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IRS cuts back on enforcement

Bush's taxes: His return shows much of his income is from the sale of the Texas Rangers.

©New York Times

© St. Petersburg Times, published April 14, 2001

WASHINGTON -- President Bush and his wife, Laura, released their federal income tax returns for 2000 on Friday, showing that they received $744,682 in income and paid $240,342, or 32.3 percent, in taxes.

Vice President Dick Cheney and his wife, Lynne, reported income of $36,086,635, on which they paid $14,295,058 in federal income taxes, or 39.6 percent.

Most of the president's income came from interest earned on his profits from the sale of his interest in the Texas Rangers baseball team in 1998, while the Cheneys' income reflected the closing out of Cheney's accounts at Halliburton, the global oil services company where he was chief executive officer until he resigned on Aug. 10 to run for vice president.

No law requires presidents or vice presidents to release their income tax returns. The tradition began in 1977 with President Jimmy Carter and was promoted by the fraudulent $576,000 tax deduction that President Richard Nixon took during his first year in the White House.

Nixon was never charged, but Edward L. Morgan, a White House lawyer and an assistant treasury secretary in the Nixon administration, pleaded guilty to tax fraud in 1975 and served four months in federal prison.

Bush earned $70,554 as governor of Texas after declining his salary for those days when he was campaigning for president. The amount he declined was about $40,000, said Robert McCleskey, a Midland, Texas, accountant who has long prepared the Bushes' returns.

Most of the couple's income came from a trust, administered by Northern Trust Co. in Chicago, which shields them from knowing what assets they own.

The couple reported $549,236 of taxable interest, which suggests a large portion of their holdings are still in the Treasury bonds and other federal government debt that they bought in 1998, when the sale of the baseball team stake gave them an income of more than $18-million.

The 2000 tax return also showed $61,546 of dividends and a $138,358 capital gain from the sale of their former lakefront home on leased land about a two-hour drive from their ranch near Waco, Texas.

The tax return included a few thousand dollars from what McCleskey said was the closing out of accounts connected with the baseball team. The oil business that Bush once ran reported sales of $733 and a profit of $314.

A small royalty interest in another oil investment allowed the couple to take a $733 depletion allowance, a tax break the oil and mining industries were given by Congress to compensate for the fact that minerals extracted from the ground are not replaceable.

The Bushes were not allowed to take all of the itemized deductions they listed because Congress limits such tax breaks for high-income taxpayers. The tax return listed $143,300 in charitable gifts, $11,536 in property taxes on their Texas ranch, $2,500 in income tax preparation fees and $33,738 in fees for managing their fortune. Their deduction was limited to $150,198 of these $191,074 in expenses.

Bush received a $75,000 advance for his campaign book, A Charge to Keep. He listed the royalty as income and paid taxes on that money, but gave away the full amount.

The Cheneys reported $34,367,375 in wages and salary, almost all of which reflected the closing of his accounts at Halliburton. His salary as chief executive for part of the year was $806,332.

The rest of their earned income came from the $948,738 Lynne Cheney earned from writing and speaking as a cultural commentator and the $443,730 paid to Dick Cheney as a corporate director and consultant by Electronic Data Systems, Union Pacific Corp., AT&T Media One and US West.

The couple also reported $225,140 in dividends, $84,036 in taxable interest, $55,481 of taxable pension income and $10,000 in real estate investments. They also had $112,032 in tax-exempt interest from municipal bonds and $144,352 in tax exempt pension income.

The Cheneys apparently paid more in federal income taxes than the law requires.

The portion of their income paid in federal income taxes was 39.6 percent, a rate that applies only to earned income of more than $250,000. Because of some investment losses and some long-term capital gains, which are taxed at 20 percent, their tax bill could have been lower.

Cheney would not be the first nationally elected official to, along with his spouse, pay more in taxes than the law required.

In 1997 and 1998 President Bill Clinton and his wife, now Sen. Hillary Rodham Clinton, paid more than twice as much in federal income taxes as the law requires because they took as income royalties from Hillary Clinton's first book, paid taxes on the money and gave away the difference.

The book, It Takes a Village, generated more than $1-million in royalties, a sum that exceeded the limit Congress has set on charitable gift deductions, which is 50 percent of income.

Last year the Cheneys gave $41,616 to charity, or one-tenth of 1 percent of their income.

However, Cheney also gave to charity the after-tax value of his remaining Halliburton options on Jan. 18, three days before he was sworn in as vice president. The options are controlled by Phillip Ward, another Williams & Connolly lawyer, who will exercise them, pay the taxes owed by the Cheneys and give the rest to four charities. The stock options are worth $7.8-million.

The Cheneys will not receive a tax deduction for this gift, and their lawyer, Terrence O'Donnell, said they have instructed their tax advisers to "calculate to the penny" on the taxes due so that they do not receive any financial benefit from the options.

The value realized from the options will go to the University of Wyoming, George Washington University Medical Faculty Associates in Washington D.C., and Capital Partners for Education, which gives aid to poor high school students in the nation's capital.

Cheney also received a $1.4-million bonus from Halliburton that was paid in January and will be reflected on the tax return the Cheneys file next April, O'Donnell said.

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