First Couple Report Taxable Income of $673,000

President Bush and his wife reported $673,000 in taxable income in 2004, a slight drop from the previous year, and Vice President Dick Cheney and his wife reported a 63% increase in their taxable income, to $1.3 million, according to their tax returns, which were released Friday.

The Bushes paid $207,000 in federal income tax, approximately $20,000 less than last year. Their adjusted gross income last year was $784,219.

The Cheneys paid $393,518 in federal income tax, up 55% from the prior year.

The increase in the Cheneys’ income over their 2003 earnings stemmed in part from a stronger performance by their mutual funds and increased royalties from Lynne Cheney’s books, their attorney said. Before deductions, their adjusted gross income was $1.7 million.

Since he became vice president, Cheney received deferred income from Halliburton Co., the Texas oil services company where he was once chief executive and which had received billions of dollars in contracts for work in Iraq.

In 2004, the Halliburton payment to the vice president was $194,852, his office said. That amount was roughly $16,000 greater than the previous year. The 2004 payment was the fourth of five annual payments he elected to receive in an irrevocable deferred compensation arrangement made with the company in 1998.

Terrence O’Donnell of the Washington law firm Williams & Connolly, who represents Cheney, said that before the vice president took office, he bought an insurance policy on the deferred income guaranteeing the payment and interest regardless of the company’s fortunes, as a means to avoid potential conflicts of interest.

The lawyer attributed the increase in the Cheneys’ income to four factors: improved returns on mutual funds reflecting market growth in 2004 over 2003; an increase in royalties from children’s history books written or coauthored by Lynne Cheney; the income, which went to charity, from stock options exercised in 2004; and deferred compensation to Lynne Cheney from Reader’s Digest, from which she retired as a director in 2003.

The Cheney’s tax payments for 2004 of nearly $400,000 included $102,663 to make up for a shortfall in the amount withheld from their paychecks.

The Cheneys were not assessed a penalty for the underpayment, because during 2004 they paid more than 110% of the amount they owed in taxes the previous year.

The White House said that Bush’s income was made up of his $400,000 annual salary, as well as about $390,000 from taxable interest, dividends and real estate. He and his wife claimed itemized deductions, which were not made public, of $111,431.

They overpaid their taxes by $38,534, which they applied to their 2005 estimated tax.

According to the White House, the Bushes made contributions totaling $77,785 to a number of churches and charitable organizations. The churches included Evergreen Chapel at Camp David and St. John’s Episcopal Church, which they attend in Washington.

The charitable organizations included: the American Red Cross; the Salvation Army World Service Office; AmeriCares; the Susan G. Komen Breast Cancer Foundation; and the federal government’s Combined Federal Campaign, which distributes money to a wide range of organizations.

The vice president’s office said the Cheneys donated $303,000 to charity in 2004, roughly a 5% decrease from 2003. It did not specify the recipients.