A tax return is great reflection of one's overall personal finance picture, but it is also telling the story of one's capability to control personal finance issues. Yesterday, the Whitehouse released the 2004 tax returns from the President and the Vice President. (Full tax returns in PDF format are available from TaxHistory.org.) What does it tell you about our leaders' personal finance savviness?
Let's take a look at the key numbers:
The President (2004 tax return)
- Total Income: $784,219
- Adjusted Gross Income (AGI): $784,219
- Itemized Deductions: $111,431 (including $77,785 charitable donations, $24,344 deductible taxes, and $27,813 miscellaneous deductions)
- Total Tax: $207,307
- Total Tax Withheld and Estimated Tax Payments: $245,841
- Tax Refund: $38,534
The Vice President (2004 tax return)
- Total Income: $1,747,794
- Adjusted Gross Income: $1,734,373 (Deducting $13,421 self-employment tax)
- Itemized Deductions: $405,695 (including $303,354 charitable donations)
- Total Tax: $393,518
- Total Tax Withheld and Estimated Tax Payments: $290,855
- Amount Owe: $102,663
It should not surprise anybody that the Vice President family is getting more income than the First Family; Cheney used to be CEO of Halliburton, a Fortune 500 company and he is still receiving deferred compensation from the same company.
What's more telling about two families' personal finance shrewdness is the different withholding/estimated tax payment status. For the second consecutive year, the First Family is withholding more than it is due. As I reported at PFBlog this time last year, the First Family overpaid by $61,451. Apparently they hired a better accountant this year, but still, overpayment is extending an interest-free loan to the Treasury, and the First Family can be a few grand better off if they withhold less and park the money in greener pasture.
Cheney's tax return tells a very different story. He managed to get a $100,000+ tax free loan instead by delaying the tax payment. What's more, he did this without triggering a penalty. The Vice President's family paid $253,067 in 2003 and they just withheld/prepaid a bit more than 110% of their 2003 tax. Apparently, they are aware of the IRS's safe harbor rule, which removes penalty as long a high-income family like Cheney's paid as much as 110% of last year's tax.
Yes, both tax returns tell much more than this, but even from these simple numbers, it is not difficult to tell who is better at managing money. Don't you think so?