When something sounds to radical to be true sometimes it is. I heard this claim some time ago and then Obama is still using it in his speeches and Warren and his secretary were on ABC recently. Unbelievably terrible fact checking done by those who are still promoting this half truth.
True: Warren is taxed at like 15% apparently.
True: His secretary is taxed at about 35%.
This is indeed true. But this is not the whole story. Let us add some further truths.
Also true: Warren's tax is via capital gains.
Also true: His secretary is taxed via income tax.
What does this mean?
Also true: The reason why capital gains are not taxed as high as income tax is because the corporations that Warren invested in were already taxed at 35%.
Also true: To illustrate this further not even Obama's proposals to increase capital gains tax to 20% would make him pay more in taxes than his secretary if one doesn't consider the 35% that has already been taxed via the corporations that Buffett has invested in.
So now that we have considered all taxes we can now see that:
The truth: Warren is taxed at 50%
The truth: His secretary is taxed at about 35%
So Warren does pay 15% more in taxes than his secretary. Not only that but to be in a 35% tax bracket as a secretary you must be earning quite a bit more than most of us.
Now I will admit that there may be more facts to add to these that are either for or against this argument but it appears that these are mysteriously missing so far in the debate except here at VVN.CO.
The above information I based on a blog from The Heritage Foundation which I will quote from a portion of it below. From blog post titled State of the Union 2012: Heritage Reaction Roundup
Once Again Mr. President, Warren Buffett Doesn’t Pay a Lower Tax Rate than His Secretary – Curtis Dubay
As expected, especially her sitting in the audience, President Obama trotted out again the well-worn trope that Warren Buffett pays a lower tax rate that his secretary. The President did so to defend his new version of the“Buffett Rule” proposal that no millionaire pay less than 30 percent of their income in taxes.
The President can claim success on this one even before he ends his speech tonight because the Buffett Rule is already soundly in place. According to the CBO, the top 1% of income earners pay 30 percent of their income in all federal taxes.
The whole idea of the Buffett Rule is based on a fallacy. One that Warren Buffett himself should know better than to propagate. It originated because Warren Buffett claims he pays a much lower tax rate than his secretary. But he earns his income through capital gains from stock he owns in businesses. He pays a 15 percent rate on those gains when he realizes them. But before he enjoys those gains, the businesses that generate them pay the highest-in-the-world 35 percent corporate income tax rate. In reality, Buffett pays 50 percent on the income he earns- far above the rate his secretary pays.
It is unclear exactly how the Buffett Rule would be implemented if it became law. One way could be to raise the tax rate on capital gains to the middle-income rate of 28 percent, or as high as the top income tax rate – 35 percent now and scheduled to rise to 39.6 percent next year. This would be highly damaging to the economy because it would drastically raise the cost of capital causing businesses to buy less. Less capital means fewer jobs and lower wages for American workers of at all income levels.
Found picture of Warren Buffett at Wikipedia.
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