Last week Martha Coakley said she did not benefit by the "Bush" tax cuts. Is this possible? Is it true that only the wealthy benefited from these tax cuts?
There were two significant tax reductions implemented during the Bush administration in 2001 and in 2003. Many of the provisions of these bills will expire on December 31, 2010. The most overreaching of the tax cuts reduced tax rates for all brackets, and this benefited all tax filers. For example the 15 percent tax bracket was reduced to 10 percent and the 39.6 percent tax rate fell to 35 percent. Also, much of the marriage penalty was eliminated, child tax credits were increased, dividend rates declined and estate taxes declined.
Since all federal tax filers were benefactors of these tax cuts, Mrs. Coakley also reaped some of their rewards. Mrs. Coakley has not released her income tax returns. However, we can look at her filings with the Federal Election Commission and make a few assumptions to estimate her taxable income in 2009 and compare this to what she would have paid in federal taxes in 2001, prior to the most sweeping of President Bush’s tax cuts.
Mrs. Coakley, as Attorney General will make approximately $135,000 in 2009. (It should be noted that her taxable income does not include the amount of pension benefit earned in 2009. This benefit alone is probably in excess of $30,000 per year.) The amount of her husband’s pension is not disclosed in her filing with the Federal Election Commission. However, he was the Chief of Police in
This leaves Mrs. Coakley’s and her husband’s taxable income at $202,000 for 2009. Based on the 2009 federal tax table, Mrs. Coakley would have federal income taxes of $44,823.50 on this amount of taxable income. Based on the 2001 federal tax table, Mrs. Coakley’s $202,000 of taxable income would have yielded an income tax liability of $54,457.50. In 2009 Mrs. Coakley saved almost $10,000 in federal taxes due to the Bush tax cuts. Her highest marginal tax rate declined from 35.5% to 28 percent. Furthermore, she has received comparable benefits in prior years and will also receive a similar tax reduction for 2010, the year the tax cuts expire. We can estimate that she has saved probably over $50,000 in federal taxes due to the “Bush” tax cuts in effect from 2001 through 2010.
Mrs. Coakley subsequently noted that it was only the wealthiest one percent of Americans that benefited from the Bush tax cuts. In looking at the most recent IRS statistics available (tax year 2005), only 2.654 percent of all tax returns reported adjusted gross income over $200,000 – Mrs. Coakley’s adjusted gross income was approximately $225,000. These statistics do not include the millions of Americans that do not file a tax return as their income levels are below the filing requirements. This puts Mrs. Coakley right near the top one percent of Americans wage earners, and in actuality one of the top benefactors of the tax cuts she recently derided.
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