U.S. Budget and Economy

On February 19th, the following conversation took place between interviewer Jake Tapper and Robert Gibbs on ABC's "This Week": TAPPER: The president got something of a political victory this week when the House and Senate came to an agreement on the payroll tax extension, but it's not paid for, the $100 billion, so that payroll tax money will not be paid into the Social Security Trust Fund. One member of the president's own party called this bill "a devil's deal" and went on the say this. (BEGIN VIDEO CLIP) HARKIN: I'm dismayed that Democrats, including a Democratic president and a Democratic vice president, have proposed this and are willing to sign off on a deal that could begin the unraveling of Social Security. (END VIDEO CLIP) TAPPER: That's quite an ad against the president's re-election campaign from Democratic Senator Tom Harkin. Is this the unraveling of Social Security? GIBBS: No, I strongly disagree with that characterization. ...

My prior post looked at the calculations behind Warren Buffett's claim that he paid a lower tax rate than any of the other people in his office. Specifically, Buffett claims that he paid about 17% of his taxable income in tax and his office staff paid percentages somewhere in the 30s. A number of articles disputed this claim, stating that, due to the double taxation of capital gains, Buffett actually paid a much higher rate. For example, a Wall Street Journal editorial titled "The Buffett Ruse" states the following: This is because wealthy tax filers make most of their income from investments. Such income is taxed once at the corporate rate of 35% and again when it is passed through to the individual as a capital gain or dividend at 15%, for a highest marginal tax rate of about 44.75%. This rate of 44.75 equals the top corporate tax rate of 35% plus 15% (the capital gains rate) of the remaining 65 percent. However, the 35% figure is the top statutory corporate tax r...