Jeb! and Tax Returns

JebBush_PresidentialCampaignLogo15This week, Jeb Bush released 33 years of tax returns, going all the way back to 1981. By way of comparison, in 1996, Bob Dole, released 30, and in 2004, John Kerry released 20. And McCain and (Mitt) Romney, when they were the GOP nominees, released just 2. Carter and Reagan released one each, and Humphrey and McGovern didn’t release any.

Which is to say, 33 is a lot of tax returns.

And what can we learn from Bush’s transparency?

Vic Fleischer has pointed out that, in the 1980s, Bush used real estate tax shelters to shelter a lot of wage income from taxation. Vic owns that space and I don’t have anything to add, so I’d recommend his piece.

What I can add is easily-digestible data. I took Jeb Bush’s tax returns and laid out the adjusted gross income he reported, the tax he paid on that income, and his effective rate of taxation in a spreadsheet.[fn1]

Putting the data together in one place lets me do a lot of fun things. Today, I’m going to do two.

First, I’m going to look at Jeb Bush’s effective tax rate. In fact, here it is:

Chart JB effective tax rateA couple things to note: in 1987 and 1988, the chart dips negative. That’s because Bush reported negative income for those years (he reports a negative AGI of $29,624 in 1987 and a negative AGI of $47,008 in 1988). But he paid taxes, respectively, of $4,353 and $7,521 in those years. So why did he have a positive tax liability?

Because, as Vic explains, his losses were artificial. In 1987, Bush had wage income of $74,960, interest income of $11,536, and dividend income of $1,828. But he also reported passive activity losses of $114,741. Some significant portion of those losses were paper losses, not economic losses.

Nonetheless, he reported a negative AGI. So why did he have a positive tax liability? The alternative minimum tax. If a taxpayer gets caught by the AMT, she loses some of her deductions; apparently, Bush lost some portion of his passive activity losses, and paid taxes on a portion of his approximately $88,000 of actual income in 1987.

Second, I’m going to look at his AGI. Again, his AGI may be somewhat misleading: especially early on, tax shelter losses make it artificially low. Still, it makes an interesting chart:

JB AGIIt turns out, being governor of Florida is profitable. Not necessarily during one’s term as governor, but after, it certainly is. Bush served as governor from January 5, 1999, until January 2, 2007. And as of 2007, his AGI skyrocketed. Over the 33 years covered by his disclosure, Bush had total AGI of $37.5 million. Of that, he reported $28.6 million (or 76%) from 2007-2013. (Note that 2007-2013 accounts for 21% of the tax returns he provided.) Even accounting for inflation and experience, that’s a huge chunk of post-governor income.

There are certainly other interesting issues that 33 years (!) of tax returns can illustrate, and I hope to look at them. But this is, at least, some initial food for thought.

[fn1] N.b.: in 1995-1998 and 2007-2008, he paid withholding taxes on household employees. The amount he paid ranged from $982-$2,210. I took those amounts out, on the theory that they are taxes—albeit withheld—on his employees, not on him. They don’t substantively change his effective tax rate, and you could certainly add them back in, but I made that editorial decision.


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