The Curious Case of Buffett and Bosanek

Debbie Bosanek, secretary to Warren Buffett and honored guest at Tuesday's State of the Union address, "pays a tax rate of 35.8 percent on her income", according to that bastion-of-truth-and-impartiality, ABC. You're thinking that's Federal Income Tax, right?

Let's do the math:

For starters, at a 35.8% tax rate, she's doing quite well for a secretary (but hey, she works for one of the richest cats on the planet)... So, for the sake of illustration, let's give her a taxable income of $100k:

Federal Income Tax: She'll pay $850 on the first $8,500, $3,900 on the next $26,000, $12,275 on the next $49,100, and $4,592 on the remaining $16,400... For a total of $21,617 or 21.62%... Hmm, that's not 35.8%?

Oh that's right, she lives in Nebraska, where she takes a state tax hit of $6,840... Now we're at $28,457 or 28.46%... Closer, but still not 35.8%...

Now wait a sec, if we go back to 2010, before the "payroll tax holiday", we gotta add another $7,650 for payroll taxes... Now we're at $36,107... That's it!! That's 36.11%... Back off a bit for deducting state taxes paid and I'm guessing you get close to ABC's #...

Now let's go back to Federal income tax, because that's where the adjustments would come: The President says millionaires should pay income taxes at a rate no less than their secretaries'... According to USA Today (taking from IRS data), millionaires pay, on average, an effective 24.4% federal income tax... Looks like they're already there...

So then, from a purely Federal standpoint, it's payroll taxes (Social Security and Medicare), not income taxes, that bring her tax "rate" well above her boss's... But that's not all bad considering she'll get almost $30,000 a year from social security (assuming she calls it quits at 66)... And, given the cost of medical care, God knows how much benefit from medicare...

But, you say, the Federal Budget's $1.5trill over-spent, and Social Security's on a collision course with a brick wall... Yep... And no doubt we'd agree it's the fault of the system we've created... However, alas, some would say the system (not hard work) has rewarded those who make great money and punished those who don't, and that's why we're in this fine mess... Honestly, can you get your head around that one?? Seriously, if you can, please clue me in...

By the way, if we'd simply step back, just a bit, and (govt) spend at 2007's rate, we'd have a balanced budget right now... Again, clue me in as to how the "1%" put us in this position...

All that aside, when we break it down, the problem in the case of Buffett and Bosanek is Nebraska... Nebraska billionaires aren't paying their fair share... I therefore propose, in the interest of fairness (screw practicality), that the Nebraska state income tax on folks earning over $250,000 per year be raised to 18%... That'll surely bring Buffet and Bosanek to par, and it'll do wonders for Nebraska's budget... That is until all the businesses move to Texas...