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Politics : Just the Facts, Ma'am: A Compendium of Liberal Fiction -- Ignore unavailable to you. Want to Upgrade?

To: Jim S who wrote (67231)	9/11/2008 12:09:29 PM
From: TimF	2 Recommendations Read Replies (1) \| Respond to of 90947

True I was dealing with the average receptionist, not personal secretaries for the very wealthy. I think it was very clever of Buffet to say receptionist, it makes people think of typical receptionists paying higher taxes than Buffet (which isn't true even if you ignore Buffet's share of corporate income taxes for the portions of various companies he owns), but someone directly working for Buffet in this capacity, or for some other top CEO, would have an above average income. Their tax rate would be higher, but they are also more likely to have quite a few deductions such as 401Ks, IRAs, Medical Savings Accounts, etc. Also they are more likely to have capital gains and dividends and possibly tax free bonds as part of their income, and they would pay lower income tax rates on that income and no FICA. Thinking of tax free bonds brings up another point. A lot of wealthy people own these, and they effectively pay tax by accepting a lower rate of return, but they don't actually pay tax on these so their official rates would be depressed from what they effectively pay. I'll do the analysis again, and again select "single" because additional income from someone else in the household complicates the issue, also I'll assume that the $75k salary is the only income. I used the same site, but added some deductions (HSA,IRA,mortgage interest), I got a net effective income tax rate of 13.13. Add payroll taxes and that becomes 20.78 I don't know what income to put in for the Forbes 400 people, and they would probably have many complex deductions (OTOH they get AMT which I'm ignoring), but I set up a scenario with someone with $10mil of income of various types, making only $4mil as wages/salary (which greatly reduces the tax burden, they pay about 10% less than if I make all the income wages and salary income), and I get 23.27 as the effective rate. Then you would get a fairly small bump from payroll taxes (since they don't apply to most of the income). Another point to consider (which Buffet doesn't include) is state income taxes. They are much smaller than federal taxes, but they would hit the CEOs far harder than the receptionists.