The Warren Buffett's Secretary Issue

[PLYMCO_PILGRIM]

Please help me out here.

I thought I read that his secretary made 60K a year. Did I read that wrong ?

If that is the case, she makes less than he does.

However, she is only paying income taxes.

He is paying income taxes on at least 100K (is this correct) and maybe more. If this is the case, then he is probably paying at a higher rate (on just his personal income taxes).

Does anyone disupute that ?

Then, if you take the taxes he pays on other things (capital gains) is at a much lower rate. If you combine all his taxes against income (personal + capital gains), and divide it into the taxes he pays....the "net" rate would be lower than his secretary.

So..to summarize:

1. Buffet makes more than his secretary (taxable income).
2. Buffet pays more personal income taxes and at a higher rate than his secretary.
3. Buffet pays a lot of capital gains tax which is at a lower rate than his secretary.
4. Buffet likely pays a bunch more in taxes (absolute dollars) than his secretary.
5. Buffet's net tax rate is lower than his secretary if you look at all his "income" (which includes gains).
6. Some people have a big issue with Rush Limbaugh (and they also seem to think that all conservatives support Rush ?). That is just a guess.

Setting Rush aside, it seems like the argument is that it is unfair that even though Buffet makes a whole lot more (however he makes it), that his net tax rate is lower than his secretary's.

Does that sum it up ?

I see what you are saying.

Do you possibly have links to all the data involved in your post so we can physically verify this instead of postulating it? I'm wondering how much more in excise, property, fuel, and sales taxes buffet ends up paying too....we have to take all that into account.

Heck if buffet buys a 100,000 car at a 5% sales tax guess what, we have to add that percentage's average into the total

You see where I'm going too right?

Lets just talk about income tax. She makes 60k, he makes 100k, who pays more on their income in total and as a percentage of those two? Obviously buffet.

Now if we take what your thinking into account the percentage, overall, for buffet might be lower but what about his total burden in dollars? That would still be a lot higher.

I dunno, it all just strikes me as dishonest the way Buffet and Obama portrayed the whole thing.

I see where you are going. And I certainly agree. Of course, she pays sales tax too.

But, the real point is what you stated before.......if he makes more in income and it isn't sheltered, he pays. more.

It isn't my thinking.....I was reflecting what I am reading. Overall, he probably pays a great deal more in terms of absolute dollars. The real question is why is the capital gains tax lower than the marginal tax rate for someone making 60 K. I think the answer is that it is because it is on investments which supposedly stimulate the economy, but I'll let others answer. I am not arguing the point, I was trying to see if I understood the argument correctly.

BTW: You asked for links, but I am taking information from other links on this thread.

And, in the end, it is not a very healthy discourse if people are using his secretary to make this kind of point. Why not be honest about what is going on in terms of taxes. Separate his income tax from his capital gains. They are two different things and if we don't like it...it should change (not saying it should).

well said

 

[edthecynic]

Alright, I was ready to agree with you, but then I got to thinking.

So, let me ask another question.

The only stocks I deal in are ones in my 401K mutual funds. So, I know little about stocks.

However, I do know that benefits come from dividends and from price increases.

A dividend would be taxed twice (as described by Rush and others). Would you agree with that ?

But if you buy a stock at $30 and sell it (I think you have to wait a while for it to qualify for capital gains....but I could be wrong) at $40 and pay capital gains on the increase, you would not be double taxed.

Is that correct ?

If so, then I would say that you and Rush are partially correct and partially incorrect.

If not, help me see my mistake.

No, paying a tax on dividends is not a double tax. A dividend is an added value over and above what you paid for the stock. You still have the stock hopefully still worth at least the $30 you paid for it, so your dividend is money paid to you that was not taxed before because you didn't have it before to tax.

But if the corporation wasn't taxed, it is likely your divident would be higher. At least earnings per share would be higher.

is that not true ?

But that still would not make the dividend double taxed.

In spite of the GOP claim that corporations pay the highest tax rate in the world, there are so many deductions that a large number pay little or no income tax already.

Study says most corporations pay no U.S. income taxes | Reuters

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.
More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.

 

[Seawytch]

But that still would not make the dividend double taxed.

In spite of the GOP claim that corporations pay the highest tax rate in the world, there are so many deductions that a large number pay little or no income tax already.

Study says most corporations pay no U.S. income taxes | Reuters

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.
More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.

Yeah...but look at the jobs they are creating with those tax breaks!

Oh sorry...I hope you aren't looking here in the US for those jobs though...

 

[Cuyo]

Why is it, that when pointing out that Warren Buffett's (legendary, and ostensibly long suffering & exploited) Secretary pays a higher tax rate than does Warren, none of the Big Government types ever come to the conclusion that her tax rate is Too High?

I think the bigger question nobody asks is... Why does Warren Buffett's secretary only make $60,000.00 a year?

He's the second wealthiest man in the country. You'd think his secretary would enjoy a taste of the high life.

 

[DiamondDave]

Why is it, that when pointing out that Warren Buffett's (legendary, and ostensibly long suffering & exploited) Secretary pays a higher tax rate than does Warren, none of the Big Government types ever come to the conclusion that her tax rate is Too High?

I think the bigger question nobody asks is... Why does Warren Buffett's secretary only make $60,000.00 a year?

He's the second wealthiest man in the country. You'd think his secretary would enjoy a taste of the high life.

If he chooses to do so, great... if he chooses not to, great... if she decides to accept it, great... if she decides to go somewhere else to make more, great

That's the great thing about freedom

 

[Listening]

Why is it, that when pointing out that Warren Buffett's (legendary, and ostensibly long suffering & exploited) Secretary pays a higher tax rate than does Warren, none of the Big Government types ever come to the conclusion that her tax rate is Too High?

I think the bigger question nobody asks is... Why does Warren Buffett's secretary only make $60,000.00 a year?

He's the second wealthiest man in the country. You'd think his secretary would enjoy a taste of the high life.

Warren Buffett's Frugal, So Why Aren't You? - Yahoo! Finance

I would suggest that Buffet does not live the high life.

Next, he is a business man and he is going to pay for value. If she is worth more than 60K, then he would pay it.

There is no reason to pay more if you don't have to.

If she could make more, she should leave and go make it.

 

[Listening]

No, paying a tax on dividends is not a double tax. A dividend is an added value over and above what you paid for the stock. You still have the stock hopefully still worth at least the $30 you paid for it, so your dividend is money paid to you that was not taxed before because you didn't have it before to tax.

But if the corporation wasn't taxed, it is likely your divident would be higher. At least earnings per share would be higher.

is that not true ?

But that still would not make the dividend double taxed.

In spite of the GOP claim that corporations pay the highest tax rate in the world, there are so many deductions that a large number pay little or no income tax already.

Study says most corporations pay no U.S. income taxes | Reuters

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.
More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.

Even by your own admission, it could be double taxed.

So the answer is that sometimes it is double taxed and sometimes it isn't.

 

[Quantum Windbag]

Alright, I was ready to agree with you, but then I got to thinking.

So, let me ask another question.

The only stocks I deal in are ones in my 401K mutual funds. So, I know little about stocks.

However, I do know that benefits come from dividends and from price increases.

A dividend would be taxed twice (as described by Rush and others). Would you agree with that ?

But if you buy a stock at $30 and sell it (I think you have to wait a while for it to qualify for capital gains....but I could be wrong) at $40 and pay capital gains on the increase, you would not be double taxed.

Is that correct ?

If so, then I would say that you and Rush are partially correct and partially incorrect.

If not, help me see my mistake.

No, paying a tax on dividends is not a double tax. A dividend is an added value over and above what you paid for the stock. You still have the stock hopefully still worth at least the $30 you paid for it, so your dividend is money paid to you that was not taxed before because you didn't have it before to tax.

But if the corporation wasn't taxed, it is likely your divident would be higher. At least earnings per share would be higher.

is that not true ?

Of course it is true. That would actually benefit a lot of pension funds and retired people.

 

[Listening]

Of course it is true. That would actually benefit a lot of pension funds and retired people.

I am afraid it would also benefit a lot of CEO's and CFO's.

I may be conservative, but I do believe some of these clowns are way overpaid.

 

[Quantum Windbag]

Of course it is true. That would actually benefit a lot of pension funds and retired people.

I am afraid it would also benefit a lot of CEO's and CFO's.

I may be conservative, but I do believe some of these clowns are way overpaid.

I agree, they are. That does not mean the government has a right to say anything about how much they get paid.

 

[Listening]

I agree, they are. That does not mean the government has a right to say anything about how much they get paid.

And on that we agree.

I am not sure about all the facts, but it seems like the government has actually insulated them from the stockholders with stupid regulations on stock voting.

 

[asterism]

No, paying a tax on dividends is not a double tax. A dividend is an added value over and above what you paid for the stock. You still have the stock hopefully still worth at least the $30 you paid for it, so your dividend is money paid to you that was not taxed before because you didn't have it before to tax.

But if the corporation wasn't taxed, it is likely your divident would be higher. At least earnings per share would be higher.

is that not true ?

But that still would not make the dividend double taxed.

In spite of the GOP claim that corporations pay the highest tax rate in the world, there are so many deductions that a large number pay little or no income tax already.

Study says most corporations pay no U.S. income taxes | Reuters

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.
More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.

That can be remedied by removing those special carve outs. Why isn't your guy doing that?

That said, your statistic is misleading. I owned 2 corporations during that time that never paid a dime in federal income tax because they never made a profit.

 

[asterism]

Why is it, that when pointing out that Warren Buffett's (legendary, and ostensibly long suffering & exploited) Secretary pays a higher tax rate than does Warren, none of the Big Government types ever come to the conclusion that her tax rate is Too High?

I think the bigger question nobody asks is... Why does Warren Buffett's secretary only make $60,000.00 a year?

He's the second wealthiest man in the country. You'd think his secretary would enjoy a taste of the high life.

Why?

Do people deserve more money just because their boss is rich? Wouldn't that be unfair to another secretary who would love the opportunity to do the same job for less?

 

[edthecynic]

But if the corporation wasn't taxed, it is likely your divident would be higher. At least earnings per share would be higher.

is that not true ?

But that still would not make the dividend double taxed.

In spite of the GOP claim that corporations pay the highest tax rate in the world, there are so many deductions that a large number pay little or no income tax already.

Study says most corporations pay no U.S. income taxes | Reuters

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.
More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.

Even by your own admission, it could be double taxed.

So the answer is that sometimes it is double taxed and sometimes it isn't.

This is the problem with CON$, they have a language all their own!

How the word "NOT" means "could" to CON$ is beyond imagination!!!

September 21, 2011
RUSH: Don't doubt me on this. It sounds like a small thing, but in a daily ebb and flow you'll not even see any news about this, but it's in important because it's crucial who controls the language, who controls the way words are defined.

 

[Listening]

But that still would not make the dividend double taxed.

In spite of the GOP claim that corporations pay the highest tax rate in the world, there are so many deductions that a large number pay little or no income tax already.

Study says most corporations pay no U.S. income taxes | Reuters

The Government Accountability Office said 72 percent of all foreign corporations and about 57 percent of U.S. companies doing business in the United States paid no federal income taxes for at least one year between 1998 and 2005.
More than half of foreign companies and about 42 percent of U.S. companies paid no U.S. income taxes for two or more years in that period, the report said.

Even by your own admission, it could be double taxed.

So the answer is that sometimes it is double taxed and sometimes it isn't.

This is the problem with CON$, they have a language all their own!

How the word "NOT" means "could" to CON$ is beyond imagination!!!

September 21, 2011
RUSH: Don't doubt me on this. It sounds like a small thing, but in a daily ebb and flow you'll not even see any news about this, but it's in important because it's crucial who controls the language, who controls the way words are defined.

Sorry Ed,

I was pointing out how your statement about NOT and the link you provided were not in agreement.

If that bothers you, please tell me how...if a corporation does pay taxes....that the divident (post corporate taxes....which do happen sometimes) isn't double taxed.

Asking for an explanation does not seem unresonable to me.

 

[edthecynic]

Even by your own admission, it could be double taxed.

So the answer is that sometimes it is double taxed and sometimes it isn't.

This is the problem with CON$, they have a language all their own!

How the word "NOT" means "could" to CON$ is beyond imagination!!!

September 21, 2011
RUSH: Don't doubt me on this. It sounds like a small thing, but in a daily ebb and flow you'll not even see any news about this, but it's in important because it's crucial who controls the language, who controls the way words are defined.

Sorry Ed,

I was pointing out how your statement about NOT and the link you provided were not in agreement.

If that bothers you, please tell me how...if a corporation does pay taxes....that the divident (post corporate taxes....which do happen sometimes) isn't double taxed.

Asking for an explanation does not seem unresonable to me.

I already pointed out that a person and a corporation are two different entities. No single entity pays double taxes on dividends, cap gains etc.

Once you involve multiple entities you can have unlimited multiple taxation to the point of ridiculousness, after all, the dollars that a person who purchased the goods or services of the company that pays a dividend were taxed before the person spent them. That would make the dividend triple taxed, once by each of three entities!

It's moronic to say that once a dollar is taxed it can never be taxed again no matter how many hands the dollar passes through! A dollar is double taxed when the SAME entity pays taxes twice on the same dollar.
Get it?

 

[peach174]

Obama has done it again and got the left to believe the lies.
Federal Tax is different than Capital Gains tax and Obama is trying to make it sound like the same tax.
Why do the left always buy into this type of crap?
Why are they buying into a Repub move by Nixon that didn't work? Why is Obama doing a failed Repub policy?
The Repubs did this same thing in the 1969 by raising capital gains tax and it didn't work then either. In fact it was disastrous in the 70's.
When it was lowered again in 78 the market took off.

 

[edthecynic]

Obama has done it again and got the left to believe the lies.
Federal Tax is different than Capital Gains tax and Obama is trying to make it sound like the same tax.
Why do the left always buy into this type of crap?
The Dem's did this same thing in the 1970's by raising capital gains tax and it didn't work then either. In fact it was disastrous in the 70's.

So cap gains is a local tax?

Cap gains tax was raised by Nixon in 1969 and 1976, Carter lowered it in 1978. According to CON$, Carter destroyed the economy.

 

[peach174]

Obama has done it again and got the left to believe the lies.
Federal Tax is different than Capital Gains tax and Obama is trying to make it sound like the same tax.
Why do the left always buy into this type of crap?
The Dem's did this same thing in the 1970's by raising capital gains tax and it didn't work then either. In fact it was disastrous in the 70's.

So cap gains is a local tax?

Cap gains tax was raised by Nixon in 1969 and 1976, Carter lowered it in 1978. According to CON$, Carter destroyed the economy.

Sorry that was a typo and I corrected it.
Where did I say cap gains is local?
I said the two are different types of taxes.

 

[edthecynic]

Obama has done it again and got the left to believe the lies.
Federal Tax is different than Capital Gains tax and Obama is trying to make it sound like the same tax.
Why do the left always buy into this type of crap?
The Dem's did this same thing in the 1970's by raising capital gains tax and it didn't work then either. In fact it was disastrous in the 70's.

So cap gains is a local tax?

Cap gains tax was raised by Nixon in 1969 and 1976, Carter lowered it in 1978. According to CON$, Carter destroyed the economy.

Sorry that was a typo and I corrected it.
Where did I say cap gains is local?
I said the two are different types of taxes.

If cap gains is not a federal tax it must be a local tax.