Debbie Bosanke | More Liberty

Taxation in America resumes by examining the progressivity of the US tax code; also, we compare Warren Buffet to his secretary, Debbie Bosanke.

Taxation in America – Buffet vs. Bosanke

By: George Noga – July 30, 2017

We examine liberal assertions that: (1) the US tax system favors the rich; and (2) Warren Buffet pays a lower tax rate than his secretary. When including refundable tax credits, the lowest income 60% of Americans pay less than 1% of individual income taxes. This is by far the lowest of any nation; moreover, the share of Americans not paying tax has doubled in recent decades. OECD and other studies confirm America has the most progressive tax system including federal, state, local and payroll taxes.

Let’s turn from the bottom 60% to the top income cohorts. The highest income 10% of Americans pay 35% more of the total tax burden than in Sweden for cryin’ out loud. Data are similar for the top 1% or 5%. During the past 30 years, the US has become far more progressive relative to Sweden, Germany, France and Finland. Corporate tax rates in America also are the highest in the developed world – by a large margin.

The liberal reflex is to blurt out, “Although income taxes are progressive, payroll taxes are steeply regressive and this makes the overall tax system regressive.” They fail to distinguish between a general purpose tax and one linked to a specific benefit to a specific taxpayer. Consider: (1) the tax base is capped, but so is the benefit; (2) higher income taxpayers receive less of a benefit as a percentage of contributions than lower income taxpayers; and (3) Social Security income is subject to highly progressive income tax rates. Independent studies, including by the Social Security Administration, conclude that both Social Security and Medicare taxes are progressive.

Warren Buffet Versus Debbie Bosanke

Using virtually any metric, the US tax code is the world’s most progressive. Liberals trot out disingenuous comparisons for misdirection and maskirovka to try and show the system favors the wealthy. Perhaps the most bizarre liberal attempt to bamboozle and to hoodwink is the assertion Warren Buffet pays a lower tax rate than his secretary.

MLLG once published a highly detailed tax computation showing Warren Buffet’s true tax rate; this post was one of our all-time most popular and is easily accessible on our website: www.mllg.us . This post summarizes and updates data from the original.

Buffet asserted he paid 17.4% in income tax and his secretary paid a much higher rate. In truth, Buffet paid close to 80% solely on that tranche of his income. Before Buffet can invest, he must first earn income subject to taxes of federal 39.6%, payroll 6.2%, Nebraska 6.8% and Obamacare 3.8%. He may then invest his after tax income in Berkshire and pay federal tax on his share of Berkshire’s income at 35% and Nebraska tax at 7.8%. When he sells stock he pays a 20% capital gains tax. At death, Buffet is subject to a federal estate tax of 40% and a Nebraska tax of 18%. Whew!

When properly computing his tax, Buffet is subject to an overall rate of nearly 80%. The 17.4% rate he cited was cherry picked from only the capital gains phase of the complete tax cycle. Furthermore, Debbie Bosanke earns $250,000+ per year – unlike a typical secretary who earns more like $25,000 and pays little or no income tax.

Buffet (like liberals everywhere) was cynically banking on the ignorance and class envy of the American people. His deception transcends political spin and crosses into a netherworld of duplicity and deceit. It froths with contempt for the American people. All we can do is shine the bright spotlight of truth on this sordid affair.

We now begin our summer in Montana and the next post is a surprise.

Just Who is Debbie Bosanke – And Why Has She Become the Poster Lady for Obama?

By: George Noga – February 21, 2012

Dear Readers:

For only the second time ever, I eschew the standard format to write more personally and directly. I have invested many hours researching this posting; if you stick with me to the end, you will be rewarded with an inimitable analysis and perspective.

Debbie Bosanke, for those of you not exposed to the White House and media spin machine, is Warren Buffet’s secretary, she who putatively pays a lower tax rate than her famous boss. President Obama is using her as an unwitting shill in his neutron bomb class warfare strategy to raise taxes to fund his hell-on-earth social welfare state. Never have I seen any issue so grotesquely demagogued, distorted, dishonest and deceptive. Consider the naked facts.

Buffet asserts he paid 17.4% in federal income tax. Although that isolated datum may be true, it is meant to dupe and hoodwink. Following is a fair and accurate calculation of Buffet’s real tax rate computed using the lingua franca of taxes by tracing a tranche of Buffet’s income through a complete tax cycle involving the following five stages.

Before Buffet can invest, he must earn income. At the start of the cycle he earns $1 million on which he pays federal income tax of 39.6%, social security of 6.2%, Medicare of 2.9% and Nebraska tax of 6.84%. He pays $483,000 in total tax which is an effective rate of 48.3% after allowing for the deductibility of state tax.
Buffet now takes $500,000 after tax which he uses to buy stock in a corporation. His investment is successful and the company earns 16% pretax profit for each of the next ten years. His share of the company’s income is $80,000 per year on which he (through the company) pays 35% federal tax and 7.81% Nebraska tax. The effective rate is 40.1% and Buffet pays $320,800 over the ten years.
The company pays a 5% dividend annually; on Buffet’s share, this is $4,000. The dividend is taxed at 15% federal and 6.68% state. Over 10 years he pays $8,280.
A decade has passed and Buffet decides to sell. Based on the aforementioned earnings and taxes paid, he nets a gain of $340,000. This is subject to a capital gains tax of 15% federal and 6.68% Nebraska. His total tax bill is $70,380.
When Warren dies, he will be subject to federal estate tax of 35% and Nebraska inheritance tax which ranges from 1% to 18% – I have assumed 9% herein; this amounts to $379,600 based solely on the data for this tranche of income.

Buffet’s True Tax Rate is 70% in 2012 – Increasing to 80% in 2013

Buffet’s true tax rate is over 70% on this tranche of income over the entire cycle of earning, investing and leaving an estate. During the 10-year period Buffet had $1 million in individual earnings and $800,000 via his share of corporate income resulting in total income of $1.8 million; on that amount, he paid taxes of $1,262,100 – or 70.1% and not the 17.4% alleged. His reported 17.4% tax rate was based solely on step 4 of the above 5 steps, i.e. only on a single part of the cycle. His real tax rate is over four times (400%) higher than he claimed.

All this is based on current tax law for 2012. I also computed Buffet’s tax rate based on current law for 2013 and it is over 80% due to the statutory rise in estate taxes and the new 3.8% ObamaCare tax. I excluded federal and state unemployment tax, property tax, sales tax and over 20 other taxes Buffet would have paid. Moreover, if Buffet would have lost money on his stock, it would have be deductible only up to $3,000 per year.

And let’s not forget Debbie Bosanke. She shamelessly is being used as a surrogate for secretaries everywhere – the kind that works in your office and earns say $20,000 and pays little or no taxes. Bosanke hardly fits that bill. Based on the limited tax data she released, her income is at least $200,000 and could be as high as $500,000, anywhere from 10 to 25 times the earnings of a typical secretary. Bosanke’s income is inferred based on published IRS data on tax rates by adjusted gross income. Neither Buffet nor Bosanke has released their tax returns.

An Ignoble, Sordid and Squalid Spectacle

I can’t recall anything in my lifetime approaching the sheer chutzpah of the Obama-Buffet-Bosanke spectacle. It transcends political spin and crosses into a netherworld of intentional lie and deception; it froths with contempt for the American people.

They assert Buffet’s tax rate is 17.4% when they know it is over 70% and rising to over 80% next year. They know Bosanke’s income is 10-25 times that of a typical secretary. They extract datum from only one part of the five-part tax cycle. All this is done with malice aforethought and intended to deceive and divide America.
The President of the United States and one of the richest men on the planet jointly propagated this massive fraud and deception knowing they could count on the state sycophant media not to expose them.
And just when you thought they couldn’t get any more scumlike, the bottom-feeding state sycophant media are flogging this deceit for all it’s worth. Even if they wished, they couldn’t get this story right because they graduate in the bottom deciles and their IQs are at least one standard deviation to the left of the norm.
Was this hoax the price of Buffet’s recently awarded Presidential Medal of Freedom? Buffet should be shamed into returning the medal and his otherwise good reputation has been forever sullied. Also, shame on him for dragging Debbie Bosanke into this squalid affair and for using her as an unwitting political pawn.
Perhaps the most sordid part of all this is that Obama is cynically banking on the ignorance and class envy of the American people due in part to the complexity of the tax code and his incendiary class warfare rhetoric. He is a divider, not a uniter.

The only antidote I know is to shine the spotlight of truth on this ignoble affair. In that regard, please be assured the tax data presented herein are accurate and fair as is the entire analysis. Please help me by forwarding this to as many as possible. Thank you.