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Tuesday, September 20, 2011

Fact Check: Buffet Doesn't Really Pay Less in Taxes Than His Secretary

My first though in hearing Warren Buffet's claim that his secretary pays a lower tax rate than the billionaire was Buffet has got to pay his poor secretary better.  My second thought was maybe I can get a job as a secretary. Finally I came to my senses and realized that particular claim was nonsense.  First of all they are talking about capital gains income vs. salary income, and secondly Buffet's capital gains investments came from salary income which means the capital gains tax is the second time that same money is generating tax dollars.

Today the Associated Press joined many conservatives explaining that the Buffet/ Secretary claim was just pure nonsense.

The data tell a different story. On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.

There may be individual millionaires who pay taxes at rates lower than middle-income workers. In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the Internal Revenue Service. That, however, was less than 1 percent of the nearly 237,000 returns with incomes above $1 million.
And as for the Buffet Rule....

This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes and payroll taxes, according to the Tax Policy Center, a Washington think tank.

Households making between $50,000 and $75,000 will pay 15 percent of their income in federal taxes.

Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.

The latest IRS figures are a few years older — and limited to federal income taxes — but show much the same thing. In 2009, taxpayers who made $1 million or more paid on average 24.4 percent of their income in federal income taxes, according to the IRS.

Those making $100,000 to $125,000 paid on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3 percent.
There is some unfairness built into the system, according to the Tax Policy Center 46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year.

Perhaps Warren Buffet would be better off worrying about the billion dollars his company Berkshire Hathaway owes the government before he makes foolish analogies designed to support the president's failing economic plan.
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