The McCain campaign released financial documents Friday indicating that Gov. Sarah Palin of Alaska had assets over $1 million, consisting largely of an ample retirement portfolio, real estate and her husband's commercial fishing business.
Palin, the Republican vice-presidential nominee, kept her tax-rate low by putting all of her investments in tax-deferred accounts. In addition, she did not report as income the $17,000 that she received in per diem payments from the state while she remained at her home in Wasilla.
Tax returns for the years 2007 and 2006 show that Palin and her husband, Todd, had diverse sources of income. In addition to her salary as governor, there were capital gains from the sale of a snowmobile and income from Todd Palin's winnings in the annual Iron Dog snowmobile race.
One of the most disputed aspects of Palin's returns, which were prepared by H&R Block, a national tax preparation company, is the tax treatment of the per diem payments.
The McCain campaign has said that these payments are not taxable income, a position that has been questioned by tax experts. "We have letters from tax experts on this," said Brian Jones, a spokesman for the McCain/Palin campaign. "The state of Alaska conferred with the Internal Revenue Services, and this is the decision that they came to."
The tax treatment of the payments has drawn considerable interest among tax attorneys, who have written on this subject on various blogs, challenging the campaign's interpretation of tax law.
"What jumps out to me in this tax return," said Robert S. McIntyre, director of the Citizens for Tax Justice, a labor-backed group, "is that the $17,000 in per diems is not there, and it should have been."
The McCain campaign has been under pressure to release Palin's tax returns after the Obama campaign released 10 years of the returns of Sen. Joe Biden, Obama's running mate. In addition, Biden has been required to routinely file financial disclosure statements with the federal government because he is a sitting senator.
The documents issued Friday are the first look into Palin's personal finances and consisted of the federal public financial disclosure report and two years of tax returns.
The Palins reported taxable income in 2007 of $166,080, consisting largely of Palin's salary as governor. The couple paid $24,738 in taxes on this income, at a tax rate of around 15 percent. But in 2006, the couple reported taxable income of $127,869, which consisted mainly of Todd Palin's income from BP Exploration Alaska, and an income of less than $5,000 for Sarah Palin from the state of Alaska prior to becoming governor.
That year, the couple paid $11,944 in taxes, for a tax rate of just under 10 percent.
Yet for a couple with modest incomes, the Palins have amassed a sizable portfolio that consists mainly of retirement investments and real estate.
The family home in Wasilla, which has been valued for tax purposes at $550,000, was listed on the federal financial disclosure form, which requires that all values be given in ranges, at between $500,000 and $1,000,000.
The remaining real estate was valued at between $150,000 and $365,000 and consisted of a fishing leasehold on the Nushagak River and partial interest in two other pieces of land.
The Palins kept their taxes low by putting all their investable assets into tax deferred accounts, including 401(k)s, IRAs and defined contribution plans from Wasilla, the state of Alaska and BP Alaska.
The disclosure form listed the portfolio's value as between $300,000 and around $850,000. The assets in these retirement accounts included a sophisticated range of investments, among them mutual funds invested in Latin America, small cap stocks, shares in Spanish, Belgian and Australian indexes and a mid-cap growth fund. Among the firms represented in the portfolio are Morgan Stanley, Putnam, T. Rowe Price and Alliance Bernstein, all well-known Wall Street companies.