"Buffett cited himself, the third-richest person in the world, as an example. Last year, Buffett said, he was taxed at 17.7 percent on his taxable income of more than $46 million. His receptionist was taxed at about 30 percent."That must be an unusually well-paid receptionist for Omaha. According to the article, Buffett claimed to not have invested in any tax shelters—and I suppose it is true, most people don't consider tax-free municipal bonds to be tax shelters. But it's his muni-bond income that helps bring Warren's total tax rate down so much.
Although Buffett may say he wants to pay more taxes, his actions tell another story. His philanthropic gifts last year to several foundations were all explicitly conditioned upon the foundations maintaining a tax-exempt status, so as to avoid all gift taxes on his tranfers.
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From an Investor's Business Daily editorial:
“[W]e don't know what tax system Buffett is looking at. It certainly isn't the one we use here in the U.S. We went to the IRS' Web site and used its tax calculator. We put in various incomes, from $50,000 to $350,000 a year — the latter being quite a bit for a secretary to make in Omaha.
“So there's no funny business, we gave this fictional person no deductions other than the personal one. That is, no IRAs, no 401(k)s, no children, no mortgage, no nothing. Virtually no one fits that profile, but at least we can't be accused of skewing the data.
“Here's what we found: At $50,000, the IRS asks for 13.5% of your income. At $75,000, it's 17.3%. You can keep going all the way to about $350,000 before you're in spitting distance (28.4%) of what Buffett's secretary supposedly pays.
“Only if you add in the 6.2% that employees pay for Social Security — which would be cheating, since if she started working before 2000 she'll get that money back — can you reasonably come close to 30%. And that kicks in at an income of just over $190,000.”
I suspect that Warren is counting both the employer and the employee Social Security taxes--after all, that is what the economists tell us, the employee is really paying both sides. And Warren is way above the cap on that.
Still, I won't complain if they decide to end the tax freedom for muni bonds--that would be a major new tax that the rich would actually pay.
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