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August 26, 2008
My eight houses
Posted by: Andoni
No, I'm not mocking Senator John McCain. There was a point in my life when I owned eight houses and the only reason I bring this up is that some of the criticism leveled against McCain for his seven houses is off the mark. However, there are other points about the answer to his houses question that need to be made.
I owned so many houses because of the tax laws at the time. The time was between the late 70's and the mid 80's and I was earning a 6 figure income as a physician. Most accountants at the time advised people in these high tax brackets to buy real estate in order to lower their taxes.
This is how it worked. If you purchased houses, you could depreciate them and deduct the depreciation directly off your earned income. It was legal and it saved tens of thousands in income tax by reducing your taxable income on paper (but not in reality). Additionally it got you out of those very tax high brackets -- 50 to 70% if I remember correctly. It was the greatest tax saving devise I ever encountered. Today they would call it a loophole for the rich.
Why am I telling you all this? First, despite my eight houses, I think I was and still am very attuned to the middle class and people's economic problems. There is no correlation between my owning eight houses and not being able to relate with working people. So I don't buy the Obama line that McCain owning seven homes means he cannot understand or relate to ordinary folks.
However, when I owned my eight houses, if someone asked me how many places I owned, I would know exactly. Furthermore, I could tell them where these houses were and what the monthly mortgage payment was.
So when John McCain stumbles over the question of how many homes he and Cindy have, I think there are three possibilities:
1. he instinctively knew that 7 wouldn't sound good, so he played ignorant
2. there is a neuron problem and he simply couldn't recall
3. he really doesn't know the details of his finances because he is not privy to them. a.) Maybe he is a kept man or b.) he is so unknowledgeble on economic/financial matters that he doesn't care to know, want to know or try to know.
Number 1 is supported by the fact that when McCain was making major renovations to a new house at the time he was first running for the Senate in 1986, he used a false name to try to fool the public.
Number 2 I've written about here and here.
Number 3, part a.) wouldn't be good because that would open him to the same charge the Republicans made against Senator John Kerry when he ran for president in 2004 -- that he was a kept man. Kerry's wife Teresa Heinz was the one with the money.
Number 3, part b.) that he doesn't know or care about economic or financial things is a death knell and a reinforcement of statements McCain has made in the past.
So, any way you slice it, McCain's house problem is not good. But saying that he is out of touch with people simply because of the seven houses he and his wife own is not really the most serious part of his housing problem.
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Comments
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Well gee. I vote for both #2 (he's senile) and #3 (he doesn't keep track). But, if you look at where the condos are, it does not seem so overpowering. In fact, since they are all over the place and in different entities, I can see why a person could get a little confused. There's the creekside ranchette in Sedona (that will become the Western White House, I suppose), 2 condos in Phoenix that have been combined into one; a condo in Arlington ; a condo in La Jolla; a 2nd (or 3rd, depending on how you count) condo in Phoenix; another condo occupied by his daughter; and 2 condos in Coronado in Calif. Gosh it gets confusing with combining condos into one and different entities owning 2 or 3 houses each. So yes I cut him slack. But he is a disgusting creature (not that I'm a fan of Obama either) so pile on if it works.
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Couple of things...
So I don't buy the Obama line that McCain owning seven homes means he cannot understand or relate to ordinary folks.
Well, I do. There is a huge difference between someone earning a six-figure income and someone with nine-figure assets. It's not even close. Someone who makes $250,000 a year could feel the pinch of the bad economy, especially if he or she is repaying student loans or living in a high-cost urban area, like San Francisco. If you have $100 million +, you're not going to be worried if a box of Cheerios shoots up to $7.00 a box or if gas prices continue to soar. The McCains will be just fine.
John and Cindy McCain have no clue what it's like to lose a job or to scramble to find a new job and pay the mortgage. None. So, no, I don't think the McCains relate to what many of us are experiencing.
3. he really doesn't know the details of his finances because he is not privy to them. a.) Maybe he is a kept man or b.) he is so unknowledgeble on economic/financial matters that he doesn't care to know, want to know or try to know.
I vote for this option. My guess is that most of "their" money belongs to Cindy and she has advisors that take care of her finances, which includes purchasing their homes. So, yeah, my guess is he really wasn't in the know.
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McCain says he has only four houses that he uses for personal purposes. The others are for investment. That means, of course, that he and/or Cindy should be claiming depreciation deductions for those other houses on their tax returns.
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....three possibilities:
1. he instinctively knew that 7 wouldn't sound good, so he played ignorant
2. there is a neuron problem and he simply couldn't recall
3. he really doesn't know the details of his finances because he is not privy to them. a.) Maybe he is a kept man or b.) he is so unknowledgeble on economic/financial matters that he doesn't care to know, want to know or try to know.....Two out of Three are really, really bad.
Enough Said.
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It could also be said that McCain is humble and doesn't want to flaunt his wealth. Isn't it great that we live in a country where one can become rich no matter what their circumstance?
The comments to this entry are closed.
Hawyer on Aug 26, 2008 6:44:40 PM:
At the risk of appearing radically affluent - which I am certainly not - I own three houses: one primary residence and two secondary residences. However (like Andoni) if asked about the quantity of residences I own - I could give you the total right off the bat and recite to the nearest whole dollar my monthly mortgage payments and annual property tax assessments.
While some might consider my real estate investment decisions extravagant and out of touch - I consider them miserably middle class.
McCain, on the other hand, came off as insufferably out of touch with reality - as "Joe Six-Pack" cannot contemplate having one residence paid-off - much less seven. In anticipation of this question, he could have said:
"You know my friend, in addition to our primary residence in Phoenix where we have lived for 25 years, we have ranch near Sedona, Arizona, and of course our condo in Arlington, Virginia. Cindy and I also have several investment properties."
The problem is Cindy's assets are estimated to exceed $100 million and John's personal assets are estimated at about $40 million. Accordingly, last year John reported $259,000 taxable income, while Cindy reported $6 million.
Now no matter how you slice it and dice it, this couple is filthy rich - which is perfectly alright, BUT owning up to it fair in square is clearly detrimental to his populist spin.
For fun take a Google-Earth tour of the McCain's real estate.
http://www.youtube.com/watch?v=0Glia_Vrbc8