subsidized housing, courtesy of our regressive tax policies. So, while McCain can't remember how many mansions and luxury condos he owns, most Americans are struggling to hold onto or purchase a modest home. The Republican nominee's indifference to the housing woes of many Americans, while he jets from one McCain McMansion to another, is a perfect symbol of how out-of-touch he is with the daily realities of ordinary people.
Want to reply to a comment? Hint: Click "Reply" at the bottom of the comment; after being approved your comment will appear directly underneath the comment you replied to
I have always understood the various tax deductibilties for home ownership (property tax excluded) to be sops to the various players in the real estate and banking industries. If it were truly an effort to assist people with housing, annual rental expense would be deductible. There would be a category known as "housing expense" As it is, mortgage and home equity interest ded's goose the banking industry. Capital gains being taxed over the long haul is a sham to begin with, since the "gain" is not indexed for inflation and if it were there would be little gain to tax at all (the 2002-2007 hyperinflationary period excepted). But as the cap gains laws stand, they are designed to induce people to buy and sell, thus feeding the Realtors and developers. That said, I do not believe that some arbitrary amount should be set capping deductibililty. If a category is deductible it should be on some principle, such as no tax on tax. And if it is, then it is deductible whatever the amount. I don't believe in the income tax period. There should be a consumption tax only. You will never see it go away because the government would lose the ability to snoop into people's personal finances, and the bankers, and Realtors and tax accountants and other powerful lobbies that feed on it would never allow the golden goose to be killed off.
Why how many houses do you think that the Clinton Family owns????
Only the rich get to run for President
Is that new to anyone?
Depends if they have some of their $109 million in investment properties like C McCain's trusts do.
At any rate, I'd bet that on any given day, neither of them could tell you within even the nearest $10,000 what their assets are. Much ado about nothing anyway. Imagine if McCain had said firmly "7 houses" and unbeknowst to him, Cindy's trustees had purchased another investment property. Instead of a doddering old fool who has so many houses he can't even count them all, he'd be called a liar and accused of "hiding assets" and God knows what else. Not a defense of McCain but just a condemnation of so much focus on something so irrelevant and turning it into a smear job, not to mention the hypocrisy of the party of the Clintons and the Kerrys and the Pelosis and the Edwards and other multi multi millionaires doing the smearing.
John McCain credit the hard work and sweat of his father in law for the ten houses he own. At 72 years of age, what did he accomplish on his own? When asked about his houses and why he did not no how many he own, he went off talking about his father in law. This is worst than welfare.
No wonder McCain thinks the fundamentals of the economy are strong. They sure are for someone who barely lives in his 7 or 8 houses and gets tax breaks out the wazoo. No wonder he votes with Bush 95% of the time -- it's in his self-interest to extend the regressive Bush tax breaks. We need real middle-class tax reform, and we won't get it from the GOP, which has been carrying on class warfare on the middle class at least since Ol' Tricky Dick Nixon! And even after four decades of this, the American public still doesn't get it.
Is it possible to be a Maverick 5% of the time?
I don't support John McCain, nor do I plan to vote for him. But, I think this article is a bit disingenious.
ALL homeowners, rich or poor, are entitled to take a deduction for property taxes and mortgage interest paid--subject to certain limits, if they itemize their deductions. Taxpayers who don't itemize deductions don't do so because the standard deduction is HIGHER than the amount they would receive if they itemized their deductions--these taxpayers still get a tax break in the form of the standard deduction, and the tax break is larger than the actual deductible expenses they incurred.
Yes, wealthier people usually claim more itemized deductions (up to the prescribed limits)--but they are also taxed at a much higher rate on their income. The top 10% of earners, paid over 70% of all taxes collected in 2006, according to the IRS--that is a progressive income tax system.
Finally, most low-income individuals pay NO federal income taxes--they do have withholding, but they have this refunded when they file their returns. In fact, the earned income credit allows low-income individuals, especially those with children, to get back MORE than they pay in taxes, even when payroll taxes are considered. I don't necessarily disagree with this policy; however, it does establish that most of the taxes paid and collected under are income tax system are paid by those with the most income--which is how it should work under a progressive system of income taxation.
The richest people pay an average of 18% of total income in taxes. People making between 60K and 200K pay more, maybe 35% because they're not quite rich enough for tricks like non-profit family foundations and shifiting income to and from their corporations and offshore accounts. Also, the IRS admits that it only captures about 70% of investment and business income, because people don't report it accurately.
The top 10% of earners pay about 65% of taxes, but they also get half of the income.
The so called progressive income tax stops progressing at about 65K- rich people do NOT pay a greater percent of their income in tax. Under Bush, the IRS does less enforcement on big incomes. Lawyers and lobbyists for the rich have corrupted our laws and politicians. Our country has been looted. Repeat the last sentences a hundred times.
Your remarks might have been true 40 years ago, but no more. Rich people only pay half as much in tax as they did then.
I agree: the article is a bit of a stretch. Not necessarily that much of a stretch, but there are virtually limitless criticisms that can legitimately be made of John McCain without resorting to sensible tax planning.
Well, he is an ex-pow he needs all the help and financial support the nation can give him!
I mean, why should he be treated any diffrent from the rest, poor guy!
The whole mortgage deduction bit was to do 'social engineering' (yeah bad word folks but the reality that's what it is) as incentive for folks to buy homes and goal was to create stable thriving neighorhoods and communities that people would participate in (ie vote and such, stay informed on the issues) but from McC's seems like he would hardly to that since he's hardly in those homes long enough to be interested in the community in which he supposedly 'resides' (Cornville AZ), seems to be more interested in Wa DC or making money. and most of the homes seem to be for some of his 'children'. Whassa matter McC, they can't buy their own? Or are you doing the stingy thing,
'kids, you aren't getting much, Cindi has it all, sorry nothing I can do about it?
To make sure I understand this, people who pay an extremely high amount in taxes (35%) should not be permitted to have any tax breaks but someone who does not pay taxes at all should get tax refunds? And the bigger a house someone buys means they get a larger tax break but don't they also pay more in taxes? Is there something stopping other people from buying bigger houses?
Think about it, in the 50s after the expense of WW2 the rich paid 90%, if it was good enough then it should be good enough now.... Gangbusters, the economy then was gangbusters and none of this crapola about the rich doing the hiring... You know they are doing the hiring now, just either offshoring the jobs or bringing in the 'legal' immigrants to push down the wages....
Even the Greeks over 2000 years ago understood that those with the most resources had benefited most from the society and that taxes should be more progressive, than regressive as they are now as Buffett has pointed out.
Ever read Atlas Shrugged by Ayn Rand? It would do society a lot of good if more people read it.
Another PERHAPS unitended "subsidy" of the current foreclosure crisis will be the dirt cheap prices at which property will eventually sell - to those who have plenty of money.
Could be McSame will be adding a few more kitchen tables to his collection.
Peter, once again you are missing the point. If you read the constitution you will find that taxes are collected to fund the operations of this government. They are not collected to those who do not earn enough money to support themselves. The McCain's and many others in their tax bracket combine for billions of dollars in tax revenues. Just because they get a break on a portion of those taxes doesn't mean that those who make less are entitled to that money. The last time I checked I made less than 100,000 per year and I am allowed to make the exact same tax deductions that the McCain's are. Just because they are able to afford more houses doesn't mean I should be given a bigger tax deduction. If you own a smaller home then, yes, obviously you are going to get a smaller deduction. But that's not my fault and that's not the fault of anyone that makes more money than you do. If you want a larger deduction then buy a bigger house. Plain and simple. But when you do I guarantee you will also be paying more in taxes. Why liberals argue with simple math is beyond me. No one is stopping anyone from buying more property. And it's not my fault or anyone else's fault if you can't afford the house you live in.
Money is power. The more money you have concentrated in the hands of a small number of people, the more power they have. It does not make for a thriving democracy with a viable middle class. A graduated tax policy is one method where a government "of the people, by the people, and for the people" can protect itself from the unfettered greed of a small, powerful group of people. In the old days we used to call them kings and gentry.
Yes, Twain wrote about them in a Connecticut Yankee in King Arthurs Court... The ending was rather depressing, but he hit right on about the rich and their entitlements...
After all we all realize that CindyDear is taking a tax writeoff for the darn planes and you cannot even write off your gas to go to work like the French do. (and all of those wonderful trips around the world and you betcha she shopped at Hermes in Paris. and probably wrote that off as well. After all, do you think she will ever be audited???
Hmm, I guess you don't really know anything about the tax laws in the U.S. after all. Fact is that you don't get to take the same deductions and apply the laws in the same manner as Mr. and Ms. McCain, or anyone else making over a $1 million per year. The reality is that only 2% of persons with incomes over $1 million per year pay any federal income tax. The other 98% pay nothing, nada, zero. Hmm, guess there is a difference, and being stupid about it makes it okay to vote for someone who depends on your being ignorant about these little facts.
your claim is patently absurd ... care to cite your source?
Your statistics couldn't be more wrong. I'd try to educate you, but you likely wouldn't understand.
I think the point he is TRYING to make in his article is that if you ITEMIZE your tax return (that is you DO NOT take the STANDARD deduction available to those NOT itemizing their taxes) and you own SEVERAL properties then you can actually MAKE money off your rental properties while still taking a LOSS (i.e. DEDUCTION) thanks to depreciation PLUS all the other related expenses you get to deduct.
WARNING - IF YOU ARE NOT A WEALTHY PERSON DO NOT TRY TO IMAGINE HOW COMPLICATED BUT ALSO HOW MANY POTENTIAL DEDUCTIONS ARE POSSIBLE ON AN INDIVIDUAL TAX RETURN. ASK A TAX PROFESSIONAL.
This comment seems to indicate that most Americans like to believe that they somehow live in the same world as the ultra-wealthy. Trust me - YOU DON'T. Here's the test: If you actually WORK (i.e. have a job with a salary) then you aren't ULTRAWEALTHY.
I am a poor person [I make less than $5mil a year].
So can anybody tell me how, people with that many homes, manage their wardrobes?
My niece tells me that they have duplicate wardrobes. Is that conceivable?
I am perplexed because I always have poorer people, who don't have the means to buy food let alone clothes, on my mind.
Yes. Many wealthy people maintain at least minimal, climate-appropriate wardrobes in each of their multiple homes.
isn't it funny how those with less are more generous and giving, and those that have are usually hoarders and greedy. they could have turned that down, as well as the medical benefits and social security - but NOOOOO.... greed is usually WHY they are rich, huh?
Why would they turn it down? It is theirs and not yours. It has nothing to do with greed. I think it has more to do with your jealousy.
Are you Dick Cheney?
That"s true when you are getting rich, but once you get rich, you are above the law. You could pay your house keeper for forty or more hours a week and she till on welfare.
Uh, no, you are simply wrong. Most of the charitable donations in the U.S. are made by wealthier individuals, and top 1% give a significantly higher PERCENTAGE of their income to charity (not just a higher amount) than the rest of the population. In any event, I think you are engaging in a broad generalization. I have poor friends who are quite generous and have other poor friends who are cheapskates. Similarly, I have wealthy friends who would give you the shirt off their backs and others who wouldn't give you a dime. One's generosity is a matter of character, not personal wealth.
The Republican nominee's indifference to the housing woes of many Americans, while he jets from one McCain McMansion to another, is a perfect symbol of how out-of-touch he is with the daily realities of ordinary people.
The above says much, this article needs to be read by both McSame and those die-hard Hilary supporters - so they at least know what is coming down the pike.
I don't think you should hope for any voter to get preoccupied with the real estate issue. Republican surrogates are already saying Rezko every other sentence ... which doesn't help when you ha ve newscasters at the convention fondly remembering the disastrous Democratic Convention of 1968. Slimy town and slimy politics. Those points keep dropping off Obama's score.
Dear Peter Dreier,
Interesting article. However, as a mortgage-holding taxpayer whose combined joint income is less than $100,000, I have to tell you that the mortgage interest deduction on our house is INVALUABLE at tax time. I'm not sure how we could make ends meet without it.
(By the way, you wrote "principle" above when you meant to write "principal".)
It's even worse than this for the baby boomers in the middle class. Before Bush's "tax cuts", a senior citizen could get a "tax free" year, to sell their home, not pay capital gains, and finance their retirement. This is now gone. It's been replaced by the $500,000 capital gains free allowance. Now, you might say $500,000 is a generous allowance -- but that's not necessarily the case if you've lived in the same home for 25 years. I was looking to downsize and move into a smaller home, after 28 years in my current home. It's in a neighborhood where real estate prices have risen significantly over the last 28 years. Once I calculated the capital gains tax, I couldn't afford to buy a smaller home in the same neighborhood!! The thing that is most galling, is that the new capital gains tax laws allow someone to take the $500,000 allowance whenever they sell a house. So, someone can flip real estate investments as many times as they like and take the $500,000 allowance every time! That means that people like the McCains can buy and sell real estate, make up to a $500,000 profit on each sale and not have to pay capital gains tax!!! On the other hand, middle class families with one home that they've lived in for many years are the ones paying the capital gains tax and seeing their retirement plans vanish!
No. They can't. You need to read the Internal Revenue Code. You must have owned and USED the property as your principal residence for at least 2 years out of a 5 year period before selling the house, and you may only exclude one transaction during a 2-year period ending on the date of the sale of the house. There is a limited exception to this general bar for certain hardship conditions, such as unforeseen health or employment changes. Also, this is not a "new" rule, but rather how the law has read for the past 11 years--it has nothing to do with Bush's tax cuts--he wasn't even President at the time (not that I support GWB, because I don't).
Loading comments…
Posted August 24, 2008 | 07:43 PM (EST)