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Written by Dave Young, President of Paragon Wealth Management
President Obama says that his most important priority is to create jobs. With that priority, it does not make a lot of sense that he relentlessly attacks those who create most of the jobs in America, i.e. “the rich”.
For the past couple of weeks the president – and his new helper, Warren Buffett- have campaigned endlessly against the job creators who he says do not pay their fair share of the tax bill.
I agree that everyone should pay their fair share. That is common sense. However, I do not believe that Warren Buffett or the president should make up facts to mislead the public that the rich are not paying their fair share.
I work with wealthy people. Regardless of what the president says, these people pay a lot of taxes. It could easily be argued that they pay much more than their fair share.
As a matter of fact, the top 10 percent of earners pay 70 percent of all federal income taxes.
According to the Tax Policy Center, the average person making:
- $50,000 pays $6,250 in Federal Income Taxes.
- $75,000 pays $11,250 in Federal Income Taxes.
- $1,000,000 pays $291,000 in Federal Income Taxes.
So if you make 20 times more than $50,000, or in other words $1,000,000, then you will pay 46 times more in taxes.
So you make 20 times more but pay 46 times more, and that is considered unfair? You are endlessly attacked and told you are not paying your fair share when in reality you should be getting a “thank you” card.
Do the rich get to use the roads more or do they get better police and fire protection? Do they get better protection from the military? I know they get much more attention from the IRS.
These are the actual numbers. The real numbers don’t back up the populist picture that the rich do not pay their fair share. They actually show the opposite.
So what about Warren Buffett? Why is he helping to distort the facts?
I’m only speculating, but he owns several large insurance companies. It is very much to the benefit of his insurance companies to have high tax rates. Because of the tax preferential treatment that insurance products receive, those companies would benefit significantly from higher tax rates. In that way Buffett would benefit from higher tax rates.
Or maybe, Buffett is right that his secretary pays a higher rate than him. I would imagine she gets paid more than your typical secretary and is in a fairly high tax bracket.
Buffett built his reputation as a legendary investor in the 70’s, 80’s, and 90’s. However, for the past 13 years he hasn’t done much at all.
From June 30, 1998 to August 31, 2011 he has returned only 2.6 percent compounded to his investors in Berkshire Hathaway. That is 2.6 percent compounded over 13 years.
Maybe that is why he has been paying less in taxes than his secretary.
Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this report constitute the judgment as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results.