UNDER OUR CURRENT TAX SYSTEM:
THE WORKING-POOR CLASS - ELENA
24yr old single Health Aide making minimum wage
Annual income and (zero) investment gain: $14,500
Annual spending: $11,300
Net worth: $900
Annual total taxes (federal, state, local, indirect $2809): $5322
fed incm $605; payroll $2218; state incm $280; sales/gas $518; indirect property $1300; indir corp $400
Current annual total taxes as percent of income & investment gains: 37%
THE MIDDLE-CLASS SMITHS
45yr old parents of 2, Construction Supervisor,
Teachers' Aide
Annual income and (zero) investment gain: $73,000
Annual spending: $50,000
Net worth (all home equity except $4000 in savings): $58,000
Annual total taxes (federal, state, local, indirect $7575): $28,337
fed incm $4741; payroll $11,151; state incm $3044; sales/gas $1902; property $5500; indir corp $2000
Current annual total taxes as percent of income & investment gains: 39%
THE MILLIONAIRE RICHS
Retired couple,
both age 45
Annual income and investment gain: $156,700
Annual spending: $100,000
Net worth (about half in
retirement accounts):
$2,000,000
Annual total taxes (federal, state, local, indirect $25,600): $31,570
fed incm $1274; payroll $0; state incm $1011; sales/gas $3676; indir prop $7900; indir corp $17,700
Current annual total taxes as percent of income & investment gains: 20%
THE BILLIONAIRE - WARREN BUFFETT
Investor, Philanthropist, World’s third richest man (Agrees his taxes are much
too low)
Annual income and investment gain: $8,100,000,000
Annual personal spending (estimate): $1,000,000
Net Worth: $50,000,000,00
Annual total taxes (fed, state, local, indirect $881M): $892,200,000
fed incm $8.1M; payroll $15,000; state incm $3.1M; sales $57,000; property $80,000; indir corp$881M
Current annual total taxes as percent of income & investment gains: 11%
[An analysis of 2000-08 yielded and estimated total tax rate of 10% over the period]
Elena, the Smiths and the Richs are typical, hypothetical taxpayers in 2006 or 2007. Warren
Buffett's taxes are based on the personal tax information he disclosed for 2006 and his company's annual report. The tax system has not been changed in any significant way since then, except perhaps that an increasing tax burden has been placed on the working poor and middle class in the form of increased sales and property taxes. For all four, their financial situations
and tax calculations are outlined in the Their Spreadsheet page (where you can also download the spreadsheet), and in the Tax Reform Essay.