With billionaire Warren Buffet at this side – or in his pocket – Barack Obama is telling every microphone and television camera he can find that there is something very wrong when wealthy people pay less in taxes than the people who work for them.
But, do they?
Buffet's claim that the tax code allows him to get away with paying "a lower percentage (of his total income) than was paid by any of the other 20 people in our office" is worthy of some analysis, for sure. The vast majority of Buffet's income apparently comes from capital gains and dividends paid on his massive investments rather than wages, and thus would be subject to a lower tax rate – an incentive in the tax code for wealthy individuals to take market investment risks to provide the capital for economic growth.
The President's contention that "middle-class families shouldn't pay higher taxes than millionaires and billionaires" as he said from the Rose Garden on Monday implies that there is rampant moral inequity in America that must be resolved.
If the President really wants to be watchdog of moral correctness, someone should remind him that the most enduring moral code in human history also requires truthfulness.
While some may have assumed Obama knew what he was talking about, thankfully the fact-checkers at the Associated Press put it to the test – and, the President failed.
The argument will rage on whether the current tax code is "progressive" enough by placing more of the tax burden on those who make more money. Our purpose here is not to debate the fairness, or lack thereof, of the tax code. Frankly, we think it is far too punitive on the entire American economy, and therefore limits maximum opportunity for every citizen. But, for the sake of the President's argument, he really should not torture the truth.
Congress hasn't given the "Buffet Tax" idea a very warm reception, so the likelihood that it becomes the law of the land any time soon is slim. But, if Mr. Buffet continues to suffer the anxiety of not paying enough in taxes, he can click here for information on exactly how to direct as big of a gift the IRS as he cares to make.
Following is the AP's analysis of Obama's bogus claim:
AP Fact Checks Obama: Are the Rich Really Taxed Less Than Secretaries?
WASHINGTON (AP) — President Barack Obama says he wants to make sure millionaires are taxed at higher rates than their secretaries. The data say they already are….
This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes, payroll taxes and other taxes, according to the Tax Policy Center, a Washington think tank.
Households making between $50,000 and $75,000 will pay an average of 15 percent of their income in federal taxes.
Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.
The latest IRS figures are a few years older — and limited to federal income taxes — but show much the same thing. In 2009, taxpayers who made $1 million or more paid on average 24.4 percent of their income in federal income taxes, according to the IRS.
Those making $100,000 to $125,000 paid on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3 percent.
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