Wednesday, January 25, 2012

Obama's Symbol of Tax Injustice (Warren Buffett's Secretary) Must Make $200K To $500K

She can't possibly represent any of the 99 million American workers, 66 percent of the workforce, who make $40,000 per year or less. Fewer than 2.1 million American workers in 2010 made $200K or more.

This woman is no poor secretary. She's in the top 2 percent of wage earners, among the richest people in the country. In point of fact, at her income level and tax rate she pays more in taxes than average workers earn in a year, any of whom would gladly trade places with her.

So Forbes here:

We can get an approximate answer by consulting IRS data on tax rates by adjusted gross income, which would approximate her salary, assuming she does not have significant dividend, interest or capital-gains income (like her boss). I assume Buffet keeps her too busy for her to hold a second job. I also do not know if she is married and filing jointly. If so, it is deceptive for Obama to use her as an example. The higher rate may be due to her husband’s income.  So I assume the tax rate Obama refers to is from her own earnings.

Insofar as Buffet (like Mitt Romney) earns income primarily from capital gains, which are taxed at 15 percent (and according to Obama need to be raised for reasons of fairness), we need to determine how much income a taxpayer like Bosanek must earn in order to pay an average tax rate above fifteen percent. This is easy to do.

The IRS publishes detailed tax tables by income level. The latest results are for 2009. They show that taxpayers earning an adjusted gross income between $100,000 and $200,000 pay an average rate of twelve percent. This is below Buffet’s rate; so she must earn more than that. Taxpayers earning adjusted gross incomes of $200,000 to $500,000, pay an average tax rate of nineteen percent. Therefore Buffet must pay Debbie Bosanke a salary above two hundred thousand.

Even in the most absurd hypothetical situation where the IRS confiscated every last red cent of her $200K salary, Warren Buffett still would be paying nearly 35 times more in taxes than she.