Comparing Income Taxes: Clinton vs. Bush

Despite all of the political rhetoric about "tax cuts for the rich" and the "middle class squeeze," a recent analysis by the Tax Foundation shows that federal income taxes have fallen for groups at all income levels as a result of the Bush tax cuts, compared to the 1999 tax rates under Clinton (see chart above). And in fact, the group in the chart above that experienced the largest percentage decrease in taxes were the married taxpayers with $50,000 of household income (clearly middle class by most definitions) - they paid 21% less in taxes under the Bush tax rates compared to the Clinton rates. By contrast, "rich" single taxpayers with income of $125,000 paid only 10% less in taxes. In other words, some middle-class taxpayers received twice the tax cut on a percentage basis as some of "the rich." .....So much for the claim that "the Bush Administration and Congressional policies are failing middle-class Americans."
Both Hillbamas want to extend the tax cuts for the middle-class but not for "the wealthy."

Here's my challenge to Hillbama: Both of them are clearly part of "the wealthy," and pay federal income taxes at the highest current marginal income tax rate of 35%. Obama's income in 2007 was about $1 million, and just one or two speeches by Bill Clinton at $200,000 puts the Clinton household income into the top tax bracket (in 2006, Clinton earned $10 million in speaking fees).

If they want to end the tax cuts for "the wealthy," they don't have to wait for the Bush tax cuts to expire at the end of 2010, they can voluntarily pay taxes right now at the old 1999 rates under Clinton. In other words, if the highest marginal rate of 35% is too low for the wealthy Hillbamas, they could make a strong, personal statement right now by voluntarily paying their 2007 taxes at the old highest marginal rate of 39.6%. In fact, Hillbama, Warren Buffet and anybody else opposed to the Bush tax cuts, can voluntarily pay taxes this year under the 1999 Clinton tax rates, instead of the current tax rates (see chart below, click to enlarge). If higher taxes on the wealthy in the future are good, shouldn't they also be good right now?

Here's an idea: Why doesn't TurboTax introduce tax preparation software based on previous years' higher marginal tax rates, to easily allow people like Hillbama, Warren Buffet and other anti-Bush tax cut advocates to pay at their preferred higher rates, instead of the new lower rates. Alternatively, The Tax Foundation has historical income tax rates back to 1913 here. If 39.6% from 1999 is too low, Buffet et al. could file under the 1960s highest marginal tax rate of 91%, the 1970 tax rate of 70%, or the 1980s tax rate of 50%.

Comments

[I'mfromJersey:]

Your analysis considers 120K "rich". Bush disproportionately helped the very very rich-- the top 1 or 2 %. The rest of us have been the victims of a bait & switch con job. The article leaves out the AMT and ignores the massive impact of Bush's policies on State & local taxes (they HAD to go up to compensate) and on healthcare. All of these have hit the true middle class very hard under Bush and have more than offset any taxes saved by the rest of us.

2008 Mar 06 01:27 PM

[valinho:]

Somehow it seems that every time arepublican president creates groth is at the expense of the deficit. If you divide the amount Bush added to the federal deficit by the number of jobs created, he should have just paid them to stay home, and we would still have saved 50%. It all about who you give the money to. Mr. Buffet cna probably do without an extra $1000, while the guy working 2 jobs could use it. Try getting your hands dirty once in a while.

2008 Mar 06 01:30 PM

[Minimum Wage:]

Sigh. I've said it before, and I'll say it again. The "tax cuts for the rich/wealthy" theme is a smokescreen and populist pap.

It would be far more accurate and meaningful to acknowledge the reality: tax cuts for parents. But no politician will say that for fear of offending parents and inviting a backlash.

2008 Mar 06 01:47 PM

[VennData:]

And give Bush another edge, with the dollar down 50% against the Euro, those tax payments are way cheaper.

The Bush coalition: Patriots until they're asked to pay for it.

I'll sacrifice for this country, those who won't can leave.

2008 Mar 06 02:25 PM

[kartey:]

the tax cuts are part of what is destroying our country. the value of US currency is backed by the governments ability to collect taxes. thats pretty much it. bush's tax cuts have only helped shit on the $. wow, i saved 10% on my taxes, but the dollar is worth 30% less than it was a year ago (did i really save anything???).

2008 Mar 06 02:30 PM

[Tom B:]

"i saved 10% on my taxes, but the dollar is worth 30% less than it was a year ago"

For sure. But "Helicopter Ben Bernacke" also bears a huge amount of the blame.

2008 Mar 06 03:20 PM

[hamzzz:]

I totally agree with mark r - you are a 1st class A. H. - there is nothing conservative about the republicans - They spend money on wars and corruption BUT they don't want to pay for it. Bush tax cuts were tax shifts - not cuts. The republicans NOT conservatives just shifted the tax burden on to our kids to pay for it. Please don't confuse republicans with conservatives. Bush tax shifts are like buying an expensive house and making your kids pay for it.

2008 Mar 06 06:02 PM

[drbagel:]

It never ceases to amaze me how people may refuse to act in their own best interests. Taxes, if left unchecked, always drift up. There are an unlimited number of worthy causes on which the government can spend other people's money, but that doesn't make it the government's money. I look for every opportunity to vote for people who oppose this constant upward pressure on taxes.

I thank Dr Perry for his article. I ask certain contributers here if vulgarity and emotionalism really help their cause.

2008 Mar 06 07:35 PM

[scadaman66:]

Great article - I have emailed it to 5 friends and hope they pass it on to many more. I have always said that I wonder how many people who complain about the Bush taxcuts ever write a extra check out of their own pockets to the IRS. Same goes for the whiners saying we need more money for schools. Write a check then!

2008 Mar 06 08:14 PM

[scadaman66:]

Hey perspective - you're the moron. You missed the point in between all of your huffing and puffing. You'll never see the consumption tax in a million years in this country, you are living in a little fantasy world. All the other folks that posted, including me are saying is that they are tired of listening to the gristle from other people who say that we don't pay enough taxes, which is total nonsense. The only example that people give who curse in their posts is a bad example. Go write a check.

2008 Mar 07 06:31 AM

[chairman:]

Great piece. But please don't confuse tax rates with tax takes.

I thought your readers might find it interesting that:

+ George Bush is on track to become the biggest income tax collector in US history, collecting $1.4 trillion dollars more than Bill Clinton.

+ The top 5% of US Taxpayers will send a trillion dollars more to
Washington during the Bush administration than under Clinton.

+ Only the bottom 50% of taxpayers will send fewer income tax dollars to Washington under Bush's tax policies than Clinton's.

TOTAL FEDERAL INCOME TAXES (millions of dollars)
irs.gov/taxstats/indta...

YEAR Total Top 1% Top 5% Top 10% Top 25% Top 50% Bot 50%

1993 502,720 145,836 238,083 297,808 398,516 478,563 24,157
1994 534,754 154,337 254,106 317,902 425,402 509,256 25,498
1995 588,331 178,035 287,741 357,402 472,808 561,225 27,106
1996 658,124 212,626 335,433 411,404 535,164 629,684 28,440
1997 727,303 241,239 377,241 459,639 594,007 696,161 31,142
1998 788,452 274,009 424,506 512,836 651,964 755,240 33,212
1999 877,292 317,419 486,464 583,002 732,890 842,168 35,124
2000 980,521 366,929 553,670 660,150 823,706 942,179 38,342

Clinton $5.6T $1.9T $3T $3.6T $4.6T $5.4T $243B

YEAR Total Top 1% Top 5% Top 10% Top 25% Top 50% Bot 50%

2001 887,882 300,898 472,823 576,163 736,053 852,642 35,240
2002 796,862 268,608 428,680 523,812 668,558 768,963 27,899
2003 747,939 256,340 406,597 492,452 627,380 722,027 25,912
2004 831,890 306,902 475,224 567,273 705,915 804,471 27,419
2005 934,703 368,132 557,759 657,085 803,772 906,028 28,675
2006 934,703 368,132 557,759 657,085 803,772 906,028 28,675
2007 934,703 368,132 557,759 657,085 803,772 906,028 28,675
2008 934,703 368,132 557,759 657,085 803,772 906,028 28,675

Bush $7T $2.6T $4T 4.8T $6T $6.8T $231B

*IRS published data complete through 2005. See:
www.irs.gov/pub/irs-so...
2006-2008 forecast assumes no increase in income tax collection despite current upward trend. Eventual numbers likely to be even larger.

This tax factoid is brought to you by ThankTheTaxpayer.org.

2008 Mar 07 08:42 AM

[hattryx:]

ever heard of the laffer curve? higher tax takes are better if they come at a lower tax rate. you have to consider individual income taxes at the margin. how much did the average joe save under bush? i'm sure the data is skewed with subsidies etc, but overall, republicans usually have the right idea when it comes to taxation. warren buffett pays low taxes because he donates so damn much and invests so much. both are good things that should be encouraged. the fact that he sounds like a masochist has very little to do with policy

2008 Mar 07 09:20 AM

[Erich Riese...:]

It is truly sad that someone, author Mark Perry for instance, considers a married couple making a total of $125,000 to be super rich. Dishonest and shameful.

Fortunately, Warren Buffett provided a more coherent analysis during a recent appearance on CNBC.

"QUESTION: EMAIL TEXT: You have stated that people, including you, aren't paying enough taxes. OK. So why don't you send some of your billions to the government? Douglas Smith, Alexandria, VA

BUFFETT: Well, I don't--I don't say generally people. I think the lower class, the middle class, even the upper middle class are paying more than they should be paying. I think that the super rich, like myself, you know, my tax rate was 17 and a fraction percent in 2006, and everybody else in the office was paying way more. I'm not advocating tax increases across the board at all. I'm advocating a redistribution to the super rich. In the last 20 years, the total wealth of the Forbes 400 has gone from 220,000,000,000 to a 1,540,000,000, seven for one. The average wage has gone no place in real terms, it's up about 80, 85 percent and that's exactly what inflation is. So the world has gotten tilted to the super rich, and I think that the middle class and even the upper middle class, I think they've been getting a very raw deal. So I would change their taxes and move them over to people like me. "

And, for these individuals to voluntarily pay extra tax does not, of course, solve the problem. It is a glib, unintelligent response to a serious question: why are the super rich entitled to lower tax rates than working people?

2008 Mar 07 11:46 AM

[User 160704:]

Mark Perry, as much research as showed, the top 1% pay less taxes as a percentage of income that an individual who makes $50,000. Also, like everyone has said, what about our ailing economy, falling dollar and sky high oil prices. "Poor" people may have been taxed a bit more according to this research, but their money sure went a lot further.

2008 Mar 07 11:50 AM

[User 160704:]

Chairman - your facts are worthless because the rich are getting richer and that is why Bush has collected more in taxes. His tax laws favor them.

2008 Mar 07 11:52 AM

[dilettantedude:]

this is an ignorant approach to taxes. it ignores the other side of the equation, which is whether taxes (income) offset the depretiation in the national stock of resources, physical infrastructure, local, state & federal institutions of government such as local schools to the NIH, and so forth. Clearly it doesn't, so Bush's low taxes (and Clinton's as well), create a hidden tax, expressed by the deterioration of the indices of a civilized, free society. This hidden tax falls far more heavily on the poor, because they depend on these institutions and this infrastructure to a greater degree, and have less flexibility to adapt to deterioration.

2008 Mar 07 12:36 PM

[dilettantedude:]

you also completely ignore, because you cannot explain, the big increase in the Gini index (a global metric for how evenly income is distributed) for the US, which is now approaching that of Mexico and China and is no longer at the level one expects of more civilized societies.

2008 Mar 07 12:39 PM

[JohnB:]

"Under President Clinton the growth in debt ceased, but note the radical change in direction since George W. Bush entered office. There is no question and a lot of mathematical proof that the steepest upward rises in debt since the end of World War II, started with President Reagan and continued with other so called Neo-Conservatives."
www.cedarcomm.com/~stevelm1/usdebt.htm

2008 Mar 07 04:16 PM

[scadaman66:]

Yes, debt did "cease" if you want to call it that, but also remember, the stock market was roaring in the 90's, mainly because of Bush the first taxcuts. Billy Bob took credit for the "boom" even though the wheels were put in motion before he got there. I don't care who is in the White House - Democrat, Republican, whatever - if the stock market tanks, tax receipts will go down..WAY down.

2008 Mar 08 09:31 AM

[FlyFightandWin:]

Wait a second.... Are you referring to "Bush the first" who said "Read my lips No New Taxes?" Then he promptly raised taxes. Is this the guy responsible for the roaring and booming economy of the 90's? And are these the taxcuts you are referring to?

2008 Mar 08 06:56 PM

[User 163486:]

It isn't all about taxes. I am far more interested in the buying power of the money I have after taxes. For example, the dollar index was 85.01 when Clinton took over from the first Bush in January 1991. When Clinton left office and Bush entered office in January 1999, the dollar index was 94.48. As of April 2008 after over 7 years of Bush, the dollar index is 70.06, a decline of 26%. Under Bush, the Euro has gone from $1.16 U.S. to $1.58 U.S., a decline of 36%.

A family an annual family income of $75K under Clinton had a buying of $65,574, while currently under Bush, the buying power of that same income level is not the $67,237 implied by the tax cut, but $49,755. Those of us living under the Clinton economy, whether or not we liked him, and I didn't, were better off economically.

An additional fact: Clinton took the budget from a 28% deficit relative to the GDP to a 6% surplus. Bush turned the Clinton 6% surplus into a 32% deficit after 7 years. It is difficult to spin this any other way than - and believe me, I've tried - the Clinton economy was preferable to the population at large. And we hardly need to be reminded of the increase in the price of a barrel of oil since 1999, when it was $25/barrel, to now at $117/barrel.

So giving Bush Kudos for lowering taxes doesn't fly with me. Sorry!

2008 Apr 20 10:16 AM

[Regan2008:]

This article isn't about numbers, it's about principle. Why should someone who worked HARD all of their life be penalized by our government? Over 70% of all millionaires are self-made, meaning they didn't get rich working 37.5 hours a week for state government. They got up and busted their asses every day for years, and yet everyone thinks it is OK to take MORE of their money. The top 1% are the only ones right now that are keeping our economy afloat; they buy products and services that others cannot afford. If they couldn't by Cadillac's, who would? The Cadillac division of GM would go under if they couldn't afford them, adding more to the problems of this economy and this country (more middle-class workers out of jobs!)

I am a conservative, but I don't think that George is a good president, I think he is terrible. Although I will say it is quite humorous that this "dumbass from Texas" made A HIGHER GPA at Yale than John Kerry did. haha

We have a lot of problems, but pointing your finger at rich people and blaming them is a problem in and of it self; If you wanna be rich, then work harder. Open up a business, get a better degree, read books on investing, spend less and save more. We live in the most capitalistic society in the world; THERE ARE PLENTY OF OPPORTUNITIES out there. It all comes down to this: Are you willing to work hard enough, to take a chance and leave your comfort zone and risk a lot for your future? Are you willing to sacrifice now for your success later? Most of the wealthiest 2% that have been bashed by you liberals actually took this leap of faith and made it; they didn't come home from work at 4:30 and bitch about how great life is for "the Jones' ".

As a financial planner I took this chance to. I took the road less traveled, and it has made all of the difference...

So for those who believe in the American Dream, keep working for it, because nobody, not Obama, not Hillary, can take it away from you
--now that's it I'm done...

2008 May 01 02:06 PM

[Erich Riese...:]

There is such a gulf in the conversation. Regan2008 talks about millionaires as if they are the elite rich who are evading taxes. Ignorant. Someone with a net worth of a million dollars is likely paying a fair amount of taxes and is being cheated by the same elite rich who are profiting from so many lower income people.

The elite rich include the investment managers who make hundreds of millions of dollars in a year and pay a 15% rate because they claim it is capital gain, rather than earned income. They pay a lower tax rate than their administrative stafff.

The elite rich includes the pretense that social security tax does not flow into the general fund, which allows anyone who earns above that income limit to pay a lower tax rate than the poor saps paying it.

Until people start talking with each other honestly instead of trying to obfuscate issues, there can be no honest discussion about our broken government.

2008 May 13 09:09 AM

[dbcinvest13:]

People talk all over this article about the defecit. How about Enron, Worldcom, Sept 11 , and the airline problems. Pres Bush had alot to take care of along with keeping the promise to cut taxes within his first year. He also gave a rebate check ,cut the estate tax and marriage penalty tax and gave a child tax credit. All that coupled with 2 wars , a surplus disappears. Afterall isn't a surplus supposed to be returned to the people in a way of relief of taxes and or rebates or aid of some sort. Pres Clinton had no problem giving 500 mill to yugoslavia for war torn homes,but he didn't give tax relief/cuts or rebates.As for economic growth we have had 20% more under Bush than Clinton you can look that up to. As for the dollar it will always fluctuate and when it dips exports go up and we are now seeing the dollar rebound. And as for the current economic shortfall we will see all at fault Nov 20 when some of the investigating goes on conveniently after the election,I am sure there will be alot of blame to go around.Bottomline the middle class where I fall has benefitted alot under Bush I can attest to that.

2008 Nov 06 08:34 AM