Tuesday, September 20, 2011

Warren Buffett's complaint that his secretary pays a higher percentage of her income in taxes than he does has (justifiably) received a lot of criticism (sample), most of which focusing on the fact that his income is in the form of capital gains and dividends, both of which are taxed at a lower rate than is ordinary income.

I have another complaint: why hasn't Buffett allowed his secretary to do the same thing? If he can set his compensation plan to minimize ordinary income, he could have done the same for her. Why hasn't he set her up so that she gets the majority of her pay in the form of dividends?

If Buffett, as he claims, is so interested in the 'little guy', why does he force his secretary to pay out so much of her compensation in taxes? Assuming she makes somewhere in the ballpark of $75,000 a year, just a 10% cut in her effective tax rate would put some $7,500 more dollars in her pocket each and every year. How many people making 'just' $75,000 a year do you know who wouldn't dance with joy at getting another $7,500 a year to do with as they wish?

Isn't she one of the middle class that Buffett (and Obama) profess to care so much about? If so, where's the love? Where's the consistency? Where are the deeds that back up the words?

Or is this a case of the big powerful CEO using his position to take what he can and to h**l with everybody else?

Or is it a case of him screwing her by leaving her to pay higher taxes than she needs to so that he can get his so-called talking point for raising taxes?