How does Warren Buffet pay such a low tax rate, and are the people who've told me so far correct?
Warren Buffet made the news in October saying he paid a lower rate on his taxes than did the other 14 people in his office, including his secretary. (He doesn't have his own office, it seems, but part of a big room with 14 other people. I wonder if there are cubicles?)
I brought this up and someone tells me that Buffet is including unrealized capital gains, Is he?
Another person says he donates his shares rather than sells them, so maybe his taxable income is low, but the NYTimes says** his taxable income last year was 39.8 million dollars. Shares donated before being sold wouldn't be part of taxable income, would they? They would be a dediuction from gross income iiuc.
Who is telling me the truth? How does he pay a lower rate than his secretary?
Is that because REALIZED capital gains are taxed at 15% and salaries at 30 or 32 percent?
What is the rate for interest? And dividends? ( I wish I had interest, dividends, and capital gains. Then I might know!) Are they also lower than the tax rate for salaries?
Thanks a lot.
**Adding fuel to the debate over his proposal for higher taxes on the rich, Warren E. Buffett said in a letter to a Kansas congressman that he paid $6.9 million in federal income taxes in 2010.
The figure represent 17.4 percent of his $39.8 million in taxable income, a percentage he has repeatedly said is too low compared to what his own staff members pay.