One great thing about American politics is its fascinating relationship to American money. Unless you live on mars, you know this is an election year. You’re probably also aware the race is shaping up as contest between the Republican John McCain and either Hillary Clinton or Barack Obama of the Democratic party.
A headline on the race caught my eye yesterday. Evidently the wife of the republican nominee, John McCain, reported over 6 million in taxable income in 2007 (clicky). Now, since you’re reading this blog, you probably know that taxable income isn’t always a good indicator of wealth. So, I sat down and did a quick back of the envelope looking and John and Cindy McCain’s financial situation.
As near as I can tell, there have been two serious credible analysis looking at their wealth. The Center for Responsive politics has analyzed their federal disclosure forms and projected the maximum value of their wealth at $45,045,011. However I spoke with center’s PR representative and this is almost certainly an undercount. The other credible source is from an unnamed analyst with the associated press, who put their net worth at upwards of $100 million.
I think both of these estimates are undercounts. I think the McCain’s have effective wealth in excess of a billion dollars. John McCain’s wife currently controls about 37% of the privately held Hensley & Co, an Arizona beer distributor. If Hensley & Co. were publicly traded her portion would be worth at least $1.017 billion (assuming a P/E ratio of 15.5 on 37% of $178 million in post tax revenue (clicky)). In addition, the McCains own a minority stake in the Arizona Diamondbacks baseball team, a LOT of municipal bonds, JP Morgan mutual funds, and many properties in Arizona, including plots of raw land, a medical office complex and several houses. Cindy is also the beneficiary of trusts from her parents and John has healthy royalties from the 4 books he has written and payments from his syndicated radio show (here, here and here). In short, the McCains are very, very rich.
Why does Cindy only have personal taxable income of 6 million dollars? I think a lot of what happening is that her personal wealth is being sheltered via family trusts and through Hensley and Co’s umbrella company. So, the six million is probably a very poor reflection of her actual wealth. This would explain her reluctance to disclose her federal income taxes earlier in March. With John and Cindy McCain’s access to such a large fortune, it would easy for their political opponents to paint John as being elitist, hence their reticence about openly discussing finance.