April 13, 2012
'Buffett Rule' Millionaire Pays Thirty Times His Secretary's Taxes (and Not Such a Different Rate)By William Tate
Despite all of Barack Obama's bluster about the rich not paying their fair share, one millionaire at a White House event this week let slip that he actually pays thirty times as much in taxes as his secretary, and about the same tax rate.
To gin up class warfare against America's wealth creators, Obama on Wednesday paraded out a handful of Democratic Party loyalists, who happen to be millionaires, in an attempt to persuade the public that the folks who pay the most taxes are not being bled enough.
These were individuals that the White House claimed were just average, run-of-the-mill(ion) millionaires. By implication, maybe even Republicans. And they want to pay more in taxes. As Obama has persuaded much of the country by now, millionaires pay less than their secretaries, right? Thus, Obama contends we need the "Buffett Rule."
One of the millionaires, Whitney Tilson, the managing director of T2 Partners, appeared with his assistant, Kelli Alires. According to BusinessWeek, "While his adjusted gross income was 39 times that of Alires, Tilson said, he paid a rate of 24.6 percent while Alires paid a rate of 33.4 percent."
Without seeing their actual returns, it is still possible to estimate ranges for the amounts of taxes paid by both individuals. Presumably a secretary's income would primarily be in the form of salary. According to federal tax schedules for 2011, a tax rate of 33.4 percent, would put her income in the $174,400 to $379,150 range. At the lower figure Alires would have paid $58,249.60. ($174,400 x .334 = $58,249.60)
Using these same numbers -- the ones Tilson gave BusinessWeek -- as a starting point, Tilson would have paid $1,673,193.60 in taxes at the lowest range. ($174,400 x 39 x .246)
These two folks were presented by Obama as poster children for unfairness in taxation. Yet the boss would have paid roughly thirty times more in taxes than the secretary.
Numbers for the upper end of the bracket lead to a similar ratio. An income of $379,150 taxed at 33.4% would mean the assistant paid $126,636.10 in taxes, whereas Tilson would have paid $3,637,565.10. Again nearly thirty times more.
Suddenly, the discrepancy between the 'millionaire' and the 'secretary' as fictionalized by the O-Team doesn't seem do dramatic, does it?
Instead of asking, "Why isn't the millionaire paying more?", a neutral observer might well ask, Why the hell is a secretary paying $126,636.10 in taxes anyway?
That's a lot of typing.
(Kind of a variation of the old joke: She worked her fingers to the bone to pay her taxes, and what did she get for it? Bony fingers.)
And to reach an effective 24% tax rate -- with such greater total income -- much of Tilson's income came in the form of dividends, taxed at 15%, which were already subject to tax. If those dividends were the result of investments made by Tilson, he presumably would have also already paid taxes on the income used to make those investments, and the income already would have been taxed at the corporate level at 35%.
Thus, if as Tilson reported, he made thirty-nine times more than his assistant, about thirty-nine times more in taxes could well have been paid over the long term. It's not difficult to extrapolate that, if the Obama administration would just reveal the actual tax and income figures for the rest of their stage props -- uh, millionaires, one could reach similar conclusions about them as well.
That's why the O-Team and their marionettes in the media have been jabbering about tax rates, not taxes paid.
If one examines actual taxes paid, folks earning more do pay more. Even the left-leaning Tax Policy Center has admitted that households making $1 million dollars last year paid 29.1% of their income in federal taxes, while households making between $50-75,000 only paid at a 15% rate.
Further, neither the White House nor their propaganda arm in the media pointed out that the millionaires at their campaign event were major Democratic Party donors, with a vested interest in seeing Obama re-elected.
The millionaires listed in the BusinessWeek article -- and it's difficult to find a full list of participants from this "most transparent ever" White House -- were:
Abigial Disney, president of the Daphne Foundation.
The foundation's website notes that it funds at least one program designed to combat "irrational" policies established by the Giuliani administration in New York and another program that "pursues the larger goal of reducing society's over-reliance on prison as a response to social ills." FEC records show that Ms. Disney has contributed over $145,000 to, almost exclusively, Democrat candidates, including a $35,800 donation to the Obama Victory Fund 2012 made last September.
Whitney Tilson, managing director T2 Partners.
The above-mentioned Tilson is a hedge fund manager, who has bet big on a stronger economic recovery, or at least massive Fed buying of Treasury securities, under Obama and a resulting rebound in stock prices. According to the FEC, Tilson has donated over $100,00, again mainly to Democrats, including $5,400 to the Obama Victory Fund last year.
Frank Jernigan, "a retired software engineer from Google Inc."
FEC records indicate only limited contributions by Jernigan, however they are exclusively to Democrats. Further, Google and the O-Team have been joined at the virtual hip, causing calls for probes into potential conflicts of interest.
Lawrence Benenson, partner at Benenson Capital Co.
The FEC reports that Benenson has made almost a quarter million dollars in political donations. Last year, Berenson donated $30,800 to the Democratic Congressional Campaign Committee, alone.
It makes one wonder: if these millionaires are serious about the federal debt and deficit, maybe they should start donating their money to the U.S. Treasury, instead of the Democrat Party.
William Tate is an award-winning journalist and author.
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