Whatever happened to Warren Buffett, the world's third-richest man? Guilt, a feeling of being blessed by luck, forgotten lessons -- who knows? In any case, Buffett now believes that government should redistribute the wealth earned by others to those who did not earn it.
"Buffett Blasts System That Lets Him Pay Less Tax Than Secretary" blared a recent headline. Huh?
At a Hillary Rodham Clinton fundraiser speech before 400 movers and shakers, Buffett denounced our tax system. According to Buffett, he pays taxes at a lower tax rate than does his $60,000-a-year secretary, 17.7 percent and 30 percent, respectively. But Buffett has long been sympathetic toward big government. Buffett joined the informal "advisory board" of then California gubernatorial candidate Arnold Schwarzenegger, who became governor because his predecessor tripled the car tax. Incredibly, Buffett promptly urged an increase in California property taxes. Buffett also opposes repeal of the estate tax, considering it unfair for generation after generation to retain wealth, presumably preventing those in the lower classes (where he came from) from rising up.
But let's examine the assertion that Buffett pays a higher tax rate than does his secretary.
Buffett says he earned $46 million in 2006, with a tax rate of 17.7 percent -- all, says Buffet, without attempting to avoid paying higher taxes. But his income clearly places him in the highest federal income tax bracket -- 35 percent -- but the same "non-avoidance" tax rules allow ample deductions and credits. Surely a man like Buffet can claim buckets-full, to say nothing of possible business losses and capital gains inherent in his line of work. So he probably reached the 17.7 percent rate without any monkey business. Fair enough. Whip out your calculator. First, Buffett, on his $46 million a year, paid -- at his 17.7 percent rate -- over $8 million in taxes.
Now let's deal with his secretary, whom he claims pays his or her taxes at a 30 percent rate. Buffett, in his speech, provided no details about the secretary. But even with minimal deductions, the highest possible federal tax bracket for a single person earning $60,000 a year is 25 percent. We don't know whether Buffett's secretary is married, a homeowner or renter, or has children.