How many times have you heard it said that multi-billionaire Warren Buffett’s secretary pays a higher percentage of her income in taxes than Buffett does? Are you getting tired of it yet?
It was Buffett himself who brought the subject up, although lately he has gotten testy, and when the media ask him probing questions about it he now says “Leave my secretary alone.” The poor media wouldn’t even know that Buffet had a secretary if he hadn’t gone public with the fact. Her name, by the way, is Debbie Bosanek, in case you want to bother her.
Buffett brought it up, but our nation’s demagogic President has run it into the ground. Obama recites the “Warren Buffett’s secretary” mantra more frequently than a shipwrecked Catholic says his Hail Marys. At the State of the Union speech the other day, Ms. Bosanek was given the place of honor in the gallery next to Mrs. Obama. That place normally is reserved for national heroes.
Poor overtaxed, bothered Debbie Bosanek, it seems, is a hero among those who are cheated by a tax system that favors the wealthy – Obama’s fabled “millionaires and billionaires.” The solution to the problem, Obama feels – the solution that he prescribes for any and all of the nation’s financial woes – is to make those evil rich people “pay their fair share.” By any sensible measure, the rich already pay their fair share, but let’s set that aside.
The question I would like to ask is how in heck did Debbie Bosanek’s accountant produce a tax return that requires her to pay a higher rate of taxes than Buffett? Unfortunately, there are a lot of unknown variables that make it nearly impossible to come up with an answer to that question.
For one thing, we don’t know Debbie’s salary. She was asked about it, but she refused to divulge it, saying the information was “private.” Does she maybe earn more than Buffett does? That would explain the higher tax rate, and it is not out of the question.
I don’t know whether I have to remind the reader about this, but taxes are levied on income, not on wealth. Buffett, with his many billions of dollars in assets, would pay zero taxes if he had zero income. And if he wanted, he could indeed have zero income. He is his own boss, so it is up to him how much salary he receives. The bulk of his wealth is in the stock of the company he heads, Berkshire Hathaway, and the company pays no dividends. If he doesn’t sell any of his stock in a given year, there will be no capital gains to tax. Dividends and capital gains are privileged forms of income under the tax code, subject to lower tax rates than other forms of income, but as I said he receives no dividends from his company, and it appears that he seldom, if ever, sells any shares.
We don’t know all the other sources of his income, and if we asked him no doubt he would tell us to leave him alone. We do know that he is a director on the boards of some other companies, for which he probably receives fees. That would certainly be taxable, though not at a privileged rate. He probably also has salted away a fair amount of money over the years in other investments, some of which may provide him with dividends and capital gains. But that is another unknown that is likely to remain unknown.
Although he could work without salary if he chose, in fact Buffett receives a flat annual salary of $100,000 per year, which places him with America’s upper middle class, but not among the odious group that Obama calls “rich folks.” In addition, Berkshire pays around $400,000 a year to physically protect him. The greatest fear of any rich person is that he will be kidnapped and held for ransom.
If I wanted to be mean, I could point out that Buffett must be a pretty stingy bastard to make his company – and therefore its shareholders -- pay for his protection. I dare say he could afford to do it himself. But I don’t want to be mean.
So we know that he makes about a half-million in income a year, give or take, plus who knows what else? Let’s leave it at a half-million for a moment. Is it possible that La Bosanek makes more than that?
It is possible, of course, if not likely, but we may never know, unless Buffett and she do the right thing and answer the questions I am posing.
The other possibility is that Buffett qualifies for vastly more tax deductions than Debbie does. Two people can have exactly the same adjusted gross income, but pay far different amounts in taxes because their deductions differ. It may be that Buffett’s deductions, whatever they may be, allow him to reduce his taxable income to some paltry amount, while Debbie pays through the nose. That could explain why he has the lower tax rate – if indeed he does. I say “if,” because I want to leave open the possibility that this whole controversy is a hoax. After all, this is politics.
Come on, Warren and Debbie. Own up. Open the books. If you say A, you must say B.