Breaking Down the Buffett Tax

By ColumnsFOXBusiness

Buffett’s Bad Tax Math

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Buffett’s Bad Tax Math

FBN’s Gerri Willis on why Warren Buffett’s claim he paid a lower percentage of his earnings in taxes than his secretary is incorrect.

Remember the fight last year over extending the Bush tax cuts? Well here we are again. But instead of the Bush tax cuts we have the "Buffett Tax," outlined by President Obama on Monday.

"Warren Buffett's secretary shouldn't pay a higher tax rate than Warren Buffett," Obama said. "There is no justification for it. It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million."

This all started when billionaire investor Warren Buffett opined in the New York Times, "My friends and I have been coddled long enough by a billionaire-friendly Congress. It's time for our government to get serious about shared sacrifice."

He went on to tell what has now become an infamous story about how he is paying less in taxes than his secretary. He claimed he paid less than $7 million in taxes last year - or under17.5% of his earnings, while his secretary paid 36%.

Well the Oracle of Omaha should break out his calculator again! If you do the math - he's actually paying much more than that.

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As the New York Post points out - first Buffett had to make the money he invested - that gets taxed at about a 35% rate. Then when he made a profit on those investments - the capital-gains tax comes into play at 15%. That's 50%!

It's not just Buffett who has his math wrong. President Obama is way off base when he says the wealthy need to pay their fair share.

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