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GUEST COMMENTARY: Source of income should not matter for taxes

Monday, January 30, 2012 | 6:00 a.m. CST; updated 7:39 p.m. CST, Monday, January 30, 2012

Mitt Romney may not have intended it, but he is providing another good reason to be rich: the low tax rate. First, there was the $10,000 bet in the Republican debate Dec. 10. It must be great to be able to wager that much money as nonchalantly as most people bet a six-pack of beer.

Then on Jan. 17, Romney said that his $374,327 in speaking fees over one year is "not that much." Earth to Romney, these fees alone put you in the top 1 percent of income, and more than likely 98 percent of the population would be thrilled to make that much money.

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Romney might be able to afford $10,000 bets because of his low tax rate. Romney reluctantly released his tax returns on Tuesday. He paid about $3 million in taxes on income of about $21.7 million, for an effective rate of 13.9 percent in 2010. The difference between that rate and the top rate of 35 percent would allow Romney to lose 456 wagers.

Unlike Romney, investment guru Warren Buffett willingly revealed his income and tax rate back in August. Buffet wrote in "Stop Coddling the Super-Rich," he made about $40 million and paid 17.4 percent in taxes. His employees paid taxes at rates from 33 percent to 41 percent on salaries around $60,000. Romney's and Buffett's compensation was more than 360 times what these employees made, yet their tax rate was about half.

Buffett has been advocating many years for a fairer tax system. In October 2007, he offered the following challenge:

I'll bet a million dollars against any member of the Forbes 400 who challenges me that the average [tax rate] for the Forbes 400 will be less than the average [tax rate] of their receptionists. So, … I'll give 'em an 800 number. They can call me. And the million will go to whichever charity the winner designates.

He remains unchallenged.

A few months ago, President Barack Obama advocated getting rid of this unfair tax quirk law and applying the Buffett Rule — "that people making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay."

The current regressive tax system, Buffett's proposal and Obama’s advocacy generate a more fundamental question. Why does source of income matter when determining tax rates?

The Federal Insurance Contributions Act (Social Security and Medicare) taxes are examples of a higher tax burden imposed on one source of income: wages. Can anybody explain why it is fair to charge most wage earners an extra 5.65 percent on their incomes? Why not put the extra burden on capital gains or dividend income? Just to be totally arbitrary, why not put the burden on people whose surnames begin with the letters A through F?

It's not even a matter of coddling the super-rich, although that is happening. It is a simple matter of fairness. Someone who makes $60,000 should not be paying a larger percentage of their income in taxes than someone who makes $20 million or $40 million.

It is time to change the tax code and set rates strictly on amount of income. Income source should be irrelevant. Otherwise, exceptions could always be added that force lower paid wage earners to pay higher rates.

A system based on amount of income would have several advantages. Such a system would simplify the tax code. Different tax rates for different sources of income would not be required. A proposal to add a tax exception to correct an inequity caused by a previous tax exception would be unnecessary.

Social Security and Medicare funding could be maintained by allocating a percentage of tax revenue to these programs, thus ending the highly regressive FICA taxes on individuals and making payroll processing easier. This same method could be used to eliminate FICA taxes on businesses.

In addition, the government would need to remove business tax loopholes and tax breaks so that all profitable companies actually pay income taxes. Perhaps the most egregious example is General Electric Co. In 2010, GE made $14.2 billion in profit, yet paid no federal income taxes.

For too long, wage earners have been subjected to unfair, regressive taxes on their wages while some millionaires and billionaires have been favored with much lower tax rates than their wage-earning counterparts. It is time to level the tax paying playing field by having tax rates determined only by the amount of income. Such a system would establish a tax system that is more equitable and progressive.

Employees who made $60,000 could buy about 1,800 six-packs if their tax rate was 13.9 percent instead of 35 percent. Unfortunately, at their current high tax rate, they can’t afford to drown their sorrows.

Joseph Sparks is an MU master's degree candidate. His blog can be found at www.sparksremarks.com.


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Comments

Michael Williams January 30, 2012 | 1:41 p.m.

JoeS says, "His employees paid taxes at rates from 33 percent to 41 percent on salaries around $60,000."
_____________________

Defend that statement.

(Report Comment)
frank christian January 30, 2012 | 3:02 p.m.

Earth to Mr. Sparks! Romney stated first time his taxes were discussed,"that most of his income comes from investments."

http://content.usatoday.com/communities/...

If one could, somehow,show that Romney is paying less than the legal rate of taxation on his investments, then one would have something to write about! If Mitt is not screwing the government and the intent is still to spray us with "class warfare", perhaps he could turn to the W.J. Clinton's acquisition of over 100M$ supposedly from his speaking engagements and her books promoting socialism.

Or, perhaps he could omit all the names and honestly write about our need for a new tax code. Wouldn't that be refreshing?

(Report Comment)
John Schultz January 30, 2012 | 3:37 p.m.

Michael, I have the same thought. I calculated my tax rate a few months ago on several years of previous tax returns, and it was always somewhere in the teens. I have some decent deductions, such as mortgage interest, chilcare, and the child tax credit that might skew the numbers a bit, but the numbers Buffet gives for his employees' tax rates seem awful high. One wonders if the author of this piece wants exemptions to go away as well, fairness you know.

(Report Comment)
mike mentor January 30, 2012 | 4:10 p.m.

Unfortunately, sound bites and explanations don't go hand in hand.

Investment income has already been taxed once!

People need to remember this when they say things like source of income doesn't matter. If I make $100,000 in wages, I am the one paying the income tax on those wages and then we are done. If I make $100,000 in investment income, the companies that I have invested in have already paid the income tax on the money that was made and any taxes I pay on my share of that income are a tax on top of a tax.

You think our economy is growing slowly now...

(Report Comment)
Michael Williams January 30, 2012 | 4:26 p.m.

JohnS: For now, I simply do not believe a 33-41% tax rate on a person making 60 grand. I will need proof of that statement from the author. He needs to defend his statement.

MikeM says, "Investment income has already been taxed once!"

Yes. That fact is conveniently forgotten because forgetting it makes the "percentage" numbers politically expedient.

You also said, "You think our economy is growing slowly now..."

Absolutely correct. Let's say I am (somehow) able to make 6% on my stock investment. If it's taxed at....40%....to me, then my real gain is 3.6%; a 30% tax rate would yield 4.2%. Both calculations make a stock investment yield more comparable to much more safe long bonds/T-bills. Why invest in the stock market if I can make the same money with bonds/bills at no risk to me?

People don't understand that investing in more risk is done ONLY if the potential reward is greater than doing nothing at all. Back when I owned my business, safe returns were about 6-7%. There is NO WAY I would have employed several people and risked my money and the bank's money for even a 10% after-tax target. It simply wasn't worth it.

(Report Comment)
Louis Schneebaum January 30, 2012 | 5:08 p.m.

"If I make $100,000 in investment income, the companies that I have invested in have already paid the income tax on the money that was made and any taxes I pay on my share of that income are a tax on top of a tax."

This is typical, over-simplified, black/white, conservative voter thinking --- and it sounds good, until you think.

The same argument could be made when you purchase a hot sandwich from the deli. Why should you pay any sales tax on that sandwich? The deli paid sales tax on the bulk product when they bought it.

(Report Comment)
Tim Trayle January 30, 2012 | 7:04 p.m.

My plumber shouldn't have to pay taxes on what I paid him. After all, *I* already paid tax (or will have to) on that chunk of dough.

(Actually, Mentor gets the conservative whine about twice-taxed income re. investment income quite wrong; he's using the wrong argument, but let's let that slip.... You other conservatives can find the mistake if you look through his post.)

(Report Comment)
mike mentor January 30, 2012 | 8:00 p.m.

Uhh, tried to dumb it down for the sake of a short and sweet post. Didn't want to go all 3000 characters on you like some like to do. I think you get the idea. At least you should...

(Report Comment)
frank christian January 30, 2012 | 8:57 p.m.

I believe you all are wrong in this instance. My understanding of double taxation on capital gains has been, yes, the plumber must pay income tax on money earned from customers, but if he invests the money, or a part of it, that first taxation should be "it" and anything more is double taxation.

Louis of course likes the liberal thought of value added, or taxation of the dollar every step of its way from raw material to finished product. That method has never satisfied the liberal governments of EU and they are turning to bailouts to save themselves, still not wanting to control the Spending.

I'm sure you are more familiar with this than I.
http://www.econlib.org/library/Enc/Capit...

"A government can choose to tax either the value of an asset or its yield, but it should not tax both....
.... Any additional tax is strictly double taxation."

"Who Gains from Cuts in the Capital Gains Tax?" Is also interesting.

(Report Comment)
Christopher Foote January 30, 2012 | 9:13 p.m.

@Mr Mentor,

Here's a study from last year from the Citizens for Tax Justice:
www.ctj.org/pdf/12corps060111.pdf
They looked at the tax returns from 12 fortune 500 companies, spanning 2008-2010. The effective corporate tax rate for those companies was -1.4%. That's right, it was negative. The companies: American Electric Power, Boeing, Dupont, Exxon, FedEx, General Electric, Honeywell, IBM, United Technologies, Verizon, Wells Fargo and Yahoo were representative of a wide range of industries.
Larger studie have found that roughly 2/3 of corporations pay o corporate taxes.
Using your logic, perhaps we should increase one's tax rate relative to the tax benefit their employer received...thus if the corporation you work for has a -5% rate, your taxes need to go up by 5% to make sure everybody pays their "fair share".

(Report Comment)
Gregg Bush January 30, 2012 | 9:29 p.m.

Taxing labor more
Than money, carried interest -
No more Middle Class.

Defending modern
Landed gentry to maintain
Order not justice.

Elites make sure that
Laborers quarrel so the
Trough can be restocked.

Most billionaires will
Remain silent while duped rubes
Carry their water.

(Report Comment)
Jimmy Bearfield January 30, 2012 | 10:00 p.m.

"His employees paid taxes at rates from 33 percent to 41 percent on salaries around $60,000."

His employees are exceptions to the rule, according to www.irs.gov/taxstats/indtaxstats/article... and www.cbo.gov/publications/collections/tax....

(Report Comment)
frank christian January 31, 2012 | 8:28 a.m.

Mr. Mentor - Chris Foote has just displayed what many would agree is his only interest in America's economy. The amount of money that may be collected by government.

If you would be able in some way,to entice him to show you the number of People those on his list of errant Corporations hire, perhaps even the number of people hired by other corporations, solely because of their connection to those on his list, you will have achieved a great journalistic feat.

It's also fun to note that only B. Clinton, before 1994 and B. Obama now are ones concerned with "everybody pays their "fair share". Both have employed this reference to "level playing field and fair play" to propagandize their programs that Increase taxes.

(Report Comment)
Michael Williams January 31, 2012 | 9:02 a.m.

Joe states, "His employees paid taxes at rates from 33 percent to 41 percent on salaries around $60,000."

This sentence is the crux of his article. I think it's wrong. I see no way a $60K earner will pay 33-41% unless there is some info we don't have.

I'd like to see a defense from him.

(Report Comment)
Jimmy Bearfield January 31, 2012 | 9:08 a.m.

"I see no way a $60K earner will pay 33-41% unless there is some info we don't have."

Yup. That's why I posted two links to federal studies. Joseph also could poll some of the J School's associate and full professors -- because they typically make around $60K before speaking fees and other outside income -- to see what their federal income tax rates are.

(Report Comment)
mike mentor January 31, 2012 | 9:30 a.m.

All this talk about fairness and each paying their fair share has really got me thinking. Maybe the progressives are on to something with this whole tax fairness quandry. Websters defines fair as, "free from self interest or prejudice." I guess the only tax system that would fit this definition would be one where everyone pays the same tax regardless of their personal situation. You can't make one person pay more than another or else your going to be acting in one of those peoples self interest and prejudiced against the other. Seems simple to me...

(Report Comment)
Michael Williams January 31, 2012 | 9:57 a.m.

Jimmy: Ofttimes, a Missourian author will respond at least once to we misguided posters on a point of clarification.

Hope this is one of them.

Otherwise, I'm gonna tend to believe my own lyin' eyes.

(Report Comment)
Jim Michaelson January 31, 2012 | 10:39 a.m.

I find it rather ironic that:

The author goes off on Romney for making a $10,000 bet, then applauds Warren Buffet for making a $1,000,000 bet.

The cited "guru" Warren Buffet, thinks he should pay more in taxes, yet his own auditors estimate that he may owe more then $1,000,000,000 (thats a billion) in back taxes.

As many have already stated, income from capital gains and dividends has already been taxed once.

The author wants "fair", while about half of american wage earners pay absolutely nothing in federal income taxes. How is that fair?

The whole GE reference. GE made a $14,000,000,000 profit, yet paid no federal income taxes. I guess Obama only wants taxes to be fair for corporations that are hot headed by one of his best friends and supporters.

Louis Schneebaum thinks that things have to be complex and muddled in a grey area (as opposed to simple and black and white) yet he does not understand the very simple fact that wholesale purchase are NOT taxed.

(Report Comment)
Christopher Foote January 31, 2012 | 10:41 a.m.

@Frank and Mike.

For the years 1988-1990, capital gains were taxed at the same rate as earned income. This was legislated in the 1986 Tax Reform Act, signed by ....Ronald Reagan enthusiastically. Here's what he had to say about it:
"...vanishing loopholes and a minimum tax will mean that everybody and every corporation pay their fair share..."
Frank, I guess you'll have to add Reagan to your Obama-Clinton list of Presidents prattling on about fair share.
Mike, everybody pays the same rate on the same dollar earned, except the very rich who get a significant discount, hence the article we are all commenting on.

(Report Comment)
frank christian January 31, 2012 | 11:30 a.m.

Chris - We have covered this more than once, long ago. Reagan signed the '86 tax act with the promise from O'Neill D's that for every dollar of new tax collected from closure of the affected loop holes, $4 in Spending cuts were to be applied. He later stated,about the Act, the new revenue has been collected, I have yet to see "one dimes worth of spending cuts". Not the only time Democrats lied to Reagan.

(Report Comment)
Jimmy Bearfield January 31, 2012 | 11:44 a.m.

"everybody pays the same rate on the same dollar earned"

No, they don't. That's why nearly half of taxpayers owe no federal taxes and why many of them also get a check funded by the other half.

(Report Comment)
Michael Williams January 31, 2012 | 2:42 p.m.

Chris: Perhaps you can tell us how a person earning $60K pays 33-41% in federal taxes.

For now, I don't get it.

And the writer won't weigh in.

This is not a trick question; I'm serious about it. This argument is about "fairness", percentages seem to be the measure du jour, and the author uses them to make his point. I want to make sure his point is accurate; for now, I simply do not believe his numbers.

He's a master's candidate in journalism. Surely, he has notes and references.

Jimmy already dealt with your "same rate on the same dollar earned", so I see no need to comment further.

(Report Comment)
Jimmy Bearfield February 3, 2012 | 10:16 a.m.

Still waiting to hear how someone making around $60K pays federal taxes at a rate of 33%-41%.

(Report Comment)
Michael Williams February 3, 2012 | 1:07 p.m.

Jimmy:

Me, too.
I still don't believe it.

(Report Comment)
Ellis Smith February 3, 2012 | 3:15 p.m.

Actually, there was a typo in the original article: the employees cited belong to Jimmy Buffett, not Warren Buffett. Their tax preparers maintain an office in Margaritaville.

The Lord giveth, and the Treasury Department taketh away.

(Report Comment)
Ellis Smith February 4, 2012 | 6:23 a.m.

A further thought on the topic of "The Lord giveth, and the Treasury Department taketh away."

In this country citizens have the right to believe or not to believe in a supreme being, and even to change their minds about it. On the other hand, we do not have a choice (other than fleeing the country to some place without an extradition treaty with the United States) but to believe in the Treasury Department and the IRS. :)

(Report Comment)
Joseph Sparks February 5, 2012 | 2:23 p.m.

I wrote the editorial, and I am responding to some of the comments.

First, I find it telling that the double tax on wages, from federal income taxes and FICA taxes, was not mention in the comments.

One person commented that half of American wage earners pay nothing in federal income taxes. This figure is misleading. It does not include FICA taxes, so those wage earners are paying an income tax, just not the federal income tax. For anybody making under about $107,000 from wages, they pay at least the 5.45 percent FICA tax, and if they make enough, they also pay federal income taxes. This does show that there can be two taxes on wages, federal income taxes and FICA.

I disagree with the argument capital gains is double taxed. If I buy a stock, I am not taxed on it until I sell it. Where is the double tax? Sure, a company’s profit can affect how much I get for the stock, and if the company makes money, they, (in theory), pay federal income taxes, but that is separate from the capital gain. So, there is no double tax.

I do agree that if I sell a stock, and make 6 percent on it, then have to pay 40 percent on it the yield is only 3.6 percent, for a 60 percent yield. However, I can make the same argument for wages. If I work for wages, and my tax rate is 40 percent, I only get a 60 percent “yield” on my labor.

Saying that dividends are double taxed is equivalent to saying, as Tim Trayle did, “My plumber shouldn't have to pay taxes on what I paid him. After all, I already paid tax (or will have to) on that chunk of dough.” While you can make the case that dividends are double taxed, it is very weak since the money is between two different entities, usually a business and a person.

The case that dividends are double taxed is further weakened by the fact that many companies pay little are no federal income tax. As reported in the April 6, 2004 Wall Street Journal, “… [T]he GAO said 45.3% of large U.S.-controlled companies and 37.5% of large foreign- controlled companies had no tax liability in 2000. More than 35% paid less than 5% of their income.”

It would be fairer to set rates based on amount of income without regard to source.

I support a progressive tax system, and some exemptions are acceptable, such as for dependents or home mortgage. Because of the potential for abuse, exemptions must be applied carefully, especially exemptions that apply to businesses.

One final point about the tax rates on income around $60,000. It is Warren Buffett who makes the claim about the tax rates in "Stop Coddling the Super-Rich." These rates are the combined rates of both the federal income tax and the FICA tax. The $60,000 figure is in the link that references Buffett’s challenge. In that article, in 2007, the average tax rate was 32.9 percent for both FICA and federal income taxes.

(Report Comment)
frank christian February 5, 2012 | 4:14 p.m.

"First, I find it telling that the double tax on wages, from federal income taxes and FICA taxes, was not mention in the comments."

I find it telling that you could not mention the stated purposes for your "two taxes on wages".

It would seem that possibly "all wealth belongs to the government" and the rate and number of times it is taxed is indicative, only, of how long the government is willing to allow those that earned it, to keep it.

(Report Comment)
Ellis Smith February 5, 2012 | 7:30 p.m.

The REAL problem is not the number or types of taxes or the rates of those taxes. That is only part of the REAL problem. The REAL problem is that our federal government will never have enough money. NEVER! If the federal government writes us some huge number that represents what it says it truly needs, shortly it will come up with an even larger number.

(Report Comment)
Jimmy Bearfield February 6, 2012 | 8:15 p.m.

Even if you include FICA, I don't see how someone making around $60K pays federal taxes at a rate of 33%-41%. www.freeby50.com/2009/04/history-of-effe... discusses how to calculate the combined tax bite.

"If I work for wages, and my tax rate is 40 percent, I only get a 60 percent 'yield' on my labor."

See the above link.

(Report Comment)
Derrick Fogle February 6, 2012 | 8:39 p.m.

As if "Job Creators" aren't always needing MORE money, too. And, they've been getting it for the last 30+ years, especially for the last 10+.

So, how successful have the "Job Creators" been? Here's an updated chart of rolling 10-year job creation, courtesy Left Business Observer:

http://www.fogles.net/mostuff/10-year-em...
(Hint: rolling 10-year job creation has been negative for the last 18 months, and has just now in the last couple of months gone barely positive again.)

Entire article with more context is here: http://lbo-news.com/2012/01/29/reflectio...

Now, let's see a few charts showing how the government's "more money" has been as counterproductive and as damaging to the US economy as the job creator's "more money" which has resulted in zero net new jobs over the last 10 years.

I'll leave it up to responders whether or not to calculate our military actions in Iraq and Afghanistan as a failure, or a success. But, it's going to be awfully hard to assess the effectiveness of the US government's use of "more money" without assessing the success of our military actions.

Military spending, last 10 years: $5.056 Trillion
US deficits, last 10 years: $4.970 Trillion

Military spending, pct of deficits, 2001-2010: 102%
Military spending, pct of deficits, 2008-2010: 62%

So please, tell me how the "More Money" US government, which has at least killed Bin Laden and supposedly installed a new democracy in Iraq, is a complete failure...

...while the"More Money" "Job Creators" who have captured almost all new wealth in this country over the last 10 years, and have literally ZERO net new jobs to show for it, are a resounding success that needs still yet more money to continue it's wonderful work.

This is really at the root of America's mass psychosis: We want a huge, expensive military for "security", but... we really don't want to pay to support it properly.

And, of course, there's always this: http://costoftaxcuts.com/

...which points out that those tax cuts for the wealthy are only ~20% of our budget deficit since 2001. The other ~80% is still overspending. Of that other 80%, about 50% (~$2.5T) is accounted for by military spending that is both nearly twice as high as baseline trends starting in 1981, and more than twice as high as 2001 military spending indexed for inflation each year. All other unfunded expenditures (welfare, education, environmental, bureaucratic, etc.) account for the roughly 30% balance.

(Report Comment)
Derrick Fogle February 6, 2012 | 9:00 p.m.

As for the article, I agree with Sparks. Low capital gains taxes haven't exactly produced an economic utopia in the US.

There really should be only 2 types of federal taxes: Income taxes, which would be taken out of someone's paycheck (no more hidden payroll taxes), and business taxes, which would be assessed against any organization that has a payroll. Of the latter - business taxes - there should be no distinction between types of businesses. All business taxes should be based on a single inverse of gross income over payroll. All personal taxes should be based on a flat tax, with the actual income curve imposed on top of that, with a cap of twice the base flat tax rate.

These tax ideas would encourage domestic employment, discourage egregious income inequity, be automatically indexed and self-adjusting, and make sure that virtually everyone pays something.

(Report Comment)
frank christian February 6, 2012 | 9:27 p.m.

"I agree with Sparks. Low capital gains taxes haven't exactly produced an economic utopia in the US."

They have done quite well for the Government. Bush cap gain cuts brought revenues from 40B$ before, 110B$ after.

In any 10 year period in the last 30 years: of the lowest 20% of our earners, 44% moved into higher brackets.

Of the highest 20% earners, 34% moved lower. These are probably the"More Money" "Job Creators" you love to ridicule.

Give it up.

(Report Comment)
Jimmy Bearfield February 8, 2012 | 6:59 p.m.

While waiting to learn how someone making around $60K pays federal taxes at a rate of 33%-41%, I used TurboTax online. I did a return based on $66K income, single, no dependents and no deductions except for the standard one. My federal tab is $10,459.

(Report Comment)
Mark Foecking February 9, 2012 | 8:43 a.m.

Derrick Fogle wrote:

"We want a huge, expensive military for "security", but... we really don't want to pay to support it properly."

And it's not just the military. We've lowered taxes, in the mistaken ideology that these cuts pay for themselves, and the only reason we are able to continue the spending we have is that there is still an ample supply of credit available. Governments at all levels are able to borrow for capital projects, without really being sure future revenues will be sufficient to pay back the loans. Many municipalities are looking at downgrades and defaults on their municipal bonds, for example.

Examples of costs being put off to the future, or spread to non-users, are found everywhere. Many in governement and private industry have the idea that someone else should help them pay for something, from transportation systems (like buses) that most people don't use (unfortunately), to TIFs for private developers, to grants for residential improvements. Usually the argument is made that the activity or project will not happen if the subsidy doesn't happen. We have to decide on a case-by-case basis whether each is worth it, and this gives us a lot of the back room deals that we see all through government.

The point is that for many years (if ever) few people have ever paid the true, full costs of anything they build, sell, or use. That a big reason why we have the deficit problems we have.

DK

(Report Comment)
Jimmy Bearfield February 13, 2012 | 11:47 a.m.

Just curious if anyone else tried using TurboTax or something similar to see how much someone making around $60K owes in payroll and federal income taxes. If so, was it anywhere near 33%-41%?

(Report Comment)
Michael Williams February 13, 2012 | 12:18 p.m.

Jimmy: It's been a while since I've had to calc FICA, FUTA, and medicare. Since you are still meeting a payroll, do you know the current percentages?

In his response above, JosephS only quotes a Buffet link...from 2007. Wow, that's current! Nonetheless, I would think a master's reporter-to-be would do his own work, or at least visit a local tax accountant instead of sitting at his computer desk hoping the internet gives him the straight skinny.

Lazy journalism.

His figures are just plain wrong.

But, perhaps I can be proved wrong.

(Report Comment)
John Schultz February 13, 2012 | 12:26 p.m.

Jimmy, I've got an appointment with my tax guy this evening, I'll try to run that question by him if I remember.

(Report Comment)
Jimmy Bearfield February 13, 2012 | 12:33 p.m.

Michael, I'm a sole proprietor, so there's only one person on my payroll: me. But here's a rundown of percentages: http://en.wikipedia.org/wiki/Federal_Ins...

(Report Comment)
Michael Williams February 13, 2012 | 1:07 p.m.

Jimmy: Perhaps Joseph was using self-employed folks as his example which, of course, would be a hidden article bias if not disclosed. It's the only way he can get close to his 30+% number, but his 40+ number is pure fantasy whatever the case.

JohnS: We'll be very interested in your tax guy's responses. Many thanks.

(Report Comment)
Jimmy Bearfield February 14, 2012 | 3:22 p.m.

John, just curious if you had a chance to discuss this with your tax guy.

(Report Comment)
John Schultz February 15, 2012 | 9:30 a.m.

Unfortunately I didn't as I faxed him my paperwork due to the weather that night. I'll try to shoot him an email this evening and see if he has time to fit an answer into his schedule.

(Report Comment)
Michael Williams February 15, 2012 | 10:37 a.m.

I shot an email off to my accountant, too.

(Report Comment)
Michael Williams February 15, 2012 | 11:37 a.m.

Best my adviser can do is 25%. The fed tax after standard deduction and personal exemption is 14.6%. Missouri tax would be 4.3%, for a total fed/state salary tax of 18.9%.

If you add in 4.2% SS and 1.45% medicare, the total is 24.6%.

Not even close to 33-41%. Unless, of course, other state taxes add in a real tax wallop unreported by the story. However, so far as I can tell, the author makes no mention of any included state taxes. If state taxes are not included, the chasm between what the author reported and what my adviser calculates gets even wider.

If the author added in SS and medicare, he needs to remember these are technically not taxes, but withholdings for future benefits. Big difference. INO, they are both "bank accounts", albeit really, really bad ones since they yield poorly, are forced, and are not heritable. You don't get fed/state taxes back, per se. You DO get SS and medicare back....in spades, if you live long enough.

So, the argument that the poor DO pay taxes...SS and medicare...even if they pay no salary taxes is a bit nebulous. Yes, there is a monetary reduction in what they can spend right now, but that money is presumably "reserved" for them in their forced, future bank account. The come-back that paying SS/medicare taxes is equivalent to paying salary taxes is not a good come-back.

I conclude the author's tax figures are fantasy. Further, since these percentages make his foundation for "fair", I conclude his story is fantasy and agenda-driven.

This story should be rewritten with better, well-researched sources other than the internet and someone elses words.

Try the person who prepares your taxes.

(Report Comment)
Michael Williams February 15, 2012 | 11:38 a.m.

And would someone PLEASE tell me if the phrase "someone elses taxes" has an apostrophe in "elses" and, if so, WHERE THE HELL DOES IT GO??????????

(Report Comment)
Jimmy Bearfield February 15, 2012 | 12:35 p.m.

Thanks, Michael. So the ball is back in your court, Joseph. Explain how someone making around $60K pays federal income taxes and FICA at a rate of 33%-41%.

Don't refer us to Buffet's op-ed. Instead, explain it yourself. This is an important step because as a journalist, you should never rely on someone else's math. Think how easy it would have been to use TurboTax online to verify or refute Buffet's claim instead of simply taking it at face value and then building a column around it.

(Report Comment)
Michael Williams February 15, 2012 | 1:01 p.m.

JimmyB: I note that you got the same email from the Missourian as I did, along with others. I think you know which one.

How did you appreciate the fact your email address is now known to all posters to whom it was sent, plus many others if that email was passed on?

Personally, I'm not happy about it. We are identified in this place by our names, but there is no way I know for others to learn our email addresses.

Perhaps I'm wrong but, if I am, I'd like to know how I'm wrong.

(Report Comment)
John Schultz February 15, 2012 | 1:46 p.m.

Michael, I received the same email as well and was surprised the recipients were not BCC'd.

(Report Comment)
Jimmy Bearfield February 15, 2012 | 2:17 p.m.

Didn't get it. Probably went to my old account.

(Report Comment)
Joy Mayer February 15, 2012 | 3:08 p.m.

Michael and John,

I'm assuming you guys are talking about the email from last week inviting you to apply for the Missourian's readers board. If so, please accept my apologies. The message came from someone on my team, and the fact that your email addresses were in the To field instead of the BCC field was a mistake. My sincere apologies.

Joy Mayer
Columbia Missourian

(Report Comment)
Michael Williams February 15, 2012 | 3:35 p.m.

Thanks Joy. When we give private, required information during signup, it's important the newspaper maintains an implied trust.

(Report Comment)
Gregg Bush February 15, 2012 | 6:00 p.m.

I noticed, too - but
I deleted it. I'm no
Cyber-stalker, and

Trust the others on
The list with honorable
Discretion. Save one.

Nonetheless, Joy, the
Apology's warranted,
Accepted by me.

(Report Comment)
Joy Mayer February 15, 2012 | 6:31 p.m.

Gregg, I wish I were clever enough to respond in kind. Thanks for the note.

Joy Mayer
Columbia Missourian

(Report Comment)
Derrick Fogle February 15, 2012 | 6:44 p.m.

I pointed out the unhidden emails error to the original sender in a private reply, and got a very prompt apology from both the original sender, and a short while later, Joy. Customer service rating: Excellent. I felt that was a complete resolution to the issue, for me.

I'm a fairly public figure anyway, especially since one of my Hacky Sack videos has gone viral. It's trivial to discover my email address. I have yet to have any problems with that, so the accidental disclosure doesn't bother me. Anyone can find me on Facebook, Twitter, or any of dozens of other forums and social networks.

Instead of worrying about internet privacy, I tend to embrace it's openness. A Google search on my UserID returns almost 30 pages of clean, relevant links before you start seeing SEO injection junk. I missed the boat on domain name registration; I could buy domain names back before flower.com was taken. I could have made a million dollars off about a $10K investment over 15 years. D'oh!

Would that have been taxed under capital gains, or regular income?

When social media started gaining traction, I decided to carve out a corner of the social media world with a bizarre, unique, and highly descriptive UserID. It hasn't paid off yet, but I'm patient.

BTW, my viral video: Hack Man vs Preacher:
http://www.youtube.com/watch?v=s6tt81jIW...

...and like a knucklehead, I didn't monetize that video beforehand. I could have made 10 cents! Then again, I'm aware that copyrighted music, while barely audible and undetected by YouTube's matching software, was present in the video. Technically, it violates the terms of monetization, and even if YouTube's filters didn't notice, my conscience did.

At least I don't have to figure out how that nonexistent revenue might be taxed.

(Report Comment)
Mike Martin February 16, 2012 | 3:38 p.m.

CoMoCam: Missourian's own Derrick Fogle, The Nimble Hack Man, takes on Mizzou

Students, preacher try to steal the show while gorilla plays accordion. Very entertaining and good music too!

http://www.columbiaheartbeat.com

(Report Comment)
Derrick Fogle February 16, 2012 | 4:05 p.m.

Sweet! Thanks for the plug, Mike. :-)

(Report Comment)
Jimmy Bearfield February 19, 2012 | 4:15 p.m.

Still waiting to hear how someone making around $60K pays federal income taxes and FICA at a rate of 33%-41%. Joseph?

(Report Comment)
Jimmy Bearfield February 21, 2012 | 11:38 a.m.

Still waiting to hear how someone making around $60K pays federal income taxes and FICA at a rate of 33%-41%.

(Report Comment)
Jimmy Bearfield February 26, 2012 | 4:19 p.m.

Still waiting to hear how someone making around $60K pays federal income taxes and FICA at a rate of 33%-41%. Joseph?

(Report Comment)
Michael Williams February 26, 2012 | 5:28 p.m.

Jimmy: The lack of a response to something so obviously incorrect, or at least highly suspect and questionable, is very unusual for the Missourian.

Even DaveR and the Colonel defend their statements herein.

Joseph? Apparently, not so much.

Journalism should be like science....self-corrective.

(Report Comment)
Jimmy Bearfield March 7, 2012 | 11:24 a.m.

Still waiting to hear how someone making around $60K pays federal income taxes and FICA at a rate of 33%-41%. Joseph?

(Report Comment)
Jimmy Bearfield April 1, 2012 | 8:09 a.m.

Still waiting to hear how someone making around $60K pays federal income taxes and FICA at a rate of 33%-41%. Joseph?

(Report Comment)
Ellis Smith April 1, 2012 | 9:14 a.m.

Wasn't this clarified sometime ago? There were other serious errors in the article. For example, the "Buffett" mentioned is in reality Jimmy Buffet and not Warren Buffett.
As most Americans know, Jimmy Buffett, the singer, is closely associated with the consumption of alcoholic beverages (as in "Margaritaville, where we are informed that "There's booze in the blender...").
The claim concerning rates in the article could only have come from a person or persons totally "sloshed" and quite possibly located within the D.C. Beltway, where all rules of accounting have been permanently suspended.

It happens. I once lost a weekend to rum and Coca-Cola. I haven't touched a drop of Coca-Cola since!

(Report Comment)
frank christian April 1, 2012 | 10:50 a.m.

I understand Jimmy Buffet has provided innumerable dollars for planet saving, Global Warming activities. Perhaps Sparks got mixed up?

(Report Comment)
Ellis Smith April 1, 2012 | 11:03 a.m.

It is also my understanding that Jimmy Buffett is philanthropic.

He is apparently a nice person.

I am not. I devour a Socialist daily for breakfast. They are actually quite tasty - with just a touch of Marie Sharpes' piquant sauce, made from habanero peppers.

(Report Comment)
Jimmy Bearfield April 15, 2012 | 12:55 p.m.

Will April 17 be the day that we finally learn how someone making around $60K pays federal income taxes and FICA at a rate of 33%-41%?

(Report Comment)
hank ottinger April 15, 2012 | 10:36 p.m.

@Ellis: although I don't countenance eating socialists, after many trips to Belize, a bottle of Marie Sharps is never far from my table.

(Report Comment)
Ellis Smith April 16, 2012 | 5:29 a.m.

@hank ottinger:

You too? Do you confine your stays to the Cayes, as do many U.S., Canadian, UK and Australian tourists, or do you spend any time inland? I like the Cayo, and one of my favorite places to stay in the past (I haven't been to Belize for several years) has been Hidden Valley Inn (hiking, birding, waterfalls).

Or are you affiliated with some research program, such as
Programme for Belize?

[You know, but for anyone else reading this, that Belize has the second longest barrier reef in the world, after Australia.]

Unfortunately, Belize has little in the way of employment for its citizens other than tourism and agriculture.

(Report Comment)
hank ottinger April 16, 2012 | 10:12 a.m.

Ellis: I co-taught a course, Biology/Environmental Studies in Belize, while on the faculty of Westminster College. Five trips of 18 days each that took students to the coral reefs (Half-Moon Caye, Blue Hole, Shark-Ray Alley, etc.), savannahs, rain forests, and various Maya ruins (Altun Ha, Xunantunich , Lamini). The Maya Mountains were always a treat, as was the Cockscomb Jaguar Preserve where we camped out for several nights at a time. Wound up in Caye Caulker for a final celebration at the end of the course. Viva Belikin!

(Report Comment)
Ellis Smith April 16, 2012 | 12:47 p.m.

@hank ottinger:

Sounds great. It's amazing how much biodiversity there is in such a small country (about the area of the state of Maryland). My jaw dropped the first time I went into the Mountain Pine Ridge: exactly like North Carolina, but you only need to drop a few hundred feet and you're back to the tropics.

BTW, I understand climbing the Citadel at Xunantunich Mayan Site is now banned, due to there having been an earthquake (2008?).

Yes, I enjoy a Belikin beer to wash down my plate of red beans and rice (hopefully with some shrimp or pork mixed in with the beans and rice).

(Report Comment)
Jimmy Bearfield April 17, 2012 | 8:06 a.m.

Will today be the day that we finally learn how someone making around $60K pays federal income taxes and FICA at a rate of 33%-41%? (Remember: Just because Buffett says so doesn't make it so.)

(Report Comment)
frank christian April 17, 2012 | 9:03 a.m.

Jimmy, "pit bull", Bearfield - He takes a bite, never lets go and just keeps shaking!

Problem is, writer has no answer and being liberal, can neither admit "wrong", nor apologize.

God Luck!

(Report Comment)
Jimmy Bearfield April 18, 2012 | 12:49 p.m.

Will today be the day that we finally learn how someone making around $60K pays federal income taxes and FICA at a rate of 33%-41%? (Remember: Just because Buffett says so doesn't make it so.)

(Report Comment)
Jimmy Bearfield May 3, 2012 | 1:45 p.m.

Before the semester is over, will we finally learn how someone making around $60K pays federal income taxes and FICA at a rate of 33%-41%?

(Report Comment)

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