Time You Enjoy Wasting Is Not Wasted Time

CNN has an article detailing Warren Buffett’s ideas on tax reform. (Link via Digg)

I firmly believe that super wealthy people and corporations should have a much higher share of taxes. All too often the rich are sheltered and the burden falls on the everyday person. I had a discussion with someone not too long ago about this, and he questioned the validity of that statement. I did some number crunching to support my theory and was surprised by how lopsided things are.

Let’s use Buffett’s figures of 17.7% tax on $46 million a year. He doesn’t specify what the lower income earner makes that gets taxed at 32.9% so I’ll use $100,000 as an example. We will use the estimated living wage for a family of four in a rural area, such as Chautauqua County, of $42,000 a year. The high income earner will pay $8,142,000 in taxes. So $46,000,000 minus $8,142,000 minus $42,000 leaves our millionaire with $37,816,000 to be rich with. Our $100,000 a year earner will pay $32,900 in taxes. So $100,000 minus $32,900 minus $42,000 leaves $25,100, which is still a tidy sum but is only a fraction of what our ‘over-taxed’ rich people have left over to play with.

Even assuming the rich person pays a higher tax percentage they still end up ahead. Let’s use some more down to earth numbers. For our area I would consider someone who makes over $100,000 a year to be ‘rich’ and someone who makes $50,000 a year to be average keeping in mind the living wage of $42,000 a year for a family of four. Let’s even assume that the lower income earner only has to pay 15% and the high income earner has to pay 40%. We still see our ‘rich’ person is left with $18,000 at the end of the year while our ‘average’ person is left with $500 at the end of the year. So even though the ‘rich’ person can complain that they paid $32,500 more in taxes they still have $18,000 at the end of the year to keep themselves rich, while our ‘average’ person barely has enough money left over to cover any emergency expenses that may come up.