Taxes on the rich

It takes a Warren Buffett to call for higher taxes on the rich:

Buffett said he makes $46 million a year in income and is only taxed at a 17.7 percent rate on his federal income taxes. By contrast, those who work for him, and make considerably less, pay on average about 32.9 percent in taxes - with the highest rate being 39.7 percent.

To emphasize his point, Buffett offered $1 million to the audience member who could show that one of the nation's wealthiest individuals pays a higher tax rate than one of their subordinates.

"I'm willing to bet anyone in this room $1 million that those rates are less than the secretary has to pay," said Buffett.

I generally agree with Buffett on this, but in fairness I feel compelled to point out that he appears to be making an apples to oranges comparison here. The article says he pays 17.7 percent in federal income taxes but some of his underlings pay 39.7 percent. The latter figure cannot be federal income taxes alone since the top marginal tax bracket is only 35%. Thus, he must be including state and local taxes or payroll taxes or both in the 39.7% while only including the federal income taxes in the 17.7%.

Or, perhaps, the reporter simply got it wrong.