Posted by Kromey at 1:32pm Jan 27 '12According to an interview they gave ABC, Warren Buffett pays 17.4% in taxes. His secretary, on the other hand, pays more than double that -- 35.8%.
Obama, predictably, has made her the face of his efforts to slash "working class" taxes (as if no one who makes more than that arbitrary cut-off point works for their income) while increasing taxes on the rich, because the fact that a secretary pays a higher rate than Warren Buffett is obviously an injustice.
Or is it?
Sit down and try to compute how much income you have to make to have an effective tax rate of 35.8%. Go ahead, I'll wait.
...
Did you do it? No?
Of course not -- it's impossible for anyone, no matter your income, to pay an effective tax rate of 35.8%, even if you add both halves of payroll taxes. At almost exactly $110,000 (the maximum taxable Social Security amount) you get a marginal tax rate that's pretty close -- if you include both income tax and her payroll taxes -- but that assumes no deductions whatsoever, and either way that kind of income hardly makes her a poster child for the struggling middle class worker.
But if it's her marginal rate we're talking about, what's Buffett's 17.4%? There's no way to get a marginal tax rate like that; that has to be an effective tax rate. So if we're comparing his effective tax rate to her marginal tax rate, well, that's an absolutely meaningless comparison.
But maybe it's not just federal taxes? Maybe we're also considering her Nebraska state taxes as well? Except we again have a faulty comparison, because there's just no way that Buffett's 17.4% includes his Nebraska tax rate of 6.68%, so we'd once again be comparing apples to oranges.
It's subsequently been declared that Ms. Bosanek has a salary of $60k. Which means Buffett must be talking about her federal marginal rate, including both sides of her payroll taxes. And comparing that to his effective tax rate.
Which is, to borrow someone else's phrasing, "beyond bizarre".
Obama, predictably, has made her the face of his efforts to slash "working class" taxes (as if no one who makes more than that arbitrary cut-off point works for their income) while increasing taxes on the rich, because the fact that a secretary pays a higher rate than Warren Buffett is obviously an injustice.
Or is it?
Sit down and try to compute how much income you have to make to have an effective tax rate of 35.8%. Go ahead, I'll wait.
...
Did you do it? No?
Of course not -- it's impossible for anyone, no matter your income, to pay an effective tax rate of 35.8%, even if you add both halves of payroll taxes. At almost exactly $110,000 (the maximum taxable Social Security amount) you get a marginal tax rate that's pretty close -- if you include both income tax and her payroll taxes -- but that assumes no deductions whatsoever, and either way that kind of income hardly makes her a poster child for the struggling middle class worker.
But if it's her marginal rate we're talking about, what's Buffett's 17.4%? There's no way to get a marginal tax rate like that; that has to be an effective tax rate. So if we're comparing his effective tax rate to her marginal tax rate, well, that's an absolutely meaningless comparison.
But maybe it's not just federal taxes? Maybe we're also considering her Nebraska state taxes as well? Except we again have a faulty comparison, because there's just no way that Buffett's 17.4% includes his Nebraska tax rate of 6.68%, so we'd once again be comparing apples to oranges.
It's subsequently been declared that Ms. Bosanek has a salary of $60k. Which means Buffett must be talking about her federal marginal rate, including both sides of her payroll taxes. And comparing that to his effective tax rate.
Which is, to borrow someone else's phrasing, "beyond bizarre".
How rich is Warren Buffett's secretary? - Kromey