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Friday, March 21, 2008

Another Tax Urban Legend: Income Taxes Under Bill Clinton and George Bush

The Tax Foundation reports that an email is circulating on the Internet and appearing on various blogs and web sites purporting to use tax Foundation data to show the income tax burden is much lower under President Bush than under President Clinton:

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Individual Income Taxes Under Presidents Clinton and Bush, 1999 Law and 2008 Law
For taxpayers who take the standard deduction and have no children
Taxpayer Tax under Clinton, 1999 tax law Tax under Bush, 2008 tax law
Single, income of 30,000 $8,400.00 $4,500.00
Single, income of 50,000 $14,000.00 $12,500.00
Single, income of $75,000 $23,250.00 $18,750.00
Married, income of $60,000 $16,800.00 $9,000.00
Married, income of $75,000 $21,000.00 $18,750.00
Married, income of $125,000 $38,750.00 $31,250.00

The Tax Foundation notes:

While the basic message of the comparison is correct (federal income taxes have indeed fallen under George Bush for groups at all points on the income spectrum), the chart created by the author of this comparison contains some mathematical errors. Furthermore, the comparisons are exaggerated by the fact that annual inflation adjustments in the tax code would have lowered tax bills in 2008 relative to 1999 under a constant nominal income amount. The table below presents the correct amount of tax paid by each of the hypothetical taxpayers in the comparison. Note that this comparison does not take into account the AMT:

Individual Income Taxes Under Presidents Clinton and Bush, 1999 Law and 2008 Law
For taxpayers who take the standard deduction and have no children
Taxpayer Tax under Clinton, 1999 tax law Tax under Bush, 2008 tax law
Single, income of 30,000 $3,157.50 $2,756.25
Single, income of 50,000 $7,262.50 $6,606.25
Single, income of $75,000 $14,262.50 $12,856.25
Married, income of $60,000 $6,585.00 $5,512.50
Married, income of $75,000 $9,426.50 $7,762.50
Married, income of $125,000 $23,426.50 $19,462.50

(Hat Tip: Kirk. Stark.)

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