THE MIDDLE-CLASS SMITHS

40 year old parents of two, Construction supervisor, Teacher’s aide

Annual income and investment gain: $73,000

Annual spending: $50,000

Net worth: $58,000 (all home equity except $4000 in savings)

Annual total taxes (federal, state, local): $20,760

Annual total taxes as percent of income and investment gains: 28%

THE MILLIONAIRE RICHS

Retired  couple, both age 40

Annual income and investment gain: $127,000

Annual spending: $90,000

Net worth: $1,300,000  (about half in retirement accounts)

Annual total taxes (federal, state, local): $4990

Annual total taxes as percent of income and investment gains: 4%

THE BILLIONAIRE, WARREN BUFFETT

Investor and Philanthropist, World’s third richest man

Agrees his taxes are much too low

Annual income and investment gain: $8,100,000,000 ($8.1 billion)

Annual personal spending: $400,000 (guesstimate, excluding philanthropy)

Net Worth: $50,000,000,000 (that's $50 billion)

Annual total taxes (federal, state, local): $11,300,000 (based on his report)

Annual total taxes as percent of income and investment gains: 0.2%

The Smiths and the Richs are hypothetical taxpayers. Their financial situations for 2007 are outlined and taxes figured in the Tax Reform Essay. Warren Buffett's taxes are based on the information he disclosed in 2007 when he argued that our taxes on the wealthy are much too low.

For a summary of their tax rates and an introduction to the effects of our system of taxes on our economy and society, see the next page->

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