Thursday, January 26, 2012

Warren Buffett's secretary Debbie Bosanek...

Buffett says he pays around 17 percent tax on all his income, while his assistant for the past two decades pays more than twice as much, at 35.8 percent. That weird disparity — one that confuses even tax experts unless she makes $200,000 to $500,000 a year — would certainly strike many as unfair.

Can anyone fail to see the irony of President Obama inviting Debbie Bosanek to sit by his wife for his State of the Union Address to use her as an example of tax unfairness, when the Buffett aide likely earns enough to put a bullseye on her back for the tax hikes Obama has long called for on higher earners?
IRS tax tables from 2009, the most recent year available, show an average federal tax rate of just 12 percent for taxpayers in the $100,000 to $200,000 bracket, rising to 19 percent for people with adjusted gross incomes of $200,000 to $500,000.
So Debbie Bosanek probably is in that $200,000 to $500,000 bracket.
If this is accurate — neither Buffett nor Bosanek has released their tax returns, but only given us a few facts meant to flesh out his claim that she pays a higher rate — she may even be part of the infamous 1 percent. In 2009, that required an adjusted gross income of $343,947.
Adjusted gross income is what a person is taxed on after deductions for things like the personal exemption, mortgage-interest payments, qualifying tax credits, etc. So it’s possible her raw salary is even higher.
While running for president and since taking office, Obama has been calling for higher taxes on upper-income earners... generally backing legislation that would hike taxes on earnings starting in the $200,000 to $250,000 range.
I [Steve Stanek] have a feeling Buffett and Bosanek are all over the map on their tax-rate claims.
ABC News this week used tax information selectively supplied to them by Buffett and Bosanek to make the case for how unfair the nation’s tax system is. It reported, “Bosanek pays a tax rate of 35.8 percent of income, while Buffett pays a rate at 17.4 percent.”
I don’t know how that’s possible, as the maximum federal income-tax rate is 35 percent. The average tax rate for the top 1 percent of earners was 24.01 percent in 2009, according to the IRS. And we’ve been talking about income taxes, have we not?
Or perhaps not. Maybe they’re including her payroll taxes for Social Security and Medicare. But that applies only to income below $106,800; there’s no payroll tax on earnings above that level.
There’s no way to tell what Buffett and Bosanek are talking about when they make their tax-rate claims.
I have a feeling they’re being mendacious. For Bosanek they are giving us her marginal tax rate, and for Buffett they are giving us the blended average rate.

Mr. Buffett told the Times of London five years ago that his secretary makes $60,000 a year and pays over 30 percent of her income in taxes. The Internal Revenue Service reports the average tax rate for someone making that amount is 11.6 percent. Even adding on payroll taxes, she isn’t paying anywhere near 30 percent.
The IRS publishes detailed tax tables by income level. The latest results are for 2009. They show that taxpayers earning an adjusted gross income between $100,000 and $200,000 pay an average rate of twelve percent. This is below Buffett’s rate; so she must earn more than that. Taxpayers earning adjusted gross incomes of $200,000 to $500,000, pay an average tax rate of nineteen percent. Therefore Buffett must pay Debbie Bosanke a salary above two hundred thousand.

Debbie Bosanek and her boss both declined Thursday to disclose how much she's paid, saying it's private.
In an interview with The World-Herald, Buffett also said none of the online guesses about Bosanek's salary is right, and the critics are missing his point.
Buffett said the issue isn't Bosanek's income, nor is her tax rate unusually high. "They can't attack the facts, so they attack the person. It's ridiculous."
Bosanek said she's not complaining about her salary or the taxes she pays, nor will she apologize for the home she bought last year in Surprise, Ariz., a Phoenix suburb.

Warren Buffett’s secretary last year purchased a second home in Arizona, a residence complete with a swimming pool and a “professional PGA putting green,” according to real estate records.
Debra Bosanek, 55, and her husband Gerald bought the 2100-square-foot home in Surprise, a city outside Phoenix. The Bosaneks paid $144,000 for the four-bedroom, two-and-a-half bath property (the purchase was financed, in part, by a $115,200 mortgage).
The principal Bosanek residence is in Bellevue, Nebraska, several miles from Buffett’s corporate headquarters in Omaha. The couple’s 2568-square-foot home, built in 2000, also has four bedrooms and two-and-a-half baths which Sarpy County assessors last year valued at $217,716.

She said she and her husband, Jerry, looked at houses last June when they took their son, also named Jerry, to visit at the University of Northern Arizona campus in Flagstaff, where he is now a freshman. Her husband drives vans and other vehicles for a company that delivers air freight from Eppley Airfield to destinations in the Midwest.

[The Buffet - Bosanek] example shows how unwise it is to legislate from anecdotal evidence. The U.S. tax code overall is amazingly progressive. The rich pay much higher average effective rates than middle- or low-income folks. According to the Tax Policy Center, in 2010 the top 0.1 percent paid an average tax rate — including income and payroll taxes — of 30.7 percent, right at the Buffett Rule level. By contrast, middle-income voters — defined as those in the middle fifth of income distribution — paid just 12.8 percent. The bottom 40 percent of taxpayers had an average total tax rate of even less, just about 3 percent when you take into account various tax credits.