Green Room

NEA Doubles Down on Warren Buffett’s Secretary

posted at 5:03 pm on April 2, 2012 by

As irksome as it may be to have a tax-exempt entity with $1.5 billion in annual income argue passionately in favor of people paying their fair share of taxes, the National Education Association is perfectly within its rights to do so. Just as we are perfectly within our rights to point out when it makes up crap to support its arguments.

For those of you who had forgotten the 15 minutes of fame enjoyed by Warren Buffett’s secretary, Debbie Bosanek, my apologies for reminding you. For those who need a refresher, it’s pretty simple and summed up by ABC News: “Bosanek pays a tax rate of 35.8 percent of income, while Buffett pays a rate at 17.4 percent.”

It took a few media cycles to ascertain that Buffett made about $46 million, mostly from capital gains, while Bosanek earned about $60,000. And it took a few more media cycles for every financial pundit in America to attempt to figure out how Bosanek’s tax rate could be so high, based on such a relatively low income.

So let’s avoid a rehash of effective rates vs. marginal rates, Social Security and payroll taxes, etc., and just accept the intended spin of “Rich people are gaming the system at the expense of poor people,” even if the vehicle used didn’t have all of its wheels.

Enter the NEA, which in support of the legislation inspired by Buffett’s secretary, the Paying a Fair Share Act, decided to go one step beyond with this argument:

WHAT DO EDUCATION SUPPORT PROFESSIONALS AND WARREN BUFFET’S (sic) SECRETARY HAVE IN COMMON?

They pay more in taxes than billionaire investor Warren Buffet! Our nation’s tax laws are out of whack. It is not fair that a bus driver, a custodian, and Warren Buffet’s own secretary pay more in taxes than our nation’s richest individuals.

Let’s begin with the obvious. Neither bus drivers, nor custodians, nor Warren Buffett’s secretary pay more in taxes than our nation’s richest individuals. In absolute terms, Buffett paid more in taxes in one year than his secretary will earn in 130 years.

The larger problem with this argument is that education support professionals (ESPs) and Warren Buffett’s secretary don’t have much in common. Bosanek makes $60,000 a year – in Nebraska. The average full-time ESP salary nationwide, according to NEA itself, is $30,480. Even if we assume that entire amount to be taxable, the marginal federal income tax rate is 15%, and the effective tax rate would be 13.6%. But there are exemptions, deductions and tax credits. The Tax Policy Center reports that 69.5% of all households with an income below $50,000 pay no federal income tax whatsoever.

If “fair share” means those with more pay more, NEA should apply the principle to its teacher members, who currently pay the same standard dues rate regardless of income, geography, or economic condition. Why should a starting teacher in North Dakota have to pay 0.7% of her salary in NEA national dues, when a top-of-the-scale teacher in New Jersey only pays 0.2%?

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The effective tax rate drops like a rock once you include personal exemptions, deductions, and child tax credit. A…friend of mine, married with 4 kids, making $80k/year paid a grand total of about $900 last year. His wife is expecting, and next year they’ll be in the “negative tax” territory.

I think that in order to get the claimed 35.8%, you have to include *both* sides of the payroll/FICA taxes, which are only assessed on the first $108k (IIRC) of earned income.

Mohonri on April 2, 2012 at 5:21 PM

They’re lying, plain and simple. Big surprise right? According to the IRS tax tables, if her taxable income is $60,000, and she files single (the highest rate) her tax bill would be $11,131, which is only 18.55%.
So if $60K is her gross income and she has deductions of any kind, plus exemptions, and perhaps filing maaried/joint, her tax bill would likely be only in the 10% range.
So 1) they’re all lying, 2) she’s getting horrible financial and tax advice from one of the richest guys in the world, and 3) she’s getting screwed if that’s all she makes after 20 years with that self-serving hypocrit.

dentarthurdent on April 2, 2012 at 5:38 PM

Shoot – even a taxable income of $100,000 only has a tax bill (filing single) of $21,610 – which is only 21.6%.

Is so much of our population that incredibly stupid to believe what these morons are saying despite the proof otherwise directly available from the IRS tax tables?

dentarthurdent on April 2, 2012 at 5:42 PM

“tax rate” is one thing, “taxes paid” is another. For the NEA to say his secretary pays more is an outright lie. But some how the left bites hook/line/sinker.

Buffett pays 1.8 mil (60 mil @ 17%), his secretary pays maybe 22,000 (FICA is what it is).

So who paid more? NEA…why Johnny can’t read just got explained.

teejk on April 2, 2012 at 5:43 PM

dentarthurdent on April 2, 2012 at 5:38 PM

they are obviously including FICA in the secretary’s tax bill. lower income levels have to pay it also so on an effective rate basis, it will bump up the rate.

solution for buffett is to pay his secretary more (like alot more but as she gets further away from the FICA cap her rate will come down).

teejk on April 2, 2012 at 5:48 PM

“tax rate” is one thing, “taxes paid” is another. For the NEA to say his secretary pays more is an outright lie. But some how the left bites hook/line/sinker.

Buffett pays 1.8 mil (60 mil @ 17%), his secretary pays maybe 22,000 (FICA is what it is).

So who paid more? NEA…why Johnny can’t read just got explained.

teejk on April 2, 2012 at 5:43 PM

correction…$46 mil for warren, not $60mil…please forgive but I attended public schools for most of my k-12 years

teejk on April 2, 2012 at 5:52 PM

I’ve heard mentioned several times on different radio programs that Buffet’s secretary had an income in the $150,000 – $200,000 range, which would make more sense if indeed her marginal or effective tax rate was to be 35.8%. Maybe these radio shows backed into a pay rate using the high tax rate. Regardless, I find it hard to believe that a trusted and long-term secretary to Buffet would only make $60K a year. Besides, I’ve lived in Omaha and it’s not as cheap to live there as you might think.

HoosierStateofMind on April 2, 2012 at 11:47 PM