If you’re a hugely wealthy celebrity, the Bush tax system is working well for you.
The same tax system that is currently saving Donald Trump $1.2 million every year ushered in the weakest job growth of economic recovery since the Great Depression and half a decade of declining incomes for average American families.
President Obama’s budget would return the tax brackets for the richest 2% of Americans to what they were in the 1990′s (as soon as the economy emerges from recession), in order to cut taxes for 95% of American families and make vital investments in health care, energy, and education.
Once the economy has begun to grow again, America has a choice between a recovery like Bush’s, marked by growing inequality, stagnant wages for working families, and neglected public investments, or one that, in the words of Larry Summers, President Obama’s Chair of the National Economic Council, enjoys growth that is “sustainable and shared by the majority of American households.”
Notes and methodology after the jump.
President Bush lowered the top two marginal income tax brackets on the richest 2 percent of Americans and lowered the tax rate on capital gains and dividends which overwhelmingly benefits Americans making over $600,000 per year.
These celebrities earn more than 99.9% of American families.
Taxable income after deductions and exemptions is approximately 88 percent of adjusted gross income for taxpayers making over $10 million per year, according to IRS data. Assuming these celebrities are typical of their class in deductions and exemptions we then apply the 2009 tax rates and the 2000 tax rates and find the difference. However, celebrities tend to have large personal expenses for management, agent and attorney fees which are deductible, so their taxable income may be slightly lower than is typical of their income class. Ironically enough, this would classify most of these celebrities as small businesses under conservatives’ favorite definition of the term (because they deduct business expenses from their income).
However, we only considered these celebrities’ wage and salary income, and didn’t take into account their savings from Bush’s lower capital gains rate. Over 98 percent of taxpayers making over $10 million a year have capital gains income, and the average income from capital gains for people at that income level is $15 million/year. Because we don’t have access to individual tax returns, we don’t know how much Bush’s giveaways to the investor class are saving these enormously wealthy celebrities, but it’s undoubtedly a lot.