Friday, April 13, 2012

Let's Talk Taxes, Obama paid a lower effective tax rate than his secretary.

Drudge headlines today relate to the fact that Obama paid a lower tax rate than his secretary, despite huge differences in incomes.  The Obama's paid an effective federal tax rate of 20.5% on $789,674 in adjusted gross income. His secretary earns $95,000 a year but paid an undisclosed  'slightly higher rate'.  Drudge:

Could Have Paid $103,067 More In Taxes Without Bush Tax Cuts, Credits...
Kids get $48,000 -- tax free!
VEEP PAYS 23.2% RATE -- ON $379,035 INCOME...

The year John Kerry ran for president, his very wealth wife reported unearned income in excess of $5,000,000 yet she paid a paltry tax rate of about 12%.  I knew a truck driver who made under $50,000 a year but paid a higher effective tax rate.  Actually, the truck driver paid a much, much higher effective higher tax rate when Social Security taxes are factored in.  SS is purely a wage earners tax.  The website of SS says "For 2012, the maximum taxable earnings amount for Social Security (OASDI) taxes is $110,100. The Social Security tax rate for employees is 4.2 percent through the end of the year The Social Security tax rate for employers is 6.2 percent. The Medicare tax rate is 1.45 percent for employees and employers. Self-Employment The Social Security tax rate for self-employed is 10.4 percent through the end of the year. The Medicare tax rate is 2.9 percent for self-employed.", here.

Actually, the SS tax for the employee will increase when the temporary 2% tax cut expires at the end of the year.  But the employee really pays the full tax of 15.3% which is a floor of a minimum federal tax on the incomes of the poor and middle class.  The employer doesn't pay the tax which is considered just a routine payroll or labor expense and instead the employer functions as a tax collector.  Unearned income or income not earned by wages is not subject to Social Security and Medicare taxes. Even worse, the taxes that go into the SS Trust Fund are immediately spent by Congress who has plundered it to the tune of trillions by leaving a big pile of worthless IOU's that can never be repaid.  The SS money is spent on wars, pork, corporate welfare and other slop.

Taxes are always sold to the people as 'taxes on the rich'. According to the Treasury Department's own website, the income tax was described as follows (the link is no longer available):
By 1913, 36 States had ratified the 16th Amendment to the Constitution. In October, Congress passed a new income tax law with rates beginning at 1 percent and rising to 7 percent for taxpayers with income in excess of $500,000. Less than 1 percent of the population paid income tax at the time. Form 1040 was introduced as the standard tax reporting form…
Rich folks can afford an army of tax lawyers and tax accountants to engage in legal tax avoidance and they can also afford to fill campaign coffers with enough cash to get Congress Critters to pass tax avoidance laws. Obama is using his own tax return to advance the Buffet Tax, despite the fact that Obama didn't meet the million dollar threshold in AGI. Yet, it was his decision to avail himself of every possible tax deduction to lower his taxable income, including gifting his children $48,000 tax free. And Warren Buffet? Buffet has been fighting the IRS at least 15 years with his team of tax lawyers to avoid paying $1,000,000,000 (a billion) that the IRS says Buffett and/or his companies owe in back taxes.Most assuredly, Buffet has no intention of paying higher taxes.

It Turns Out Warren Buffett Is A Master Of Avoiding Taxes

So who pays the taxes?

As Leona Helmsley famously quipped 'We don't pay taxes. Only the little people pay taxes'.  Indeed.

Of course, the biggest tax of all is the inflation tax that has wiped out 95% of the purchasing power of the dollar, courtesy of the Federal Reserve.  And that's a tax that was specifically designed by the Banksters and government to transfer wealth from the poor and middle class to the wealthy.

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