Thread: AP takes Obama apart on his claim that millionaires pay less than Buffet's secretary.

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.
"Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett. There is no justification for it," Obama said as he announced his deficit-reduction plan this week. "It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million."
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.
The 10 percent of households with the highest incomes pay more than half of all federal taxes. They pay more than 70 percent of federal income taxes, according to the Congressional Budget Office.
In his White House address on Monday, Obama called on Congress to increase taxes by $1.5 trillion as part of a 10-year deficit reduction package totaling more than $3 trillion. He proposed that Congress overhaul the tax code and impose what he called the "Buffett rule," named for the billionaire investor.
The rule says, "People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay." Buffett wrote in a recent piece for The New York Times that the tax rate he paid last year was lower than that paid by any of the other 20 people in his office.
"Middle-class families shouldn't pay higher taxes than millionaires and billionaires," Obama said. "That's pretty straightforward. It's hard to argue against that."
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. But that's less than 1 percent of the nearly 237,000 returns with incomes above $1 million.
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.
Obama's claim hinges on the fact that, for high-income families and individuals, investment income is often taxed at a lower rate than wages. The top tax rate for dividends and capital gains is 15 percent. The top marginal tax rate for wages is 35 percent, though that is reserved for taxable income above $379,150.
With tax rates that high, why do so many people pay at lower rates? Because the tax code is riddled with more than $1 trillion in deductions, exemptions and credits, and they benefit people at every income level, according to data from the nonpartisan Joint Committee on Taxation, Congress' official scorekeeper on revenue issues.
The Tax Policy Center estimates that 46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year. Most, however, will pay other taxes, including Social Security payroll taxes.
"People who are doing quite well and worry about low-income people not paying any taxes bemoan the fact that they get so many tax breaks that they are zeroed out," said Roberton Williams, a senior fellow at the Tax Policy Center. "People at the bottom of the distribution say, 'But all of those rich guys are getting bigger tax breaks than we're getting,' which is also the case."
Treasury Secretary Timothy Geithner was pressed at a White House briefing on the number of millionaires who pay taxes at a lower rate than middle-income families. He demurred, saying that people who make most of their money in wages pay taxes at a higher rate, while those who get most of their income from investments pay at lower rates.
"So it really depends on what is your profession, where's the source of your income, what's the specific circumstances you face, and the averages won't really capture that," Geithner said.

http://news.yahoo.com/fact-check-ric...070642868.html


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Barack Obama is in serious trouble with his base--so he is going back to the rich vs. poor rhetoric that worked for him in 2008. It's obvious that from this fact check--that he has distorted facts and figures to manipulate the American public--into this hate mongering of successful people in this country--and how he is going to make them pay their fair share--when they already pay most of the tax base of this country--while they are also the minut minority in this country. 311 MILLION Americans compared to 237,000 in the 1 million and over income.

Congrats to the Associated Press for FINALLY calling Barack Obama out on this issue.

2012 cannot come soon enough!

"Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery." Winston Churchill

I'm so tired of the lies and I think the country is too.

The article is misleading and/or wrong:

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.

By saying "including ... payroll taxes" the sentence implies that the lower income figure would also include payroll taxes. However, 15% seems absurdly low, given that payroll taxes are 7.65% for SS+Medicare. So would we really expect that a household making $75,000 would only be paying 7.35% income tax ($5,500)? Maybe that's true, I'm not up to speed on all my income tax brackets and how they cascade into each other.

However, the story basically mathematically must be wrong or misleading if we see what else immediately followed the above quote:

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.

The first bolded area means that those wages aren't paying FICA, etc, which I guess means they are jobs like mowing lawns, babysitting, etc. Because if they were paying SS+Medicare, they would be taxed at 7.65%.

The 2nd bolded phrase implies that now the article is comparing apples to oranges. So basically you can ignore the numbers in that bottom bolded part, or add ~7.65% to those tax rates, which would make them approximately 17.6% and 14% respectively.

One problem with Obama's claim is that many people with incomes above $1 million do pay regular tax rates: Movie stars, Sports Stars, CEO's, Executives, large business owners, etc. However, investors like Buffet and thousands of others like him, who primarily earn money through capital gains only pay 15% on that income.

The most frustrating thing is that the two tax rates are different because they are taxing two different things.

Income tax on pay (as sighted for Warren's secretary) is very much a different thing than capital gains tax (which is where Warren gets most of his income - admittedly assumed).

Yet, the president and his administration are directly comparing these apples and oranges as a means to mislead the electorate. How honest is that?

I'm certainly glad that some in the lamesteam media are finally catching on and reporting this, yet the talking heads on the news still seem to fail to make this distinction (another clear example of incompetence, gross neglect or bias).

Originally Posted by Disillusioned_1

The article is misleading and/or wrong:



By saying "including ... payroll taxes" the sentence implies that the lower income figure would also include payroll taxes. However, 15% seems absurdly low, given that payroll taxes are 7.65% for SS+Medicare. So would we really expect that a household making $75,000 would only be paying 7.35% income tax ($5,500)? Maybe that's true, I'm not up to speed on all my income tax brackets and how they cascade into each other.

However, the story basically mathematically must be wrong or misleading if we see what else immediately followed the above quote:



The first bolded area means that those wages aren't paying FICA, etc, which I guess means they are jobs like mowing lawns, babysitting, etc. Because if they were paying SS+Medicare, they would be taxed at 7.65%.

The 2nd bolded phrase implies that now the article is comparing apples to oranges. So basically you can ignore the numbers in that bottom bolded part, or add ~7.65% to those tax rates, which would make them approximately 17.6% and 14% respectively.

One problem with Obama's claim is that many people with incomes above $1 million do pay regular tax rates: Movie stars, Sports Stars, CEO's, Executives, large business owners, etc. However, investors like Buffet and thousands of others like him, who primarily earn money through capital gains only pay 15% on that income.

I believe the article is based on- Federal income tax liability and not payroll taxes (social security/medicare) that everyone pays on earned income.

For instance sub-chapter S small business owners pay 15.3% in payroll taxes (social security/medicare) because they are responsible for both--ends-- (employer/employee) contribution--as are sole proprietors, etc.

Originally Posted by Oreo

I believe the article is based on- Federal income tax and not payroll taxes that everyone pays on earned income.

For instance sub-chapter S small business owners pay 15.3% in payroll taxes (social security/medicare) because they are responsible for both--ends-- (employer/employee) contribution--as are sole proprietors, etc.

Just a technical correction -

Although a shareholder in a Sub-S corp is responsible for both sides of the payroll taxes that doesn't apply to their pass through earnings as long as they have taken a reasonable salary. Residual earnings from a Sub-S are taxed as ordinary income but are not (at this point) subject to SE tax. What you mention IS the case for an active partner in a partnership.

I don't have a problem with capital gains income being taxed at the same rate as ordinary income.

They're both income.

I just don't understand why it was a good idea last year for President Obama and a Democratic House and Senate to extend the "Bush Tax Cuts" through 2012 and now this year he wants to undo that.

Originally Posted by Disillusioned_1

The article is misleading and/or wrong:



By saying "including ... payroll taxes" the sentence implies that the lower income figure would also include payroll taxes. However, 15% seems absurdly low, given that payroll taxes are 7.65% for SS+Medicare. So would we really expect that a household making $75,000 would only be paying 7.35% income tax ($5,500)? Maybe that's true, I'm not up to speed on all my income tax brackets and how they cascade into each other.

However, the story basically mathematically must be wrong or misleading if we see what else immediately followed the above quote:



The first bolded area means that those wages aren't paying FICA, etc, which I guess means they are jobs like mowing lawns, babysitting, etc. Because if they were paying SS+Medicare, they would be taxed at 7.65%.

The 2nd bolded phrase implies that now the article is comparing apples to oranges. So basically you can ignore the numbers in that bottom bolded part, or add ~7.65% to those tax rates, which would make them approximately 17.6% and 14% respectively.

One problem with Obama's claim is that many people with incomes above $1 million do pay regular tax rates: Movie stars, Sports Stars, CEO's, Executives, large business owners, etc. However, investors like Buffet and thousands of others like him, who primarily earn money through capital gains only pay 15% on that income.

Based on IRS Statistics on Income for 2009 we had the following (selected) effective rates:

Income from $20k-25k...........2.07%
Income from $50k-75k...........6.78%
Income from $200k-500k.......19.48%
Income from $1M-1.5M..........25.17%
Income > $10M.....................22.4%

Originally Posted by lutherf

Based on IRS Statistics on Income for 2009 we had the following (selected) effective rates:

Income from $20k-25k...........2.07%
Income from $50k-75k...........6.78%
Income from $200k-500k.......19.48%
Income from $1M-1.5M..........25.17%
Income > $10M.....................22.4%

And this out of the current linked article:

The top marginal tax rate for wages is 35 percent, though that is reserved for taxable income above $379,150.

And this is what my tax chart 2011 is showing also.

No tax changes have been made from the 2009 year to the 2011 year--so what are they talking about here?

Originally Posted by soot

I don't have a problem with capital gains income being taxed at the same rate as ordinary income.

They're both income.

I just don't understand why it was a good idea last year for President Obama and a Democratic House and Senate to extend the "Bush Tax Cuts" through 2012 and now this year he wants to undo that.

No--you really do not want to hammer the middle class with higher capital gains taxes--they will stop investing and saving.

As far as Obama doing this now? Here is Obama on August 5, 2009 stating he would not raise taxes on anyone--because of the recession.

Video: Obama Says Raising Taxes During a Recession Not a Good Idea | Verum Serum

The economy hasn't improved--in fact--many economists are expecting a double dip recession--so we have to presume this campaign rhetoric is nothing more that an old film from 2008 to rally the base.

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