The press were abuzz yesterday debunking O’s key premise that millionaires pay taxes at a lower rate than teachers making $50,000.
Yesterday, we showed that a married teacher with 2 kids who earns $50,000 pays at a 5.5% rate. Even if you add 7.65 in payroll taxes to that, the resulting 13.15% is still less than a millionaire who pays only capital gains taxes at 15%.
That was a micro analysis.
The WSJ presented the macro analysis:
In 2008, the last year for which such data are available, the IRS reports that those who made more than $1 million in adjusted gross income paid an average income tax rate of 23.3%.
That’s slightly lower than the 24.1% rate paid by those making between $500,000 and $1 million, probably because the richest are like Mr. Buffett and earn more from capital gains and dividends.
The rate for a relative handful of the rich — 400 people — fell to 18%.
But nearly all millionaires still paid a rate that is more than twice the 8.9% average rate paid by those earning between $50,000 and $100,000, and more than three times the 7.2% average rate paid by those earning less than $50,000.
The larger point is that the claim that CEOs are routinely paying lower tax rates than their secretaries is Omaha hokum.
I think the President should modify his Buffett Rule to read: anybody who earns more than $1 million … and who has accumulated wealth greater than $25 billion … and who plans to bequeath practically all of his estate to a pal’s “foundation” shall pay an effective income tax rate of 90% … unless he /she whines that they’re being coddled, in which case the tax rate escalates to 100%.
My real recommendation: limit the charitable estate exemption to $1 million so that Buffet has to fork about half of his estate over to the government … that’ll keep him from bring coddled in the grave.
The Homa Files 