andyt andyt:
I don't really get it tho. He paid tax on a lot more money than the secretary - so if the income is higher, shouldn't the tax rate he paid on it be higher too? I understand having various tax dodges that reduce net income, but not how you pay a lower rate on higher earnings.
My guess would be that his higher income/wealth level allows him the opportunity to take advantage of things most people can't afford.
For example, every Canadian is entitled to put $5000 each year into a TFSA, but how many people can afford to do that every year? Certainly those earning 6 figures probably can, but a single mom with a kid or two making $40,000 a year can't. Same goes for RRSPs. Canadians are allowed to bank 18% of their income (to a maximum of $20,000 or something) each year. But how many do that? most people put in a $1000 or two just before they send in their taxes to get a bigger return and that's all.
I do know that mortgage interest in the US is a write-off on your taxes, so if Buffet has a huge house with big mortgage payments (I don't know but I doubt it given his own financial acumen), while his secretary has a small house with smaller payments, then right there he would get a larger tax break than she would.
income, ie the income you pay taxes on. He still had to pay tax on 8 million dollars net income, on which he paid at 19%. His secretary, presumably well paid, had to pay 30% tax rate on her income. I don't get what's going on there. My best guess is that he took the 8 mill as capital gains, which is taxed at a lower rate than employment income. Why that should be so is beyond me.
