Obama Tax Return: President's Income Falls, Tax Rate is 18%
Monday is April 15 and that means one thing to many Americans: a last minute scramble to file their taxes. However, there is one family who was sure to promptly get their tax information on time. The White House recently revealed the 2012 tax return of the First Family of the United States, proving that at least some things affect everyone in the nation.
The tax returns show that President Obama and First Lady Michelle Obama paid $112,214 in taxes in 2012 on an adjusted gross income of $608,611. Their effective tax rate was 18.4% for their federal income taxes. Although it may sound low, in comparison to what the rest of the country pays, the Obama family's taxes are similar to what a normal person would pay.
According to the nonpartisan Tax Policy Center, the effective tax rate for all Americans on adjusted gross income was 11.5% in 2011. When compared to the income group that his adjusted gross income would put his family in, the 95-99 percentile, President Obama's taxes are slightly lower then the 19.2% that is average. The Obamas gave away 25% of their income to 33 charities, the largest donation being a $103,000 gift to the Fisher House Foundation, a Chicago-based organization that provides free or low-cost housing to veterans that are receiving treatment at military hospitals. The Obamas also paid $29,450 in state taxes to Illinois.
The Obama family actually had a drop in income from previous years. In 2009 President Obama and Michelle reported $5.5 million in income, mostly coming from royalty payments from Presidents Obama’s book, "Dreams from My Father" and "The Audacity of Hope." Most of their income this year came from President Obama’s salary of $400,000 a year.
Taxes are a very misunderstood concept in America with people often mixing up their tax bracket for the effective tax rate, thinking that if they increase their income they could actually make less money due to taxes. In the current tax system, income up to a certain amount is taxed at a certain percentage. For example for a single filling taxpayer in 2012, 10% is taxed of income from $0 to $8,700. If you make more than that, only the amount in excess of $8,700 is taxed at a next rate. Outside of very specific circumstances it is generally impossible to have an increase in income that ups your taxes to the point where they cancelled each other out.
As thousands of Americans rush to add up their receipts and figure out how much they owe Uncle Sam or how much Uncle Sam owes them, in return we can all at least take in the information that President Obama pays something as well.