Income Equality and the Obama Lie -- 2

A few days ago, I tried to calculate what Warren Buffett's secretary 4earns each year. Based upon the claim that she pays 35% of her income in taxes, Buffett's secretary must be in the top 1% of all earners in the country -- she has to earn about $400,000 to pay that much. But word now comes out that Buffett's secretary is paid $60,000 per year according to Buffett. In simple English, this means that the oft repeated claim by Buffett and Obama that Buffett pays only half the percentage of his income in taxes that his secretary does is FALSE. That's right, it's a lie! According to the IRS, the average person earning $60,000 per year pays about 11.5% in federal income taxes. When you add the 4.2% for social security and the 1.3% for Medicare taxes, then Ms. average secretary is paying a total of 17% of her income in taxes. According to the White House, "Bosanek [the secretary] pays a tax rate of 35.8 percent of income, while Buffett pays a rate at 17.4 percent." That means that in truth, Buffet is paying taxes at a slightly higher rate than his secretary. It also means that both Obama and Buffett have been lying about this entire issue. Did they really think that no one would ask for some sort of backup to this claim?

To put the total stupidity of this lie into context, it is important to understand that the marginal tax rate for income for someone with $60,000 of taxable income is only 15%. Of course, Ms. Bosanek would have deductions and exemptions coming off her pay before the tax was ever applied, so she has substantially less than $60,000 of taxable income. The simply is no way to get her tax rate up to 35.8% of her income when one starts with this number. It should also be noted that according to Buffett, he donated about one third of his income to charity last year. The tax rate that he claims to pay, however, is compared to his total income, not what is left after his donations. I am not saying that Buffett should not give to charity; quite the contrary, he ought to be comended for his charity. The point, however, is that the tax code is specifically written so that people get a tax benefit for making donations to charities. Buffett's huge contribution lower his tax rate significantly. America wants Buffett to pay a lower rate if he makes such big contributions.

It will be interesting to see if Obama ever mentions Buffett's secretary again. My guess is that she will soon be lost in the mist. Over at the White House, they must know that the lie has be uncovered. IT is time to move on to the next one.