According to the press in recent months, Warren Buffet’s secretary pays 35.6% of her income in taxes. Presumably this includes both federal and state taxes, since the highest marginal federal income tax rate is 35%.
So how much money is she actually earning? I’m guessing it’s around $1M per year taxable; that would result in a federal tax rate of 32.4%, leaving some room for state taxes.
Can anyone confirm that her income is in that ballpark?
If so, that’s quite a handsome salary for a “secretary;” I would assume that for this kind of money, her duties are more like that of an executive assistant or personal valet. Anyone seen her detailed job description?
You are leaving out payroll taxes. Which I do not know if people include or not in these calculations. Which are either about 7.5% or 15% depending if you believe that the employers contribution is part of what people get paid.
Some of the folks in the press have made wild guesses based on a fundamental misunderstanding of what was actually said. The secretary, Debbie Bosanek, is not paying a federal tax rate of 35.6%. Per the Omaha World-Herald:
The article also says that while both she and Buffet have declined to reveal her salary, Buffett told the Times of London a few years ago that she makes around $60,000.
Oh, that is hilarious. All this time the press has made it seem that she was an ordinary secretary making around 30k a year. So, the whole “outrage” is misplaced by a distortion of the facts. She IS a secretary, but she is a HIGHLY paid secretary. Why the outrage then, she makes a shit ton of money? No, not as much a Buffet of course, but a ton. Also, as expressed so many times before, most of Buffet’s taxable liability is from capital gains and not earned income. Big difference in tax rates between the two forms of income.
If the whole point is that we must stop the rich people from gasp making money from capital gains, I will ask if we should also stop the same thing from happening to the middle class as well? Plenty of middle class people increase their net worth by investing in stocks, precious medals and the like. Should we go ahead and punish them as well by taking away the lower tax rate on capital gains?
I am certainly not rich, but I am not jealous enough of those who are to want to tax them into oblivion. They are rich for the most part because they did the things that I didn’t do to get rich. Be it have the brains, the drive or the skill or even the luck. But I really don’t get this whole punish the rich for being rich thing.
The current capital gains tax rate of 15% (for higher incomes and ignoring the short term tax rate) is the lowest it’s been since just after WWII.
It’s perfectly reasonable to argue that returning to Clinton (varied between 21 and 29%), Bush41 (~28-29%), or Reagan (~20-28%) levels of taxation on capital gains will not tax the rich into oblivion.
The idea is that an increase in capital gains to previously levels (even to 20 or 25%) did not tax the past rich into oblivion and let them pay federal taxes more in line with the rest of us. How is getting them to pay closer to the share of taxes paid (by percentage of income) by the rest of us the same as taxing them into oblivion?
I think you are missing the point. The disposable net income of “ordinary” people does not really allow them to build up a sizable nest egg, let alone use $100 bills to light cigars. The “rich” take advantage of their income in capital gains where their disposable net income allows for accumulating considerable wealth. The tax rates on these folks are different, skewed to the benefit of the wealthy.
In other words, the price of a loaf of bread, a gallon of milk, a pound of hamburger and a dozen eggs might be the same for both individuals. However, one has to choose which one to buy this week while the other can buy the entire weekly production, every week, of all the items, and their wealth continues to go up. Yes, I’m painting with a wide brush. And yes, life isn’t fair so deal with it. The perception is (and perception is reality) an overt sense of inequity and unfairness.
In this scenario, for the sake of the argument, equity would be an identical tax rate, regardless of how that income is earned, i.e., a flat tax. Then there is the possibility of an additional tax on the wealthy because, yes, they can afford it. And yes, you can argue all that until the cows come home as well. But when so many middle class are out of work, with no money, their reality can bring even the wealthy down (however you want to define that term). Yeah, I just saw Soylent Green again.
We may be rapidly departing GQ territory, so don’t take the following statements as opinion or argument, simply as a summary of the reasoning that went into the laws we have now.
The idea is that the rich DON’T light their cigars with $100 bills. To a large extent, they start companies, and these companies not only hire wage-earners, but they pay taxes themselves. So if Buffett invests $10 billion in Company X and Company X increases in value to $20 billion, there has - in theory, at least - already been $3.5 billion in tax paid (35% of the $10 billion that presumably came from profit). Had the company not paid those taxes, Buffet’s value would have been 23.5 billion. So if Buffet pays another 1.5 billion (15%), we’re really just taxing the same money a second time.
So… while the rich investor is paying a lower rate when we look at only the individual entity, the lower rate is paid on investments that produce jobs and pay taxes themselves.
There doesn’t seem to be a real GQ type answer to the OPs question, since neither Buffet nor his secretary seem to be publishing her exact salary, at least from what I can tell. And since I’ve seen no details on exactly what taxes Buffet was including (or not including) in her rate, I don’t thing a lot can be determined from that either.
The fact remains that Buffet doesn’t pay as much of a percentage as she does because he has no salary, and thus pays no income tax, while she does and so she does. He also has owns a business, so he has more write offs than she does, since she works for him. He also makes huge charitable contributions that he can use to defray even more of his taxes, something that even if she makes a million a year she couldn’t match. You can parse that any way you like, depending on your political orientation, but anything more along these lines should be in GD, since there doesn’t seem to be a factual GQ answer to the question.
You can’t be serious.
When Facebook goes public, a lot of early investors are going to make a lot of money, and none of that will have come from income that had taxes paid on it.
Since it seems like the available factual information was provided in the first few posts, and further discussion is best suited to GD, let’s move this over there.
Tax them into oblivion? Who the fuck is wanting them to be taxed into oblivion? Talk about a straw man.
Personally I would think it was a-OK if they paid the same 30 odd% rate that I pay on the money I make. I could even be talked into a flat tax given certain requirements, but I still feel it is bullshit that people who live off of capital gains and dividends pay lees than half the rate that I do. And that includes members of my own family. It has nothing to do with jelousy, it has to do with fairness.
A subjective quantity and quantified subjectively (and individually, to boot). No surprise there’s a debate, then, about what constitutes fair.
Aside: I’ve also tried to explain that “fairness” is subjective to a few flat taxers to no avail. Apparently (according to these individuals, anyway), there actually is an objective notion of fairness, and it can be applied to tax policy.
