President Obama has enjoyed making a point the rich, the very rich, are making more out very well under the current tax code while the rest of us suffer. His favorite example is his friend Warren Buffet. In fact, Obama even mentioned it during his State of the Union Address:
When it comes to the deficit, we’ve already agreed to more than $2 trillion in cuts and savings. But we need to do more, and that means making choices. Right now, we’re poised to spend nearly $1 trillion more on what was supposed to be a temporary tax break for the wealthiest 2 percent of Americans. Right now, because of loopholes and shelters in the tax code, a quarter of all millionaires pay lower tax rates than millions of middle-class households. Right now, Warren Buffett pays a lower tax rate than his secretary.
I’ve been working this for a long time. I’ve tried making the point that Buffet pays that SAME income tax rate as his secretary; tax on salary is straight forward and everyone uses the same schedule. I’ve also tried to point out that Buffet pays much MUCH more in taxes than his secretary; he makes very much more.
All of this is ignored as only so much right-wing buffoonery.
So, let’s look, what does Warren Buffet’s secretary – Debbie Bosanek – pay? Well, it’s reported that she pays a rate of 35.8%. And Buffet? What does he pay? The same report says he pays 17.4%.
Buffett’s secretary since 1993, Debbie Bosanek, sat next to her boss just hours after being invited by the president to the State of the Union address, where the president made her the face of tax inequality in America.
Bosanek pays a tax rate of 35.8 percent of income, while Buffett pays a rate at 17.4 percent.
“I just feel like an average citizen. I represent the average citizen who needs a voice,” said Bosanek. “Everybody in our office is paying a higher tax rate than Warren.”
Interesting. Interesting indeed. The first thing I considered when reading this is why Buffet doesn’t compensate his staff in the same way he compensates himself; namely through assets that yield capital gains. The second question I asked was, “Wait a moment, what IS the marginal rates exactly?”
According to the above table, Ms. Bosanek can’t earn enough income to set her tax rate at 35.8%. In fact, the highest that any American can pay is 35%. And even if Ms. Bosanek made $1,000,000 her rate would be 32.73%. No where near the 35.8% the liberals report she pays.
This should not be surprising; liberals suffer from a degree of lack of understanding when comes to things economic:
It’s not even close. The conservatives did better, MUCH better, than the Leftists. And it tracks exactly with political affiliation.
So the next time that you are confronted with the argument that Mr. Buffet’s secretary pays more in taxes than her boss, challenge them. Ask them questions. Ask them if they mean total dollars or tax rate. Then ask them to explain their answer.
The taxes include things beyond the federal income tax — they include social security, medicare, etc. The key point is that the very wealthy have lobbyists that have reduced their taxes while the middle class have none. This is a strong argument for the Democrats in this election cycle, it may win them back the House!
The taxes include things beyond the federal income tax — they include social security, medicare, etc.
Scott, stop the insanity.
The claim is that Buffet pays a lower tax rate on his income than does his secretary. It just isn’t true; you know it, I know it and the whole rest of the country SHOULD know it!
This is a lie, pure and simple.
The question that continually occurs to me is why a man like Warren Buffet, who made his Billions as a capitalist, allows himself to be used by and supports a class warrior like Obama. Part of it is, he already made his money and he wants to keep the nouveau riche from crowding out the wealth universe . It is better to rich when everyone else is not, than to live in a world of competing wealth .
The other part has to be that it is a payoff to Liberals and Socialists to be left alone .
The other part has to be that it is a payoff to Liberals and Socialists to be left alone .
The cynic might say it’s to have Obama deny the pipeline forcing oil in North Dakota to be transported by a railroad owned by Berkshire Hathoway.
To Pino: Buffet’s overall tax rate is lower. The total amount of taxes he pays compared to the income he makes (not his federal income tax rate) is lower. That’s the point. That’s going to be a very powerful campaign theme this year, it’ll draw a lot of independents who wonder why Mitt Romney, for instance, pays only 13.9% of his income in taxes. It’s NOT a lie!
Alan, Buffet is thinking like a traditional conservative, and like conservatives in Europe still think. It’s not class war — indeed, if class war is being waged it’s from the wealthy on the poor and middle class. No country’s wealthy is taxed as low as ours (at least in advanced industrialized states), no country’s wealthy has as much wealth as ours (though our poor and middle class don’t stack up so well in such comparisons), and there is no way to right the economy without increasing some taxes on the wealthy. It’s just practical common sense.
There is no serious tax proposal on the table from the Democrats that would alter the fact that our wealthy are taxed the least in the industrialized world. No tax plan is on the table that would prevent people from getting rich. All over the industrialized world people get rich and make lots of wealth, all paying far higher taxes than our wealthy do. So to pretend that it’s somehow ‘socialism’ to just increase taxes so the wealthy pay as much of their income as do the middle class, well, I don’t think that dog will hunt this campaign!
Buffet’s overall tax rate is lower. The total amount of taxes he pays compared to the income he makes (not his federal income tax rate) is lower.
This simply isn’t true. There is no way that they are including his sales tax, his state tax, his property tax or all the taxes he is currently paying. And they are comparing it to some aggregate sum of the taxes that the woman is paying. They aren’t even adding up the same taxes between one and the other.
And, AND, the whole point of the comparison is to give Obama a weapon to raise the INCOME tax. How about this, lower the tax of the secretary?
I’m sure they are focused on federal taxes — income, social security, medicare, etc. But isn’t that legit? We’re talking federal taxes here — state (sales) and property taxes are for state and local elections. I think it’s legit to argue that investment income should be taxed at a lower rate in order to spur investment. That’s worth discussing. But it’s not a lie that due to so much of his income coming from investments, Warren Buffett pays a lower percentage of his income as taxes.
I’m sure they are focused on federal taxes — income, social security, medicare, etc. But isn’t that legit?
If they want to have a conversation on FICA with holdings, we can. Same for medicare. And maybe we do and maybe we don’t wanna tax investment income different than normal income. Or, perhaps, we don’t wanna tax investment income normally but we do when we wanna tax folks who make a living doing that.
Or, perhaps we look at how Buffet gets his income shielded. For example, when he buys 100 shares at $5 and they grow to $100 his able to donate those shares and deduct $10,000, not the $500 initial investment. This also contributes to his low tax rate.
Anyway, Obama is looking to raise the taxes on wealthy individuals. And he’s doing it because there are more people who buy into the fact that it’s not fair and that message resonates with these people. So, Obama is able to say that Buffet pays a lower federal income tax than I do. And it isn’t true. He pays a higher rate than I do.
Romney only paid 13.9%. Also, recall that Obama’s focus is not on increasing tax rates, but on closing loopholes — loopholes that allow people to shield their income. I don’t think he’s ever called for an increase in the tax rates (though I’d support such a thing). All I’ve read is that his effort to reach a grand bargain with Boehner involved closing loopholes. Remember, nobody is claiming that the federal income tax rate is lower for Buffett, the claim is that he pays overall a lower percentage of his income in taxes. So far I’ve not seen Obama claim that the federal income tax rates should be increased. This is about loopholes.
Given that our debt problem will require cuts that will hurt the poor and middle class, not having the wealthy pay their share would be an act of class war by the wealthy elite against average Americans. Our wealthiest pay the lowest taxes in the industrialized world, have the highest wealth, and in the bubble economy did not use that wealth to create jobs but instead created bubbles. We’d have been so much better off if we’d taxed a bit more, invested in infrastructure, did not increase the debt as much and avoided the bubbles. My own blog today points out that Germany is weathering the recession better than most, but has much higher taxes, more social welfare spending, very strong unions and more regulations. They’ve also met the Kyoto accord goals and in fact gone beyond them. The other really top performing countries now are in Scandinavia. This is proof that the “lie” is when people say those things harm an economy! The US system isn’t working to create jobs or build the economy because it essentially pushes money to the wealthy where they create bubbles, rather than to the middle class where increased demand would yield jobs.
Romney only paid 13.9%.
Much of that was return on investments; not income. Romney paid the same federal rates that you and I would pay on his earned income. He also paid the same capital gains rates that you and I pay on investment income.
recall that Obama’s focus is not on increasing tax rates, but on closing loopholes — loopholes that allow people to shield their income.
If that’s true, I support it; closing loopholes is not the same as raising taxes.
My own blog today points out that Germany is weathering the recession better than most, but has much higher taxes, more social welfare spending, very strong unions and more regulations. They’ve also met the Kyoto accord goals and in fact gone beyond them. The other really top performing countries now are in Scandinavia. This is proof that the “lie” is when people say those things harm an economy!
There are a number of different reasons for that success; not all tax rates.
” No country’s wealthy is taxed as low as ours (at least in advanced industrialized states), no country’s wealthy has as much wealth as ours (though our poor and middle class don’t stack up so well in such comparisons), and there is no way to right the economy without increasing some taxes on the wealthy. It’s just practical common sense. ”
It is not practical common sense . We all look back to the 1800s because it is the easiest to demonstrate economic theory . It was the century where America went from a farming economy to an industrial powerhouse . Most of the important economic advances were financed by rich investors taking huge gambles. If the present philosophy of punishing capital formation had been the common sense practice, a lot of that would not have happened . Government officials simply do not have the expertise to make those decisions . But boy do they believe they are that smart . Example most of Obama’s economic agenda .
President Obama punishes economic winners like the keystone pipeline and rewards losers like Solyndra, who non subsidized capitalists were smart enough to stay away from . Why does he do this ? Pure freakin politics, no other reason . These are payoffs to his base . He uses his Kommissar bureaucrats to punish those he considers politically evil . Here is one you may not have heard . It demonstrates why crony capitalism is corrupt . To punish the evil oil companies , Obama’s EPA is fining them for not blending Cellulosic Ethanol into their products . The punch line is that there is no Commercial Cellulosic Ethanol yet available .
Capital gains was recognized long ago , even by economically challenged Democratic thinkers to be different than other income . Now we have a neo Marxist President who knows that class warfare is a political winner . It has proven over 3 years not to work in turning an economy around .
A more easily seen experiment is going on state wide . Neo Marxist states such as California, Illinois, and New York are raising the burden on the wealthy . Other States like New Jersey are slowly turning that model around . We will see long term who is right .