Buffett and His Secretary Can’t Get Their Story Straight on Taxes
By: Michael_Patrick_Leahy
January 25, 2012
Chalk this up as the first strategic blunder of the Obama campaign. The poster-child of their class warfare narrative, Warren Buffett’s secretary, has just made a tax claim that, if true, reveals her to belong in the top 1% of income earners in America.
The Obama campaign communications team–in this case, ABC News–joined forces this evening with Warren Buffett and his secretary, Debbie Bosanek, to selectively release some information about their personal tax returns. Note that neither Mr. Buffett nor Ms. Bosanek took the transparent approach of releasing their complete tax returns for the past four years for review by the entire public, as I called on them to do yesterday.
Here’s what they claimed in the ABC report: “Bosanek pays a tax rate of 35.8 percent of income, while Buffett pays a rate at 17.4 percent.”
It’s hard to interpret this statement without additional information. Do they mean “effective tax rate” or “marginal tax rate” ?
When they say “income,” do they mean total gross income or taxable income?
Since the top marginal rate on taxable income (which kicks in when taxable income exceeds $379,150) is 35%, it’s impossible that Ms. Bosnak’s claim that she pays a tax rate of 35.8 % applies to her taxable income. Since taxable income is always less than total gross income, the claim is even less credible for that measure.
Despite these factual inconsistencies, Bosanek doubled down, putting herself forward as the face of Obama’s tax inequality mantra:
“ I just feel like an average citizen. I represent the average citizen who needs a voice…Everybody in our office is paying a higher tax rate than Warren.”
If she’s really paying a marginal rate of 35%, she’s earning over $379,150 per year in taxable income, which places her in the top 1% of income earners nationally. If this is true, Ms. Bosanek is anything but an average citizen. An average citizen–say someone who earns the median salary of a secretary to a CEO, which is $67, 791, according to a 2011 survey conducted by Certified Compensation Professionals–pays a much lower effective tax rate on taxable income than Ms. Bosanek. Assuming this average citizen took about $15,000 in deductions, she would pay an effective tax rate of 17% on taxable income of $52,791, the same rate Mr. Buffett claims to be paying.
Whether Ms. Bosanek is in fact in the top 1% of earners, or her claims, along with those of Mr. Buffett, are simply not correct is something no one will know for sure until both Ms. Bosanek and Mr. Buffett release their personal tax returns for the last four years.
In either case, as the story continues to unfold it will be painfully obvious to most voters that the Obama campaign’s attempt to portray Ms. Bosanek as the sympathetic face of tax inequality has backfired badly.
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