Tuesday, September 27, 2011
Warren Buffett has forcefully injected himself into the U.S. political debate, with President Obama using the billionaire's anecdote that he pays a lower tax rate than his secretary as a bludgeon in favor of raising taxes on millions of other Americans.
The Omaha stock-picker has every right to do so, and his foray may even do some good. His tax claim has already had the educational benefit of prompting the press to report that, as a general matter, the Buffett-Obama premise is false. CEOs don't typically pay lower rates than middle-class secretaries.
As data from the IRS make clear, the vast majority of those earning more than $1 million per year typically pay tax rates two to three times higher than people making less than $100,000. In 2008, the average tax rate for millionaires and above was 23.3% and for those earning between $30,000 and $50,000 it was 7.2%.
But the opportunity to educate the public would be even greater if Mr. Buffett would let everyone else in on his secrets of tax avoidance by releasing his tax returns. Going only by Mr. Buffett's unverified claims, his federal taxes in 2010 amounted to 17.4% of his taxable income, probably because much of his income was from capital gains and dividends. It's also likely that he took significant deductions for charitable donations. No doubt the millions of Americans who could end up paying more because of this claim would love to see the details. ...
If Mr. Buffett's anecdote is going to be the main political basis for rewriting the U.S. tax code, Americans have every right to know the basis for the anecdote. We called Berkshire Hathaway last week to see if Mr. Buffett would release his 2010 return, but we haven't heard back.