June 19, 1997

President Clinton, now attempting to unravel the balanced budget deal and kill the GOP tax relief plan, has unearthed his old phony accounting scheme he tried using to sell his 1993 tax hike. The scheme — what they call "Family Economic Income" (FEI) — is pure gimmickry, and artificially inflates Americans’ income. Simply, FEI makes everyone look more affluent than they are.

How Clinton’s Phony Calculation Makes the Middle Class Look Wealthy

The Clinton numerologists distort their analysis with the discredited accounting scheme they used in 1993, using "Family Economic Income," a "broad-based income concept" — and note the words broad and concept: in fact it’s so broad, no family computes their income like this, and neither does the IRS! Among its many artificial and misleading calculations, FEI counts as income:

§ "imputed rent on owner-occupied housing" — that is, even though you live in your house and don’t rent it, you have to count as income the profit you could make if you did rent it!
§ "nontaxable transfer payments such as ... AFDC" — welfare payments count, too.
§ "inside build-up on pensions, IRAs, Keoghs, and life insurance" — on top of the money you set aside for retirement, Clinton counts the buildup within the account, even though you don’t see it and can’t use it for years.

That’s how Treasury Secretary Rubin gets away with saying the tax relief plan "dispro-portionately benefits the most well off in society" when in fact it honestly benefits the middle class:

• According to the Joint Committee on Taxation (JCT), Congress’ official tax estimator, three-quarters (74%) of the benefits of the Senate tax relief bill go to those making $75,000 or less; 90% of the benefits go to those making $100,000 or less.
• A family of four earning $30,000 will receive a 53-percent tax cut under this plan (JEC).

Staff Contact: Dr. J.T. Young, 224-2946