Middle Class Got Tax Cut Under Bush

Barack Obama's campaign pledge to "rebuild the middle class" by giving tax breaks to 95 percent of workers and their families surely won him votes.

But an analysis by Investor’s Business Daily found that the middle class already got a large tax break under President George W. Bush.

Citing data from the Congressional Budget Office, IBD disclosed that the effective tax rate on the middle fifth of households fell from an average of about 17.1 percent under President Bill Clinton to 14.4 percent under Bush. That's a 16 percent tax cut for the middle class.

As for the oft-heard claim from the left that middle-class incomes are stagnant or shrinking, a study last year by the Minneapolis Fed concluded that "incomes of most types of middle American households have increased substantially over the past three decades."

Real household income did grow just 18 percent over the past 30 years. But after correcting for distortions in the data, Terry Fitzgerald, a Fed senior economist, found that "median household income for most household types . . . increased by 44 percent to 62 percent from 1976 to 2006." And per-person income surged 80 percent.

IBD observes, “Yes, many Americans are suffering in this recession, including the middle class. But the last thing we need is another general in a phony class war telling people how bad they have it.”