I agree with Debbie Bosanek, Warren Buffett’s secretary.
It’s unfair that she pays a higher marginal tax rate than her boss.
Since she and Mr. Buffett have yet to make available their tax returns for the past four years so that we can accurately assess their claims about their tax rates, let’s for the moment take her word that she pays a 35.8 % tax rate. We don’t know how she calculates this–whether it’s her marginal tax rate or her effective tax rate, whether it refers to taxable income or gross income, or whether it includes FICA payroll taxes as well–but for the sake of argument, let’s assume it’s simply her marginal tax rate on taxable income. At the 35% marginal tax rate, this puts her taxable income at $379,150 a year, clearly among the top 1% of earners in the country.
Her boss, Warren Buffett, claims to pay a 17.4% tax rate. Again, since he hasn’t released his tax returns, we don’t know exactly what this means, but for the sake of argument, let’s say he’s referring to his effective tax rate on taxable income.
The solution to this terribly unfair treatment of Ms. Bosanek is obvious.
We need to pass The Warren Buffett’s Secretary Tax Relief Act of 2012, which would reduce income taxes for every American so that no one pays an effective tax rate in excess of 17.4%. This is approximately the effective tax rate that Ms. Bosanek would pay today if she earned what the average secretary to a CEO earns–a little over $67,000 annually. Ms. Bosanek is a victim of the current tax system because she’s such an outstanding and valuable employee to Mr. Buffett. She’s being penalized for excelling.
The problem, you see, is that Ms. Bosanek is penalized by the highly progressive nature of our current income tax system. The marginal tax rate jumps from 15% to 25% for every dollar of taxable income in excess of $34,500. Then it jumps to 28% for every dollar of taxable income in excess of $83,600. It jumps further to 33% for every dollar of taxable income in excess of $174,400, and then to 35% for every dollar of taxable income in excess of $379,150.
Come to think of it, the easiest way to solve this problem of fairness would be my proposed Warren Buffett’s Secretary Tax Relief Act of 2012. Under this new tax law, we would establish a single flat income tax paid by all Americans that sets our tax rate at 17.4% of every dollar of taxable income earned, from the first to the billionth.
Michael Patrick Leahy is the editor of the Voices of the Tea Party e-book series, co-founder of the Nationwide Tea Party Coalition, and co-organizer of Election Day Tea Party 2012. His new book,Covenant of Liberty: The Ideological Origins of the Tea Party Movement, will be published by Broadside Books in spring, 2012. He can be reached on Twitter at @michaelpleahy .