Getting down to brass tax
There aren't many radio stations that play music consistently in the mornings, so I usually pop in a CD or listen to the morning radio shows during my commute to work. The local DJs generally talk about topics that relate to everyday people, and I like listening to their contrasting views on topics ranging from politics to Britney Spears' latest folly.
"The Rick &Bubba Morning Show," which features Rick Burgess and Bill "Bubba" Bussey, is probably the most popular syndicated morning radio show in this state, and I like the show's sense of humor and energy. I even like the "Pass the Gravy" theme song that's played as the show cuts to advertisements. But the self-titled "Sexiest Fat Men Alive" DJs also tend to ridicule certain concepts, such as global warming and anything else that doesn't fit into their conservative philosophies.
Earlier this week, Rick &Bubba discussed recent comments by billionaire investor Warren Buffet, who said in a recent interview that he pays income taxes at a lower rate than his office workers.
The DJs suggested that Buffett, whose first taxable job was as a 13-year-old newspaper carrier, doesn't pay enough because he uses tax shelters and corporate lawyers to lower his taxes.
They also commented that Buffet, who claims that he doesn't circumvent income tax laws, should just pay more money to the government and that he should give his secretary a raise.
I think Burgess and Bussey were missing Buffet's point, which is that the wealthiest people in the U.S. – I'm talking about people who make more than $90,000 annually – wind up paying income taxes at a lower percentage rate than middle-class workers.
The DJs read some figures from the U.S. Chamber of Commerce that countered Buffet's point and argued that the top 2 percent of wage earners in this country actually pay 86 percent of all taxes.
That sounds incredibly unfair, but let's break that down with a sample of 100 single people. If John Smith and Jane Doe each earn 1 million dollars that's taxed at the federal rate of 35 percent, their combined tax bill would total $700,000. If the remaining 98 people in this sample earn $50,000 annually taxed at 15 percent, their total bill would come to $735,000.
This was very simple example, but I think it's obvious that the richest people in the U.S. – the millionaires and billionaires – contribute the largest percent of taxes. But they don't necessarily pay at a higher rate than people in the lower tax brackets.
In an interview with CNN's Lou Dobbs, Buffett, one of the most respected investors in history, said, "I personally would increase the taxable base above the present $90,000. I pay very little in the way of Social Security taxes because I make a lot more than $90,000. And the people in my office pay the full tax."
I don't claim to understand the U.S. income tax code, which is like a Sudoku puzzle. But there's something that doesn't add up when someone like Buffet claims to pay income taxes at a lower rate than his staff-level employees.