Secretary’s Tax Rate is Perfect Spin Job

If you open your laptop to any news website, or turn on your TV to any 6:30pm news channel, or follow a bunch of cable news “talking heads” on Twitter, you’re sure to have heard about The President’s Plan or Economic Growth and Deficit Reduction. Love it or hate it, it’s what’s going on in Washington, DC right now, and Republicans and Democrats are dealing with it how they may.

In this initiative, President Obama is using a capitalistic American hero as an incredibly popular prop. Given that Warren Buffet feels the uber rich need to be taxed more, I’d use it too. I think they’re calling it “The Buffett Rule.”

Within this prop however, is a very compelling illustration. An illustration so perfect, that, when I read it, made me let go of my mouse and throw a few comments Amanda’s way. I suppose it’s all over the place now, but on page 46 of Obama’s report, he exclaims, “As Warren Buffet has pointed out, his effective tax rate is lower than his secretary’s.” BOOM. Perfect illustration to prove a point.

Thinking a few steps further, however, reveals that things aren’t as simple as the quote may hope. First, Buffet’s taxes are a red hot rich mess. He’s wrapped up in investments, which are taxed at a lower rate than income (Remember, the President is talking “rate” only). Second, Social Security somehow plays into his rate.

Moving along, here’s my bigger thought regarding the secretary illustration. How many jobs does Warren Buffett supply? For simplistic reasons, let’s say 10. If Buffett supplies 10 American jobs that receive W-2s, who pays the taxes? I suppose the short answer is that the employees do. I mean, after all, it is taken out of their paycheck.

Well, actually, it seems to me Buffett pays the taxes. Here’s the rub. The taxes exist, only because a job opportunity exists (and is placed). In short, the job comes first, which is at the pleasure and opportunity born from Mr. Buffett. Sure, a tax rate may come before the job, but no one pays “tax rates.” Taxes are paid, for a job a person is employed in and performs, at a rate. Taxes are paid, not tax rates.

No doubt, I’m not a tax expert. Far from it, actually. Further, I’m not a “hater,” as exemplified by previous posts. No one wants the President to succeed more than me. Bush, Clinton, Bush, Obama… Let’s go! I’m an American, just like you.

This all said, the kabillionaire vs. secretary tax rate seemed like the perfect microcosm of what’s wrong with our tax system. After all, it’ll probably be a VERY effective “play” with the casual voter. Who knows, that may be the point…

Why did I post a pic of the young Warren Buffet, you ask? I can’t help but wonder if the Buffett above would preach the same message we’re hearing from the billionaire of today. Yesterday’s Buffet had cleats on his wingtips, hustling and hoping someone would listen. Today’s Buffett could wear Umbros and a Michael Jackson zipper jacket, and people would listen. Point? It’s a little different once you’ve made it.

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