During his State of the Union (SOTU) address, President Barack Hussein Obama had Debbie Bosanke, Warren Buffett‘s secretary, be his guest and sit with Michelle Obama. Obama claims that Ms. Bosanke told him that she pays a higher tax rate than her boss, Warren Buffett on of the richest men in the world. Obama said that her paying a higher tax rate “just wasn’t fair.” So, with Obama’s penchant for telling half-truths, I thought a little deeper examination of his remark, which he has lately often repeated, was in order. Obama said, in the SOTU, “Right now, Warren Buffett pays a lower tax rate than his secretary.” Taken at face value, his statement seems that his “fairness” claim is justified. But, as Paul Harvey used to say, here is “the rest of the story.”
First, Obama was less than completely truthful when he said that Warren Buffett and his secretary, Debbie Bosanke, are not subject to the same tax rate. Obama said “tax rate,” when, in fact, there are different rates based on how people are paid. The capital gains tax rate is different from the salary tax rate. In reality, Buffett and his secretary are subject to the same tax rate if both of them derive income from capital gains. If Ms. Bosanke invested in stocks that pay a dividend, then she is paying the same rate as Buffett: 15%.
Second, if Ms. Bosanke gets a salary, she is still paying the same rate as her boss if he derives any income from a salary. If Mr. Buffett was paid a salary of ALL his income, he would have payed a higher rate than his secretary because the tax rate on salaries is progressive. The more you make the higher percentage you pay.
Third, 2009 IRS tax rates show some very interesting results. Taxpayers earning adjusted gross incomes of $200,000 to $500,000, pay an average tax rate of 19%, higher than the rate Obama claims Buffett pays. So, using Obama’s “logic,” Buffet must pay Ms. Bosanke a salary above $200,000. She is hardly the symbol of injustice that Obama wishes her to project.
Fourth, despite her heavy tax burden, Ms. Bosanke last year was able to purchase a second home in Arizona, a residence complete with a swimming pool and a professional PGA putting green, according to real estate records. Poor thing. She’s destitute! Awwwwwwwwwwwwww!
Bottom line: Buffett and his secretary were taxed at the same rate on dividends. And Buffett’s salary, if he was paid any, would be taxed exactly as his secretary’s salary. ANYTHING Obama says, just like Bill Clinton, must be carefully parsed and analyzed. While truthful (more or less), he is less than forthcoming with ALL the facts needed to form a complete picture and make a decision. Obama used Warren Buffett and his secretary as props to support his continued class warfare rhetoric.
But that’s just my opinion.