If John Kerry wins the presidency, his household will be the richest ever to occupy the White House. Kerry's wife, Teresa Heinz Kerry, controls a vast fortune estimated by a Los Angeles Times study to fall somewhere between $900 million to $3.2 billion. Through a series of entirely legal maneuvers, Kerry is attempting to conceal from American voters the full extent of his wife's wealth and her corporate holdings — and the fact that she apparently manages to pay a remarkably small amount of taxes.
Such evidence as one is able to assemble from publicly available information raises deeply disturbing questions. The Kerry campaign has disclosed Mrs. Kerry's 2003 income as $5,115,000. Using a conservative estimate of her wealth at $1 billion — at the low end of the Los Angeles Times' estimates — then we can easily see that her investments yielded only a miniscule one half of one percent last year.
In 2003 even Treasury bills yielded twice that much. Dividends on the S&P 500 yielded three times that much. Long-term Treasury bonds yielded eight times that much. If Mrs. Kerry's investment income really was only one half of one percent, then she is perhaps the world's worst investor. Or if her income is in fact greater, and she has found some way to minimize it for tax purposes, then Mrs. Kerry may be the world's greatest cheat.
Let's put this in terms that people of less extreme wealth can relate to. If you had $100,000 invested last year and your investment income was only $500 — the same percentage as Mrs. Kerry's income — then something would be very much out of whack.
Perhaps much of Mrs. Kerry's wealth is held in various types of trusts, the income of which is not reported on her personal tax returns. But if that's the explanation, then disclosing only her personal tax returns would be a deceptive exercise in making her income seem as small as possible to voters.
Or perhaps Mrs. Kerry's taxable income has been greatly reduced by legitimate deductions, such as contributions to charity (including her support of liberal political causes like the Tides Foundation). Maybe Mrs. Kerry has found a way to take deductions in connection with her Gulfstream jet, her $5-million ski chalet in Idaho, her $9 million oceanfront "cottage" in Nantucket, her $4 million estate in western Pennsylvania, or the $6.9 million five-story Boston mansion she purchased with her husband.
We can't know exactly what is out of whack with Mrs. Kerry's income, if anything, because she and her husband have always chosen to file separate tax returns. Mrs. Kerry's separate returns have never been made part of the public record.
The Kerry campaign said in March that it will make the first two pages of Mrs. Kerry's Form 1040 available to the public in October, when her tax preparers finalize it. This will give voters no more than a handful of days to consider what little is disclosed there, before going to the polls on November 2.
Even then, the first two pages of Mrs. Kerry's Form 1040 are a mere summary that will disclose virtually nothing we don't already know. They will not disclose specific holdings; income, profits, or losses from individual investments or partnerships; or whether or not Mrs. Kerry utilizes potentially abusive tax shelters or off-shore entities. Mrs. Kerry's reported taxable income will remain suspiciously small in proportion to reasonable estimates of her vast wealth. And voters will have no explanation as to why.
The Kerry campaign justifies this last-minute pre-election peep at Mrs. Kerry's wealth by claiming that George W. Bush did the same thing during the 2000 election with his 1999 returns. But Kerry fails to mention that Governor and Mrs. Bush's entire joint Form 1040 for 1998 — the prior tax year — was made available. By the standard set by candidate Bush, Mrs. Kerry should release her entire 2002 Form 1040 immediately — not just the first two pages — and she should do so now.
The Kerry campaign argues that more complete disclosure would compromise Mrs. Kerry's right to privacy. But surely a woman who serially marries senators understands that, from time to time, she may have to forfeit that right.
Liberals have argued that Mrs. Kerry's personal fortune has nothing to do with her husband — after all, she married it. But then again, so did he.
Legitimate concerns extend beyond wondering just how rich Mrs. Kerry really is, and whether she paid her fair share of taxes. There are also questions about power, influence, and conflict of interest. According to the Los Angeles Times, Mrs. Kerry's "money is actively managed every day of the year, providing capital to Gannett, Anheuser-Busch, Pfizer and Procter & Gamble, among many others." Any of those companies would have a keen interest in Mrs. Kerry’s husband’s policies as president.
Already Kerry's economic proposals seem tuned to serve his wife's economic interests. His proposal last March to end tax breaks for U.S. corporations that do business overseas was designed with a loophole that would let the H. J. Heinz Company — the centerpiece of Mrs. Kerry's family fortune — keep its overseas tax breaks, and get a lower domestic tax rate at the same time.
Voters of both parties should demand immediate and full disclosure of Teresa Heinz Kerry's holdings and tax returns. There is ample precedent: In 1984 the husband of Democratic vice presidential candidate Geraldine Ferraro made his tax returns public in response to pressure from voters. Today the stakes are greater in every way. Mrs. Kerry’s disclosure should be no less.
— Donald Luskin is chief investment officer of Trend Macrolytics LLC, an independent economics and investment-research firm. He welcomes your comments at don@trendmacro.com. Thanks to reader Richard Mirabella for suggesting some of these ideas.
Such evidence as one is able to assemble from publicly available information raises deeply disturbing questions. The Kerry campaign has disclosed Mrs. Kerry's 2003 income as $5,115,000. Using a conservative estimate of her wealth at $1 billion — at the low end of the Los Angeles Times' estimates — then we can easily see that her investments yielded only a miniscule one half of one percent last year.
In 2003 even Treasury bills yielded twice that much. Dividends on the S&P 500 yielded three times that much. Long-term Treasury bonds yielded eight times that much. If Mrs. Kerry's investment income really was only one half of one percent, then she is perhaps the world's worst investor. Or if her income is in fact greater, and she has found some way to minimize it for tax purposes, then Mrs. Kerry may be the world's greatest cheat.
Let's put this in terms that people of less extreme wealth can relate to. If you had $100,000 invested last year and your investment income was only $500 — the same percentage as Mrs. Kerry's income — then something would be very much out of whack.
Perhaps much of Mrs. Kerry's wealth is held in various types of trusts, the income of which is not reported on her personal tax returns. But if that's the explanation, then disclosing only her personal tax returns would be a deceptive exercise in making her income seem as small as possible to voters.
Or perhaps Mrs. Kerry's taxable income has been greatly reduced by legitimate deductions, such as contributions to charity (including her support of liberal political causes like the Tides Foundation). Maybe Mrs. Kerry has found a way to take deductions in connection with her Gulfstream jet, her $5-million ski chalet in Idaho, her $9 million oceanfront "cottage" in Nantucket, her $4 million estate in western Pennsylvania, or the $6.9 million five-story Boston mansion she purchased with her husband.
We can't know exactly what is out of whack with Mrs. Kerry's income, if anything, because she and her husband have always chosen to file separate tax returns. Mrs. Kerry's separate returns have never been made part of the public record.
The Kerry campaign said in March that it will make the first two pages of Mrs. Kerry's Form 1040 available to the public in October, when her tax preparers finalize it. This will give voters no more than a handful of days to consider what little is disclosed there, before going to the polls on November 2.
Even then, the first two pages of Mrs. Kerry's Form 1040 are a mere summary that will disclose virtually nothing we don't already know. They will not disclose specific holdings; income, profits, or losses from individual investments or partnerships; or whether or not Mrs. Kerry utilizes potentially abusive tax shelters or off-shore entities. Mrs. Kerry's reported taxable income will remain suspiciously small in proportion to reasonable estimates of her vast wealth. And voters will have no explanation as to why.
The Kerry campaign justifies this last-minute pre-election peep at Mrs. Kerry's wealth by claiming that George W. Bush did the same thing during the 2000 election with his 1999 returns. But Kerry fails to mention that Governor and Mrs. Bush's entire joint Form 1040 for 1998 — the prior tax year — was made available. By the standard set by candidate Bush, Mrs. Kerry should release her entire 2002 Form 1040 immediately — not just the first two pages — and she should do so now.
The Kerry campaign argues that more complete disclosure would compromise Mrs. Kerry's right to privacy. But surely a woman who serially marries senators understands that, from time to time, she may have to forfeit that right.
Liberals have argued that Mrs. Kerry's personal fortune has nothing to do with her husband — after all, she married it. But then again, so did he.
Legitimate concerns extend beyond wondering just how rich Mrs. Kerry really is, and whether she paid her fair share of taxes. There are also questions about power, influence, and conflict of interest. According to the Los Angeles Times, Mrs. Kerry's "money is actively managed every day of the year, providing capital to Gannett, Anheuser-Busch, Pfizer and Procter & Gamble, among many others." Any of those companies would have a keen interest in Mrs. Kerry’s husband’s policies as president.
Already Kerry's economic proposals seem tuned to serve his wife's economic interests. His proposal last March to end tax breaks for U.S. corporations that do business overseas was designed with a loophole that would let the H. J. Heinz Company — the centerpiece of Mrs. Kerry's family fortune — keep its overseas tax breaks, and get a lower domestic tax rate at the same time.
Voters of both parties should demand immediate and full disclosure of Teresa Heinz Kerry's holdings and tax returns. There is ample precedent: In 1984 the husband of Democratic vice presidential candidate Geraldine Ferraro made his tax returns public in response to pressure from voters. Today the stakes are greater in every way. Mrs. Kerry’s disclosure should be no less.
— Donald Luskin is chief investment officer of Trend Macrolytics LLC, an independent economics and investment-research firm. He welcomes your comments at don@trendmacro.com. Thanks to reader Richard Mirabella for suggesting some of these ideas.
