The world's third richest man (2010 Forbes List) often complains that his tax bill (as a percentage of income) is less than his secretary's. Buffett often references this anecdote in his argument that the rich in this country do not pay their fair share.
But, economist Greg Mankiw offer these statistics in rebuttal:
Income Level % of Income Paid in Tax
$ 15,400 (lowest fifth) 4.5%
$ 56,200 (middle fifth) 13.9%
$207,200 (top fifth) 25.1%
For the record, the top 1% of income earners ($1,258,700 annual income) pay 31.1% of their income to the IRS.
Mr. Buffett's wealth is tied to stock that does not pay dividends while his other assets are invested in tax free bonds. He earns just $100,000 annually for running one of the most successful companies in American business history. Mr. Buffett could adjust his holdings into taxable investments and pay a great amount of his income to the Treasury if he really feels bad.
Check out Mankiw's report to the Eastern Economic Association. It's worth the read...
Do you feel you are paying your share?
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