<p>All the cited article proves is that if you pick your definitions correctly you can prove anything you want. For an apples-to apples comparison, consider the following:
The top 1% of American taxpayers pay income tax pay at an average (mean) rate of 21% of their income. The 90th to 95th percentile - that’s roughly $50K to $75K - pay an average (mean) federal income tax of 12.5% That’s straight from the IRS spreadsheets, which you can download and check at [SOI</a> Tax Stats - Individual Statistical Tables by Tax Rate and Income Percentile](<a href=“http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133521,00.html]SOI”>http://www.irs.gov/taxstats/indtaxstats/article/0,,id=133521,00.html) - charts 7 and 8</p>
<p>So where does the Tax Policy Institute get its very different numbers of 29% and 15%? Well they add Social security tax, which is fair, except that it should cut the other way. Most taxpayers in the $50K to $75K get most of their income from wages. So FICA taxes, whether you calculate them at 7.5% or 15%, should add a significant amount to the income tax. But TPI only lists the “federal tax” for this group at 15%, just 2 1/2% above their income tax. I don’t see how they got there.</p>
<p>For rich folks, FICA is a small proportion of their income. This biggest part of FICA is capped at $106K. Even with a two-salary household, that isn’t going to boost the overall tax percentage on a million dollar income household more than a point or two. So how does the TPI get the “federal” tax on rich folks from 21% to 29%? As previous posters pointed out, they allocate corporate income tax to the shareholders. And since rich people own almost all the corporate stock, they get allocated credit for those payments.</p>
<p>But wait: why don’t tenants get credit for the income tax paid by their landlords? Why don’t the poor schlubs who have their money in savings accounts get credit for the income tax paid by the bank? I mean, the Supreme Court has explained to us that corporations are “people.” So just because you’ve invested in another “person” you get credit for the tax they pay? I don’t get it. </p>
<p>Interestingly (I would assume, for many of the CC parent cohort) the people who probably legitimately pay the highest income-and-FICA tax combination of all are the 95th to 99th percentile taxpayers - people who earn between $75K and $400K per year. The mean income tax for that group is 17.2% - just a shade behind the rich folks - and I suspect that, at least in the lower reaches of that cohort - the great majority of that income is subject to FICA, pushing us into the lead, although the differences between all income groups is really, very minor due to the income-regressive impact of taxes other than income tax.</p>
<p>Hurray for us! We’re number one!</p>
<p>Buffet’s math was straightforward, and correct. This “spin” - which, predictably, has been posted all over the internet by the usual echos - is basically an exercise in twisting facts to push a point which is fundamentally false.</p>