Warren Buffett to Congress: Tax me more than $7 million(VIDEO)(Read article summary)
Warren Buffett says he pays less in federal taxes than lesser paid Americans. Where do Warren Buffett's numbers come from?
The mega-rich have been "coddled long enough by a billionaire-friendly Congress."
No, that's not some tax-the-rich liberal speaking. It's mega-investor Warren Buffett, who sits at the top of the mega-rich pyramid, writing an op-ed piece in The New York Times Aug. 14. He argues that the tax breaks for the wealthy must be removed.
It's compelling stuff: "Last year my federal tax bill – the income tax I paid, as well as payroll taxes paid by me and on my behalf – was $6,938,744," Mr. Buffett wrote. "That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income – and that's actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent."
That's shocking. But is it really true that the wealthiest Americans pay less than the middle class?
No. Skewed as it is by tax breaks that help the wealthy, the federal tax system remains progressive, which means that the poor pay a smaller percentage of their income than the rich pay on theirs. In 2007, the bottom fifth of households in the income distribution paid about 4 percent of their income in federal taxes, according to the director of the Congressional Budget Office (CBO), Douglas Elmendorf, in testimony to Congress this past December. By contrast, the middle fifth of households paid 14 percent, and the highest fifth paid 25 percent.
Also in 2007 (the latest data available), that highest fifth of households earned 55 percent of before-tax income but paid almost 70 percent of federal taxes, according to the CBO.