AP fact check: Secretaries don’t pay more taxes than their bosses (Paging Warren Buffet)

Hotair ^ | 09/19/2011 | Ed Morrisey

[SeekAndFind]

Let's hope that Warren Buffet is better at managing funds than he is at tax policy. After Buffett complained that his secretary pays a higher tax rate than he does, Barack Obama decided to call his new class-warfare taxes “the Buffett Rule” and emphasize that he wants to make taxes more “fair.” But was Buffett right? According to an AP fact check — and just about every ounce of common sense that exists outside of the class-warfare fever swamps of the White House these days — not at all:

“Middle-class families shouldn’t pay higher taxes than millionaires and billionaires,” Obama said Monday. “That’s pretty straightforward. It’s hard to argue against that.”

The data tell a different story. On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.

There may be individual millionaires who pay taxes at rates lower than middle-income workers. In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the Internal Revenue Service. That, however, was less than 1 percent of the nearly 237,000 returns with incomes above $1 million.

Even when talking rates rather than aggregate payments, the claims made by Buffett and Obama are nothing more than an urban legend:

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 and payroll taxes, according to the Tax Policy Center, a Washington think tank.

Households making between $50,000 and $75,000 will pay 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.

That has been true ever since the US went to a progressive income tax. It was true decades ago, it was true a few years ago, and it remains true today. Those with higher incomes pay more taxes at higher rates that those with lower incomes. So unless Buffett’s paying his secretary a million dollars a year, the notion that we’re burying secretaries in higher taxes while letting millionaires and billionaires off the hook is flat-out false.

Buffett should know better than to make that kind of claim without checking his facts first, but no one elected Buffett to be in charge of anything, either. The President of the United States has vast resources at his command to get the facts straight before speaking to the American people, especially before pushing a divisive and destructive policy like his tax plan with class-warfare rhetoric designed to gin up demand for government to start seizing more from the successful than they already do. Either Obama doesn’t bother to do his homework, or he doesn’t care whether he’s passing along myths rather than facts.

[bvw]

Something went haywire morally with Buffet when he had to abandon Graham and Dodd’s methods of security analysis. One typical scoffer at Seeking Alpha writes emotionally accurately of the mindset that took over when Graham and Dodd was abandoned by the investment community: http://seekingalpha.com/article/44626-the-graham-and-dodd-method-for-valuing-stocks

The facts in that essay -— regarding applying G&D to stocks versus a randomized return — are very suspect, imo. I mean who did the analysis?

Graham and Dodd’s methods generalize and work well when their underpinnings are understood. Buffet seems to have stuck with them too, long past 1956.

But something went wrong in trying to use them. And I remember when it was, and think I remember what Buffet — in his yearly commentaries — thought of it, directly and by inference.

Graham and Dodd rely on honest books. Real fiduciary duty and accurate reporting. THAT’S what broke down. Mark it to the mid-seventies onward, and the retirement of the Cocktail set with replacement by the Cocaine set.

I think that pervasive social breakdown of mores, morals and ethics in the investment, banking and finance community got to Buffet.

He has obviously joined the extreme social deconstructionists like the old Marxists who advocate Stalin-Mao like despotism, and the new Marxists like Cloward-Piven and Alinsky, or a mortal enemy like a Bin Laden, or the modern bloody levelers like Ayers-Dorhn (and their apt student Obama), who believe that the whole Western system must be destroyed, financially, economically and civilly.

[SaraJohnson]

Because they are using their money to advocate for socialism to take my freedom and money!

We can call it the Buffet/Soros billionaire tax. Let’s give them what they want - all the way. Taxes on the rich -them! Leave the rest of us alone.