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The inference is that the 47% are all on welfare. Reality is that a family of 4 with $50K in annual income likely pays no federal income tax predominately due to to the Earned Income Tax Credit.
EITC was first enacted in 1975 under Ford. The EITC has received long standing bi-partisan support as a means to provide relief through the tax code to the working poor. The EITC was expanded under Reagan, Bush, Sr., Bill Clinton and Obama.
The median annual household income is the U.S. is abot $50K.
The article you posted admits that his effective tax rate was indeed 17.4%.
Quote:
"...he paid 17.4% of his taxable income to Uncle Sam, including payroll taxes for Medicare and Social Security."
Total effective federal tax rate and effective federal income tax rate are two different things. The former includes SS and Medicare payroll taxes and the latter doesn't. You should also be aware that Buffett collects a salary of only $100,000 per year. That places him squarely below the higher tax brackets. It's Buffett's way of evading taxes.
I've posted the IRS's info on the effective tax rates the various income groups pay first without and then with payroll taxes. For your review:
Quote:
Originally Posted by InformedConsent
The average American had an effective federal tax rate (income and payroll taxes) of 11.21% or less. That's LESS than Mitt paid. In fact, the bottom 90% paid LESS than Mitt did...
Taking the IRS data on KNOWN average effective federal income tax rates for each income group:
Top 1% pays an effective federal income tax rate of 24.01%
Top 5% pays a rate of 20.46%
Top 5-10% pays a rate of 11.36%
Top 10-25% pays a rate of 8.25%
Top 25-50% pays a rate of 5.56% IRS: Effective Federal Income Tax Rates By Income Level
Let's add the 5.65% (4.2% SS + 1.45% Medicare) payroll tax to all of the bottom 90%, all the while acknowledging that many of those in the top 10% ALSO pay payroll taxes. The average total effective federal taxrates of the bottom 90% would be:
Top 10-25% pays a rate of 13.90%
Top 25-50% pays a rate of 11.21%
Bottom 50% pays a rate of 7.5% (1.85% effective federal income tax rate + 5.65% payroll tax)
NONE of the bottom 90% has an average total effective federal tax rate that is more than the 15% capital gains tax rate.
And furthermore, the capital gains earnings were ALREADY TAXED at the corporate level whereas employees' salaries are tax deductible as a business expense which is NOT taxed at the corporate level.
The article you posted admits that his effective tax rate was indeed 17.4%.Total effective federal tax rate and effective federal income tax rate are two different things. The former includes SS and Medicare payroll taxes and the latter doesn't. You should also be aware that Buffett collects a salary of only $100,000 per year. That places him squarely below the higher tax brackets. It's Buffett's way of evading taxes.
I've posted the IRS's info on the effective tax rates the various income groups pay first without and then with payroll taxes. For your review:
I take exception to the word "evading" tax. One is not obligated to pay one more dime than the tax code mandates.
If I have mainly capital gains income, that is taxed lower than ordinary income, this is not sinister. The fault is with Congress that made this distinction.
Buffett evades any of the higher tax brackets by only collecting $100,000 per year salary. He certainly could be paid MUCH more considering what he does.
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