Bush Pays Little State, Local Tax, Magazine Says : * Income: The First Couple legally avoided bigger bite of adjusted gross income of $450,000 to pay lower percentage than the national average.

From Reuters

President Bush has legally avoided paying most state or local income taxes since taking office by taking advantage of differing tax laws in the three places where he has residences, according to a magazine report.

Money magazine said Bush and his wife, Barbara, paid $3,596 in state taxes in 1990, or less than 1% of their adjusted gross income of $452,732.

As a result, the Bushes were able to cut their total tax bill, including federal income taxes, Social Security and local property taxes, to about 29.5% of their income, the magazine said.

A typical U.S. family with adjusted income of $52,011 paid 37.7% of income in taxes in 1990.

The magazine noted that state and local taxes have soared during the Reagan and Bush administrations as federal policy-makers shifted expenses such as health care and environmental cleanup to the states.

The Bushes live most of the year in either the White House or their vacation home in Kennebunkport, Me. But their legal residence is a rented hotel suite in Texas, a state with no personal income tax.

Bush earned $200,000 as President in 1990; the rest of his income came from investments.

Taxpayers with an equivalent income in Washington would have paid about $30,000 in D.C. income tax. Maine residents would have paid about $29,000, the magazine said.

The Bushes take advantage of a special exemption from D.C.'s income tax, with a top rate of 9.5%, which frees about 61,000 residents, including senators, congressmen and other politicians, from paying taxes there as long as they maintain a home elsewhere.

He also legally skirts Maine's top 8.5% income tax rate by claiming the rented three-room suite in the Houstonian hotel as his permanent home.

Since moving to the White House in 1989, Bush has spent 103 days in Kennebunkport as opposed to 14 in the Houston suite, which he rents for $264 a night, discounted from its regular $600 per night rate. The magazine said Bush pays only for the nights he is there.

Texas law allows Bush to call the state home as long as he promises to return to live there eventually. There is no minimum residency requirement.

Nevertheless, the arrangement has drawn some criticism.

Elaine Hoiska, director of the State and Local Tax Institute, told Money, "It's outrageous how Bush gets away with paying so little in state taxes, given the properties he owns, the amount of money he makes and the fact that he has yet to buy a home in Texas."

Tax analysts who examined Bush's tax records tried to answer one open question--who received the $3,596 in state income taxes the Bushes did pay in 1990?

The President was not required to disclose state tax returns, but the analysts concluded that some of the money went to Maine as non-resident income tax.

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