Comparing Clinton and Bush on Income Taxes

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

[PK de C'ville]

Mr Perry, Ph.D.,

Pls extend your argument and show us the tax levels for $250k, $500k, $1M... Also, pls review the suggested/new tax policies regarding the estate tax and, finally, pls review the impact of the Alternative Minimum Tax on middle income taxes.

And finally, finally, pls follow up with your views on the

- $2 Trillion off budget war costs,
- the size and impact of current and projected US debt,
- the debt/taxpayer burden which will be paid by our kids and grandkids,
- the Fed's thoughtless extension of cheap credit policies leading to the bubble from hell which has thrown the US into its current recession,
- comments on how Bush is not responsible for this God-awful mess

Thanks,

We're awaiting your response!

[Ern]

How convenient. Just look at an adjusted gross income tax table and you are a conservative who is capable of meking decisions that affect the lives of all americans! Simple mind, simple answer, simply awful economy!
What is not addressed is all the wrote offs available to those in the upper income brackets and the preks that are no charged as income. Even at Vanguard funds if you have a half million you pay lower fees. this is the case across the whole economic spectrum. What is not addressed is who pays the bills. That falls to the middle income who are living pay check to paycheck.
Also, the tax cuts are more than offfset by the devaluation of the dollar which falls hardest upon those who cannot pass on rising costs to consumers as can even small business's.
When you consider what has been done to America by the Bush version of Reaganomics you wonder what they have conserved beside their priveleged position.
Reaganomics= Reagan left office with a 4 trillion deficit. Clinton pay go=budget surplus. Bush Reaganomics=9trillion deficit. when will the conservatives understand they must pay the bill for what they have taken as their own? Never!

[Unfaire]

It is an unfaire comparison when you do not include AMT. If you do, you will find out the middle income people are paying comparatively more taxes than the both richer and poorer now than before. This is tentamont to weakening the backbone of the wellness of the American society. We have to pay taxes to keep our system running. What is important is not to waste it as well as taxing fairly.

[john haskell]

we also need to allocate tax income to fix our educational system so that our children don't grow up to talk about "wrote offs" and "preks" as User 4978 does.

[Things Come Undone]

Under Bill the dollar went up in value under Bush the Dollar has gone down factor that into your tax theory. Plus Bush has spent but not paid for the war in Iraq " Debt is a tax deferred to a later date" I think is what Milton Friedman said.
So when Bill paid down the debt he was cutting taxes.

[finmah]

But all of the comments on income taxes -the hidden joke since no tax gouger likes to tell us - is when do you enter a "wealthy bracket"?

Hey why disclose before you are elected that you are targeted for redistribution - that takes the fun out of things.

If some of us remember financial aid applications in college - you will realize the biggest problem is identifying a resource rich student - you can't determine wealth by income - not easy to really target the rich. So all this talk that income tax and numerous brackets target the rich is nonsense and many people know it.

Most definitions of wealthy imply someone who has enough assets that they don't have to work and can live comfortably therefore if you want to redistribute the rich then tax assets not marginal income.

Not young professionals who have 150k in school debt and make 100k living in a big city and brown bagging it.

Compare this to kids who inherit large estates and become yoga instructors or secretaries who have millions in stock options at certain companies - or farmers with large unrealized gains on land with modest incomes. Many get by with modest incomes and low taxes.

Focus on assets

Now that would take guts - tax people who are already rich based on their assets! Every wonder why tax gougers in Congress are reluctant to do this - it might impact their OWN estate planning.

The benchmark for a real successful redistribution plan will have the affect of having the rich flee the country - but who cares if you barely pay taxes to begin with.

That comparison is with a Republican congress that caved - can you imagine what it will be like with a Dem president and veto proof Dem congress -look for massive disincentives for capital formation and business growth.

[jimsep]

I hope you are making this analysis available to the McCain Campaign.

And to President Bush. Why doesn't he talk about it more? Lou Dobbs
also needs to be confronted with this.

[rlwn]

Another thing to consider-what benefits, often to the poor and middle class, have been pared back or eliminated altogether? Also, what happened to the jobs of many regulators at EPA and FDA, neither agency now able to carry out their assigned functions?

[devassocx]

Both parties and prezes are responsible for the economic mess we
find ourselves in.

Collectively, they spent the tech bubble boom windfalls, and in the last
couple of years with Demos in control of congress we didn't see any
spending restraint...so those that try to politicize all this are
just plain wrong.

Truth is, the gov't takes way too much of the people's money and
spending is wasteful.