Personal Finance 

Comparing Presidential Tax Returns

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One always looks forward to the annual ritual of the White House releasing the President’s tax return because it feeds one of our guilty pleasures – financial voyeurism. This year is no different as pundits pick apart the return and look to draw conclusions about the President’s financial life. We intend to do something slightly different, we’re going to compare Preident Obama’s return with the returns of former Presidents George W. Bush and Bill Clinton.

I originally wrote this for MSN Money back in April but I thought some of the folks here might find this information interesting to dissect. I’m eager to hear what you think!

We are able to do this because Presidents will release their returns while their in office. For our analysis, we leaned on the archives at Tax Analysts, which saved the releases as they were made available.

Presidential First Year Incomes

How do President Obama, Bush, and Clinton compare in their first year in office? Obama out earned Bush and Clinton in his first year in office. Obama and Bush enjoyed $400,000 a year salaries while Clinton was paid a mere $200,000 a year in his terms:

  • Obama (2009): $5.5 million
  • Bush (2001): $811,100
  • Clinton (1993): $293,757

The vast majority of Obama’s income came from the sale of his books. Most Presidents don’t pen multi-million dollar books until after their Presidency! Even when adjusted for inflation, both Bush and Clinton earned, $982,557 and $436,136 respectively (in 2009 dollars) – far less than Obama did.

That said, Obama overpaid in his estimated payments by over $8,000 (something he would do again in 2010). I wonder if that skews the IRS’s average tax refund statistic!

Charitable Contributions

As for charitable contributions, Obama and Clinton both gave less, as a percentage of adjusted gross income, than Bush:

  • Obama (2009): $329,100 (5.98%)
  • Bush (2001): $82,700 (10.2%)
  • Clinton (1993): $17,000 (5.8%)

As you can imagine, percentages don’t always tell the story as Obama gave significantly more, even adjusted for inflation, than the other two Presidents.

As an aside, a lot has been made of President Obama’s charitable contributions in 2010, which amounted to 14.1% of his income. As you may remember, Obama’s new children’s book, “Of Thee I Sing: A Letter to My Daughters,” was going to donate all of its proceeds to the Fisher House Foundation, which provides free or low cost lodging to veterans and military families receiving treatment at military medical centers. We now learn that the proceeds resulted in a $131,075 contribution. Excluding those proceeds, the Obamas donated 6.6% of their income, which is closer to historical averages.

If you’re curious, President Reagan took in $412,730 ($974,101 in 2009 dollars) and gave $5,965 to charity. President Roosevelt earned $62,019 ($1 million in 2009 dollars) while giving $1,020 to charity. Presidents have become more generous lately!

Effective Tax Rates

Here were each President’s effective tax rate (despite all being in the top tax bracket) for that first in year in office:

  • Obama (2009): 32.56%
  • Bush (2001): 30.85%
  • Clinton (1993): 21.33

Post-Presidency Earnings

It’s a little unfair to compare former Presidents and current ones, though Obama’s $5.5 million haul in 2009 puts him in the same league, because former Presidents earn staggering sums to speak and write memoirs. As we learned from the release of the Clinton tax returns in the 2008 Presidential Election, President Clinton earned nearly $110 million between 2000 and 2007, paying $33.7 million in federal taxes! In fact, Clinton earned more in his first full year out of office, $15.9 million in 2001, than he did while he was in office, $3,719,188 from 1992 to 1999.

Since President Bush is no longer disclosing his returns, we can only rely on news reports that President Bush’s speaking fees were around $150,000 a piece and he received a $7 million advance on his memoir, “Decision Points.”

Lessons from the Presidents

There are some valuable lessons we can take away from reading the tax returns of current and former Presidents. First, despite their high incomes, many Presidents take advantage of every opportunity to defer income. President Obama made the maximum contribution to his retirement plans in 2009 and 2010, despite earning several million dollars, and it’s something you should consider too.

It’s also important to keep charitable organizations in mind, as each President has made sizable contributions to various charities, because many of them rely on the generosity of the public in order to continue their great work. Donating even 5% of your more modest income can have an impact if you select the right local charities.

Finally, it’s important to know when your taxes have become too complicated for you to do yourself and that you need to hire an accountant!

{ 3 comments, please add your thoughts now! }

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3 Responses to “Comparing Presidential Tax Returns”

  1. Charlie says:

    Google “The Obama Deception” for more examples of his charity.

  2. Great article. The fact that President’s get paid $400,000 in salary also does not account for the perks that they receive WELL in excess of that. Referring free food, free lodging, free transportation, free security. Basically, they have zero expenses while they are in office, and can bank all of their salary.

    I would not want their job, but they do have an enviable financial position.

  3. skylog says:

    thanks! i always find these informational posts fun.

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