Paul,
I have no idea how much money Warren Buffett’s secretary earns and perhaps she does earn more than $200,000. But your post is based on two incorrect premises.
1. Buffett’s tax rate, as a percentage of adjusted gross income, is NOT higher than 12%——it is actually just 11%, as you can read in my post
here. When you hear a higher rate discussed, it is based on his taxable income (after his substantial deductions for charitable giving.) So, just based on AGI, he pays an income tax rate below the rate for those with AGI of $100,000 to $200,000.
2. Buffett doesn’t contend that his entire staff pays a higher effective INCOME tax rate than he does (whatever you want to calculate it on). What he says is that they pay a higher tax on their incomes when payroll taxes (Social Security and Medicare) are included.
For those who are curious about the average effective INCOME tax rates at various income levels, they are in my post
here and I have pasted them below.
Here, for 2008, are the average effective individual income tax rates, as a percentage of adjusted gross income, for various income groups. Note that the last number is for the 400 highest income returns the IRS got that year.
Size of AGI Average Tax
(in $) 2008 % of AGI
1-25,000 1.76
25-50,000 5.32
50-100,000 8.41
100-200,000 12.59
200-500,000 19.50
500-1,000,000 23.92
1-10,000,000 24.47
10,000,000 + 20.89
109,736,000+ 18.11
(top 400)
