Cindy McCain’s 2007 income fell by a third, tax return shows

The McCain household wasn’t immune from the weakening economy, according to tax returns released Friday: Cindy McCain’s income fell by nearly a third last year.

But the family’s considerable investments, estimated at more than $100 million, and a steady flow of salary, dividends, capital gains and interest are probably preventing any economic pain at home.

In 2007, Cindy McCain reported income of $4.2 million and ended the year with the federal government owing her almost $1 million. Instead of asking for a refund, she applied the excess tax payments to next year’s bill.

She was doing considerably better in 2006, when she reported income of $6.1 million. Phoenix’s economy was thriving back then, and so was her family business, a Phoenix beer distributorship that she inherited from her father. But when that boom began to flatten out, it took a toll on Hensley & Co.

John McCain doesn’t own any part of the family business, according to records at the Arizona Department of Liquor Licenses and Control.

McCain and his wife file separate tax returns. In April, McCain made his 2007 return public, showing that he had almost no interest income or dividends. He earned a Senate salary of nearly $162,000 and book royalties of $177,000. He also received what his staff called a tax-free disability pension of $58,000 from the Navy.

Under Arizona community property law, the McCains pool their salaries and each reports half the total, but their investment income is reported separately. So the two each show salaries of $297,350. In fact, Cindy McCain earned $433,000 as chairwoman of Hensley.

In addition, she received nearly $2.9 million in returns on her Hensley stock in 2007, but that was down from more than $4.5 million in 2006. That money was reported in a miscellaneous income category that includes royalties, real estate and trusts on the federal 1040 tax form.

A spokesman for the McCain campaign said the Hensley payouts dropped because the company spent more on capital investments, which could have reduced its profitability, and because of the weakened economy.

The McCain children also own significant shares in Hensley.

Cindy McCain’s income took hits in a number of other areas. Her taxable interest income dropped from $40,000 to $23,000. Dividends dropped from $283,000 to $118,000. But her capital gains income of $746,000 in 2007 was virtually unchanged from 2006.

Her reduced income in 2007 does not appear to have affected the family’s lifestyle. In February, Cindy McCain purchased a $2.1-million beachfront condo in Coronado, Calif., through her limited-liability corporation known as Dream Catcher Family.

Cindy McCain’s federal tax bill was $1.1 million, or about 30% of her taxable income.

Early in her husband’s campaign for the presidency, Cindy McCain was reluctant to disclose her family’s financial information and came under intense pressure to do so.

Then, in May, the campaign unexpectedly released her 2006 tax return on the same day it released the candidate’s health records. At that time, she had yet to file her 2007 return.

The tax returns made public do not contain individual tax schedules, which would detail her investments and charitable contributions, among other things.

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ralph.vartabedian @latimes.com