Did you know that all public figures; including the President of the United States; are supposed to have the same kind of privacy as every other US citizen? That includes the information contained in their income taxes. It was not until 1970 that they began to regularly release (on their own not through the IRS) copies of either the tax return or a summary of the tax return. Keep in mind that these are not the actual return so there is no way to substantiate that the return released is the same as the one actually filed. Everyone’s tax return gives some indication of what is important to them.
For example, you can often tell a person’s political and religious affiliation simply by seeing where they give their charitable contributions too. Is family important, that is often reflected in things like where their vacation homes are located? Do they have more taxable interest then they do income that indicates investing for the future is important. So, according to the released tax returns what does that say about our Presidents?
One of the more fascinating returns to look at is Franklin D. Roosevelt – his returns were released after he was no longer President by his Presidential Library. In 1913 when he became president his taxable income was $989.64 which is the equivalent of $23,664.99 today. This put him under the taxable income threshold of $20,000 so he did not owe any income tax. And even if he had, it would have been taxed at a rate of 1%. Whereas today, he would have been taxed at 10% and owed taxes.
When you look at his last return released for 1937, his income had risen dramatically to a taxable income of $82392.57, which is the equivalent of $1,354,533.85 today, with less than half of his income being from investments. I found it interesting that he did write off a bad debt indicating that the person he had loaned the money to have died; and that he had over $3,000 in charitable giving mostly to his church and to an organization called the Community Chest of Washington DC which is today known as the United Way. He also was able to take a then little known deduction called the Earned Income Credit – at the time everyone who had earned income was eligible to take that deduction no matter what your income was, at a rate of 10% of your income not to exceed $1,400. Or the equivalent of $23,016.00. Can you imagine if the earned income credit worked the same way now. People who made under $23,000 would not pay tax at all!
To see how we can help you save money on your taxes just give us a call. No we don’t do the presidents taxes but we can help you save money by getting the best strategies in place for you.