The Myth Of A Free Buffet

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Posted on : 1/27/2012 07:00:00 AM | By : Dann | In : ,

Or a free Buffett...one of the two.

After months of the seemingly fallacious assertion that Warren Buffet pays a lower tax rate than his secretary, we finally have some facts to work with. 

The ever astute Mrs. Megan McArdle-Suderman has looked things over and found....surprise!....perhaps someone is stretching the truth a bit here.  Or comparing apples with bananas or kiwi or something.  She has a link to the original ABC report.

The summary?

While it is difficult to justify the exact percentages, it is pretty easy to see that those pushing the Buffett-secretary myth are comparing his secretary's total tax load (including payroll taxes, including the part paid by Mr. Buffett's company) with Mr. Buffett's cap gains tax rate (but not including the corporate taxes paid by his company).

Cherry picking has done been done.

A couple thoughts via Glenn Reynolds.  Mr. Reynolds had a secretary at Dewey Ballantine that made $50k per year back in the 1980s.  Mr. Buffett's secretary, Ms. Debbie Bosanek, only makes $60k today.  Not only could Mr. Buffett voluntarily pay more in taxes if he feels he is under taxed, he could also voluntarily bump Ms. Bosanek's paycheck if he feels that she is one of "the people who got the short straw in life."  Even a 90/10 split would be an improvement over the current situation for Ms. Bosanek.

Not that $60k in Nebraska is anything like a truly short straw.

The cold hard fact is that the number of super-rich that pay lower income tax rates than their secretaries is quite slim.  The number of the super-rich hedge fund managers that benefit from the "carried interest" rule is an order of magnitude smaller.  Changing the law so they pay income tax rates instead of the capital gains rate might be a good idea.  Doing so will not raise enough money to spit at when compared with our current deficits.

I'd love to have both people release their complete tax information so that we can truly compare apples to apples.

Even better would be to have Mr. Buffett put his money where his mouth is by writing bigger checks to the U.S. Treasury and to his most worthy secretary.  I'm betting that it will take pigs in the sky and ice in Hell before either happens.