Taxing politics
The candidates (and PotUS) have filed their taxes, so we can indulge in a bit of ethics checking by comparing the amount that they paid to the amount that they "should" have paid [1]. The numbers are somewhat interesting:
- Filed: Joint
- Income: $719,274
- Taxes paid: $22,1635
- Effective tax rate: 31%
- Nominal taxes owed: $230820
- Percentage of nominal taxes paid: 96%
- File: Single
- Income: $405,409
- Taxes paid: $84,460
- Effective tax rate: 21%
- Nominal taxes owed: $120,967
- Percentage of nominal taxes paid: 70%
- Filed: Joint
- Income: $ 20,400,000
- Taxes paid: $5,100,000
- Effective tax rate: 25%
- Nominal taxes owed: $7,119,074
- Percentage of nominal taxes paid: 72%
- Filed: Joint
- Income: $4,200,000
- Taxes paid: $1,400,000
- Effective tax rate: 33%
- Nominal taxes owed: $1,449,074
- Percentage of nominal taxes paid: 97%
The
candidates all paid less than the average tax rate [2] for their 2007
taxes. McCain is the greatest tax cheat/smartest taxpayer, laying out
just 70% of the what the tables say he should owe. Clinton comes a
close second, paying just 72% of the nominal amount. Both Bush and
Obama paid nearly the full amount.
As with all things political, you can look at this two ways. Either McCain and Clinton are smart enough to find the deductions hidden in the tax code, so they should be praised and voted for. Or Bush and Obama are honest enough to only take those deductions that they know they have earned, which means that they should be praised and voted for. Of the two sets, the latter is probably closer to what the typical American pays [3].
In either case, it is interesting food for thought.
John
[1] "Should" meaning that they only have the standard deductions and only earned income. If Bush had earned his $719,274 as capital gains on stocks, then he would have been liable for only about half of what he paid in taxes as the current capital gains rate is 15%.
[2] Calculated using Moneychimp.
The average rate is the actual rate at which you pay taxes, as opposed
to the "marginal rate" which is the rate at which your highest level of
income is taxed. If you earned $100,000 last year, your first $7825 was
taxed at 10%, the next $24,025 would be taxed at 15%, the next $45,250
would be taxed at 25%, and the remaining $22,900 would be taxed at 28%,
so that the average rate would only be 22% even though the marginal
rate was 28%. Clear as mud, no? S'why CPAs make the big bucks... In
general, the higher your income, the closer you should come to paying
the marginal rate.
[3] How many of you have $125,461 in itemized deductions?
Comments
John
But then, you knew I was evil...
John