Warren Buffet has a lower tax rate than his secretary

Posted by at 3:27PM

Buffet.JPG
Times Online:

Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent. Mr Buffett told his audience, which included John Mack, the chairman of Morgan Stanley, and Alan Patricof, the founder of the US branch of Apax Partners, that US government policy had accentuated a disparity of wealth that hurt the economy by stifling opportunity and motivation.

I read this article today and I think it really says something about this country and about Warren Buffet. He is a great man who has donated 37 billion dollars to the Bill and Melinda Gates Foundation – which is dedicated to bringing innovations of health and learning to the global community. Even with all his money Buffet doesn’t think of himself as better or more worthy of consideration than the average American.
America has a huge disparity in income between its richest and its poorest citizens. In 2000 the richest 5% made 19x more than the poorest 20%. Studies show that Income disparity makes a huge difference in a person’s health and happiness. (Stanford’s own Prof. Salposky)
Most people still say that America is a land of opportunity – that if you work hard, you can fashion a great life for yourself. But the heavy taxes that affect the middle class all but assure that you’ll never become super-wealthy.
It seems like those who can afford to pay higher taxes are the ones that don’t have to. Too bad. I’m glad someone wealthy is talking about it.

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43 Responses to “Warren Buffet has a lower tax rate than his secretary”

  1. Tom says:

    Maybe he should be pushing to have is secretary pay less in taxes.
    If he really thinks he is paying to little , why hasn’t he written a check out to the US Treasury? All talk and no action here.
    I would love to see her tax return since 30% seems a little high. Even if she is single, her rate is only 25% at 60k.Where did the extra 5% come from.
    Even better maybe he should also write out a bigger check to her and maybe she will pay less.
    I would also like to see how he did his taxes since people who make over 350k are paying 35% tax rate and if he wasn’t trying to avoid paying higher taxes then he should have payed around that percentage.
    In the end he has the pen and checkbook. He always has the option to lead by example and write out a check to the government, which he doesn’t seem to be doing anytime too soon.

  2. Jason says:

    Write a check to the US Treasury? And what would the point of that be? Warren Buffet has already pledged his massive fortune to charity – 30 billion dollars to the Bill and Melinda Gates Foundation – which has been doing amazing things to save the lives of the poorest people in the world. He has already led by example.

  3. Tom says:

    He says the rich should be paying more taxes. If he really feels that way then maybe he should pay more. The point I am making there is he should put his money where his mouth is.
    The fact that he gives money to charity is a personal thing. It doesn’t affect anybody but him and the people he helps.
    Based on your comments I guess you feel like I do and that the foundations and charities do a better job at helping people than the government does. If so I am with you and Warren Buffet is doing a good thing. On the other hand, making people no matter what they make, pay more taxes doesn’t help anybody. From my point of view it looks like they hurt people more then help.
    I actually believe that all people should pay the exact same % of tax no matter what your income. I am willing to make the bleeding hearts happy and say that all money over 40k-50k be taxed since most people who make below 40k and have a family don’t pay any federal taxes anyway.

  4. Anonymous says:

    Wow I thought the government was for taking care of projects that we can’t/won’t do as individuals such as national defense and roads. If that is so, why is the govt. taking 5+ million from one person? I think all workers should pay some income tax, but our tax system has now become a big welfare program with earned/unearned income tax credits.

  5. paul says:

    I don’t buy it that she pays 30%. $60,000 on the tax tables is only 25% bracket. That assumes she has no deductions, credits, or exemptions. If she is married that rate will drop down to around 17%.
    Another example of BS class baiting.

  6. Dave says:

    That is still dishonest. First of all social security is not referred to as Federal Income Tax. Secondly the employers half should not be included. It comes from the employers money not hers. If you’re going to use the excuse that if the company didn’t have to pay that they would pay her more than why not include all corporate taxes because there is a chance that if they were taxed less they might pay their employees more.

  7. David DIez says:

    “If he really thinks he is paying to little , why hasn’t he written a check out to the US Treasury? All talk and no action here.”
    So you are advising only those with a conscience should pay higher tax rates?

  8. Paul says:

    Here is the real issue. Buffet lumps himself in with someone making 250K. Its crazy. At 250k you are not wealthy and you still have to worry about your mortgage, saving for your chidrens education, and saving for retirement. Also, you then get hit with the AMT tax which takes all of your tax credits and deductions away. deductions. Warren Buffet, Bill Gates, and Obama are all socialists. Distribution of well is a Marxist idea. State owned banks, distribution of wealth – sounds more like communism.

  9. Paul says:

    Here is the real issue. Buffet lumps himself in with someone making 250K. Its crazy. At 250k you are not wealthy and you still have to worry about your mortgage, saving for your chidrens education, and saving for retirement. Also, you then get hit with the AMT tax which takes all of your tax credits and deductions away. deductions. Warren Buffet, Bill Gates, and Obama are all socialists. Distribution of well is a Marxist idea. State owned banks, distribution of wealth – sounds more like communism.

  10. Gerry says:

    The reason Buffet is paying less of a percentage is because the capital gains tax (which is where he makes the bulk of his money, off dividends from his Berkshire stock) is RIDICULOUSLY low. So, all these ultra-rich CEOs who get stock options pay a capital gains tax that is practically nothing.
    I frankly can’t believe that anyone on this string of posts thinks it’s OK that the percentage disparity between Buffet and his secretary is so large. PAY YOUR FAIR SHARE! And that includes the people making millions of dollars a year. Many of them were born into money anyway. What did they do to “earn” that money?
    And what possible good would it do for Buffet to voluntarily pay more tax? That’s not changing the tax landscape. If he’s the only one that does it, how is that helping?
    All Buffet is saying is, shouldn’t he and his secretary pay the same percentage?

  11. Bee says:

    Taxes may scare and confuse the weak-minded (Sarah Palin and The Disciples of Sarah Palin), but they are a good thing. They pay soldiers, policemen, firemen, teachers and so much more. I don’t think Warren Buffet should have to write a check to the US Treasury to make people feel warm and fuzzy, that won’t fix anything. This is a situation where the government should step in and with a few decisive actions fix many problems. It needs to be done, but no one re-elect someone that raises taxes.

  12. Jone says:

    I’m really surprise that Buffet did donate that money. I thought he was pretty greedy, check out http://www.elitetone.com for more on the dontation.

  13. Sam says:

    Yes, this is a “Collective action problem,” where no problems are solved by one person giving more as an individual, but the problems are solved by a group of people giving more as a group. So Buffett can’t help by doubling his own tax rate (it is just an extra $7.8 million, a drop in a bucket), but if the top 1% get a higher tax rate, then that will solve problems (it would mean hundreds of billions).

  14. Greg says:

    I agree, Warren Buffet is a great man, not only his donation of 37 billion to the Bill and Melinda Gates Foundation but his other contributions to our society as an industrialist. Although one of the richest men in the world, he is not so full of himself that he can’t see what our governments tax policies are doing to the little folk like me! I struggle to keep my tax rate down, and believe me, I can’t afford to write checks to the IRS after giving them money all year long. If men such as this keep speaking and more continue to join him in believing in the wrongs that are built into our tax codes and how they are destroying small business, maybe, just maybe we can get this issue fixed and more Americans will be able to enjoy the “Land of Opportunity” and get closer to the levels of people like Warren Buffet!

  15. DonnieF says:

    I would also need to agree with the previous post about Mr Warren be a great philanthropist and industrialist. He didn’t create this problem, he pays his share of taxes and he speaks out for the little man. Our tax issues in this country can only be fixed if others sound the call like Mr. Buffet has…

  16. Gov. Christie’s priorities are all wrong | Steven Welzer's Campaign Website says:

    [...] a disparity of wealth that hurt the economy by stifling opportunity and motivation.” http://tusb.stanford.edu/2007/07/warren_buffet_has_a_lower_tax.html This entry was posted in Uncategorized. Bookmark the permalink. ← New Jersey could join [...]

  17. Vincent says:

    I agree that a disparity is unfortunate, but this is framed poorly.

    1: Buffet is a legendarily savvy investor. Yet he chooses to cut his 24 billion dollar check to the Gates’ Foundation, not the gov’t. So, the smartest investor on the planet thinks a private philanthropy is a better investment for improving humanitarian concerns than the gov’t….

    2: The founders of Google’s (men nearly as rich as Buffett) salary last year? 1$. Jack up the taxes on that poor dumb bastard trying to make it big all you like (he makes 100k a year), and you won’t even touch half of the Forbes 100, just crush the middle class.

    3: Hate the rich all you’d like, but do you want to make it impossible to become rich? Yes? That’s what taxing -earnings- does; create a stratified society where the poor cannot become rich, and the rich just maintain their wealth. Trying to get ahead is gobbled up by the gov’t, which becomes the sole provider of any decent paying job (the state of California paid a doctor with no license 700k last year), and we all become dependent on the state (which, of course, takes care of you via medical care, and retirement benefits)…Yay! Socialism! Oh, wait…how’d Russia/Nazi Germany do with that?

    …so no, I see no problem with him paying 17%, I just want to, too. Perhaps the gov’t should stop pouring money into idiotic bueraucracy? I think we could do with a non-deficit budget and a flat tax of 17%. [Think of the savings in IRS employees salary alone.]

  18. The Decline and Fall of the American Empire | Paul Craig Roberts says:

    [...] do not the Republicans listen when mega-billionaire Warren Buffett says that the tax rate on his massive income is lower than the tax rate on his secretary’s [...]

  19. Warren Buffett releases tax figures to GOP – Page 6 says:

    [...] per cent on the $46 million he made last year, without trying to avoid paying higher taxes" Warren Buffet has a lower tax rate than his secretary | The Unofficial Stanford Blog You do understand that anyone who's income is primarily from investments, pays a lower tax rate [...]

  20. Tim says:

    Man you yanks are crazy. You have a huge budget deficit and all Vincent can think about is also paying as little tax as him. Increasing capital gains tax apparently isn’t worth consideration.

    Paul thinks an income of 250k means you’re not wealthy and have to worry about your mortgage and saving for your childrens education. If you’re buying multi-million dollar houses and sending your children to expensive private schools then sure your budget may be tight but that’s a matter of living beyond your means, you can easily afford a more than nice house and good schools for your kids, just not the mansion and overpriced school you’re currently using. If most families are managing on 100k there is no way you are anything like struggling on 250k (over twice that) especially with the already low taxes the US has compared to the rest of the western world.

    Fact is if the US doesn’t get over it’s republican obsession with no taxes and limited government it’s going to end up the next Greece or perhaps USSR.

  21. Adrian says:

    The conservatives in this section seriously need to get over their fetish for rich people. It’s disgusting that middle and lower class Americans pay more than these rich bastards.

    You guys are never going to be obscenely rich so stop worrying that the government is going to take away your all your money if you do.

  22. Frank Sanford says:

    Who pays more or less taxes is something that will always be of great controversy, it really doesn’t matter how it looks on the surface every savvy businessman knows that paying less tax to increase your bottom line is just plain smart! Behind closed doors the true intention of every business man is to increase profits by decreasing expenses…taxes is obviously one big expense and Warren Buffett is no dummy!

    Frank Sanford

  23. For Help With Their Failed GM ‘Investment,’ Obama Administration Asked…Bain Capital « News « @griffinrc says:

    [...] good fiscal policy, and “fair”) – it is culled right from the Leftist, Warren Buffett “I pay less in taxes than my secretary” fraudulent [...]

  24. For Help With Their Failed GM ‘Investment,’ Obama Administration Asked…Bain Capital | PERSUASION IN INK says:

    [...] good fiscal policy, and “fair”) – it is culled right from the Leftist, Warren Buffett “I pay less in taxes than my secretary” fraudulent [...]

  25. chris says:

    @Tom, with the standard deduction and exemptions she would actually only pay about 16.5%, plus Social Security and Medicare would get her to around 24% then state tax may get her the rest of the way, but think about it, that would mean no real estate tax, which I am sure he pays and no charity, which he gives quite a bit. If he gave no charity and you figure in his real estate tax (which is a tax, that you can deduct against federal taxes) and state taxes, he would be at a higher rate. Also, he is double taxed on all those dividends he gets. Once on the corporate level, since they are not a deduction to his corportations, and then again on his personal return. So, it is bull, that she pays a higher rate.

  26. cheaphoarde says:

    I don’t buy it. If you get on turbo tax and plug in single making 60,000 you pay about 16%. That doesn’t include other deductions she may have. That doesn’t include if she’s married. Also—Buffett took in 46 million dollars and all he pays his secretary is 60k. How come noone is outraged about that?

  27. d_mickey says:

    30 percent is a total fabrication. On the first $8500, she pays 10 percent, or $850. From there to $34,500, she pays 15 percent, or $3900 (15% x $26,000). And from there to $60,000, she pays 25%, or 25% of $25,500, or $6375. So…

    $ 6375
    + 3900
    + 850

    =$11,125.

    $11,125 is 18.5% of $60,000, NOT THIRTY PERCENT!!

    Are Americans really so math-challenged as to believe these lies? Your president lied to you. If you had passed 10th grade math, you would know this. And this number doesn’t even take into account the standard deduction she would be allowed, which would bring her taxable income only about $56,000.

  28. ernie says:

    Go read the “great man’s” book. He essentially made his money by buying what he calls the toll booth company. Businesses that can jack the consumer because they are the only game in town. He would buy a company like a newpaper, drive the only competitor out of business, and jack up ad rates on customers. Yeah, he is a real humanitarian.

  29. Buck298 says:

    FINALLY! Thank you d_mickey for stating the actual facts. My God, no wonder class warfare works. President Obama stated the “Buffet Lie” again last night.

    The only thing that’s true in this whole lie is that “part” of her salary is taxed at 25%. I’m not sure what her deductions might be, but the average american making a salary of $60,000 pays an average of around 11%. That’s straight from the IRS.

    Get yourself educated people or you’ll only make fools of yourselves.

  30. For Help With Their Failed GM ‘Investment,’ Obama Administration Asked…Bain Capital | Letting Freedom Ring says:

    [...] (and good fiscal policy, and “fair”) – it is culled right from the Leftist, Warren Buffett “I pay less in taxes than my secretary” fraudulent [...]

  31. djp says:

    http://www.taxfoundation.org/news/show/250.html

  32. chris says:

    Loop holes! The president talks about the evil rich people taking Loop Holes, to lower their taxes. Can anyone tell me what these evil loop holes are? BTW, a loop hole is an unintended benefit someone gets from the tax code. Taking itemized deductions that have existed for generations and are taken by the rich and middle class and even some poorer people who own homes, are not loop holes.

    What loop holes did Warren Buffett use? Deducting Charity from his tax return, oooh how evil, he gave charity and deducted it. Deducting Real estate tax, also so evil, pay taxes to local governments and school systems and deduct it on your taxes, only the one percenters would think of that, evil! What else, state tax deductions, I bet Warren paid taxes to more then one state and then deducted it on his tax return, very evil!

    How about the lower tax rate on dividends, also so evil of him and the other 1%ers to pay tax at the legal rate, what a loop hole for those smart enough to hire an accountant or buy turbo tax. How evil!! They should double tax those evil 1%ers who get dividend income. Oh wait, dividends are double taxes, my bad.

    The president either has no understanding of the taxes or is just playing class warfar, I am guessing both.

  33. bill says:

    Should we maybe look at this differently. We don’t go to the Barber or Hairdresser and pay a percentage of our income for the service of getting our hair cut. If we did would it not be unfair?

    Why do we pay a percentage to the Government for its service. The government, like the Barber provide a service. They are there to protect us from harm and provide basic services. Why would we be be outraged that Buffet only pays 17.7% in taxes. Lets do the math:

    $46million times 17.7% = $8,142,000 in taxes

    $60,000 secretary 30% = $18,000 in taxes

    What extra services were provided to Mr Buffet for his extra $8,124,000?

  34. James says:

    Hey Warren if it really bothers you just write up an employee payment contract. Take a larger portion of your pay as income an not capital gains. Just have the company pay you a salary of $6-$30 million and you can pay all the taxes you want. You have complete control over how much you pay in taxes. It is up to you to pay more. That being said even if you confiscate all the money from the top 1% in one year it will not make a dent in the annual budget. So it is a leftist dream to think you can tax the rich enough to fix this problem.

  35. mitch says:

    The wealthy should pay less, so they can invest in product manufacturing and service companies. The less than wealthy should pay less so the market doesn’t have improperly influenced pricing.

  36. Math geek says:

    So, I went into Turbo Tax and did a little number crunching.

    If Mr Buffet’s secretary made $60,000 and filed as single and did not fill out Schedule A, but took the standard deduction, she would owe $8756 in income tax on that salary. I’m not taking into account SS taxes she pays, mind you, just income tax.

    $8,756 divided by $60,000 shows an overall tax rate of 14.6 percent, not the 30 percent Buffet claims. She’s not even in the 30 percent marginal tax rate bracket. she’s in the 25 percent marginal bracket.

    But the marginal rate is is not really relevant. Total taxes paid divided by adjusted gross income is what is relevant.

  37. Brandon says:

    His secretary does not pay 30%. This is an obvious lie. I made 67K last year and paid 8% in taxes. I make nothing in capital gains and only get a few deductions for various things. Please stop listening to this ass. He talked Obama into cancelling the Pipeline so he could make money, he is in this to make more money!!

  38. Rab says:

    Please, this is idiotic — it takes about 5 mins. to work this out on the IRS site. If she is paid $60k in salary and is single, her exemptions are $9.5k (standard deduction and personal) for $50.5k taxable income. On which she would pay $8.756k/$60k = 14.5%. If she is married, then the total exemptions are $19k for $41k taxable income and she pays $5.304k/$60k = 8.8% !!!! If Warren is talking about Federal Income Tax this is it. If he is talking about some of the multiple variations of Federal + State + SS + Medicare +etc. tax rates, then he should be more precise!

  39. Rob R says:

    I’ll support Obama any day of the week over obstructionist Republicans, however I’m getting a little tired of hearing about Buffett and his secretary.

    I just did my taxes the other day and you know what? I paid less in taxes than Buffet’s secretary too! I even paid less than Buffett himself! And I only made $108,000. My effective tax rate was a measly 5.94%!

    I wrote a satirical piece about this on my blog, The Mainland:

    http://themainland.net/2012/01/26/i-paid-less-taxes-than-warren-buffets-secretary/

  40. Max17 says:

    I suggest people stop getting their ‘facts’ from sources two or three times removed from the actual IRS data. Too many times, these sources are tainted by ignorance or deliberate deceit. The simple fact is, nobody earning $60K is paying a 30% tax rate.

    The CBO takes the IRS receipts and crunches every number you could possible hope to find about tax rates and who is pay what. Here’s a good link for their data through 2007:

    http://www.cbo.gov/publications/collections/collections.cfm?collect=13

    One of the tables (link below) shows average federal tax rates for everyone earning $64,500:
    income tax rate = 3.3%
    total federal tax rate = 14.3%

    as opposed to the top 1% of earners at:
    income tax rate = 19%
    total federal tax rate = 29.5%

    http://www.cbo.gov/ftpdocs/115xx/doc11554/AverageFederalTaxRates2007.pdf

    Please notice, I have compared apples to apples, using the government’s own data, with links to my sources. Warren Buffett and his secretary have not released their IRS tax returns and never will, because the facts will not support their statements. I don’t care what Buffett says, only what he proves.

  41. Dredd says:

    Will you people stop using facts? You’re ruining the feelings of this bloggers point. And that’s all it is, feelings. Because it obviously has no basis in reality, i.e. facts.

    And you should be thankful for Republican “obstructionists”. Right now they’re the only thing preventing us from needing an eventual bailout from countries like Greece.

  42. Mike R says:

    All you foolish… you do know the avg middle to lower class people pay about 40% a year in taxes? that’s all taxes combined. and you talk about double tax blah blah blah the rich have all these tax breaks. their businesses have tax breaks so when their companies make record profits they collect off their stocks which have even more tax breaks. its not we are jealous of their money it’s that they should pay 40% of their income as well. and businesses are not people like these republicans say. they think we are all morons and to the ones that think being a republican is cool you have fallen into their hands. Democrats are the lesser of two evils. I don’t know all the tax breaks they get but i do know that they don’t pay the same % we do, they have loop-holes that cater to the rich. Their businesses make money on our roads use tax payers facilities to make their millions. what’s even more sad is that even the semi-rich think they are part of the top but sadly they are just pawns as well. the uber-rich control everything. watch george carlin’s american dream skit. yeah it may be comedy but it’s true and if you think it’s not than you my friend need to take your head out of your assets. and why the hell would warren buffet lie and try to raise awareness about this when all it would do is lower his income? come on people wake the …. up! even the tax guy that owns h&r block backs him up (henry bloch). now say this guy doesn’t know what he is talking about. wake up people, you are being robbed by people that make more in a year than you do in a lifetime! meaning they control washington and persuade govt to cater to them if ya didnt get what i was sayin… peace

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