Barack Obama, Warren Buffett
Washington, April 15: For months, President Barack Obama has marvelled that the billionaire investor Warren E. Buffett pays a lower tax rate than his secretary, citing it as an egregious example of an unjust tax code. It turns out that another famous and well-compensated American does, too: Obama.
The President and his wife, Michelle Obama, reported adjusted gross income of $789,674 in 2011, and paid just over 20 per cent of it in federal taxes, according to income tax returns and gift-tax returns released by the White House on Friday.
The White House confirmed that Obama’s secretary, Anita Decker Breckenridge, paid a “slightly higher” tax rate than her boss in 2011, on a salary of $95,000.
That, said a spokesperson, Amy Brundage, “is exactly why we need to reform our tax code and ask the wealthiest to pay their fair share”.
On Monday, at the President’s urging, the Senate will take up the proposed “Buffett Rule,” a minimum tax for the wealthiest Americans. In his references to Buffett and his secretary, Obama always notes that like Buffett, he has done well, does not need tax loopholes and could afford to pay more.
In fact, the President’s income declined nearly $1 million from the previous year, when he was reaping larger amounts from sales of his best-selling books. Although he is still comfortably in the 1 per cent, he has fallen out of the $1 million-a-year bracket that would make him subject to the Buffett Rule.
It goes to show how a tax filing can be sliced and diced, particularly in an election year in which Obama has taken up taxes and economic inequality as a cudgel in his battle with his likely Republican opponent, Mitt Romney.
The Obama campaign — which posted Obama’s tax return on its website along with his previous 10 returns — assailed Romney for his refusal to disclose more about his taxes. The campaign has also drawn attention to the tax rates paid by Romney and his wife, Ann, who derive the bulk of their income from interest on investments, which are taxed at a lower rate than wage income.
“On the eve of April 17th, governor Romney has yet to provide tax returns from the period in which he made hundreds of millions as a corporate buyout specialist,” the Obama campaign manager, Jim Messina, said in a statement. “Mitt Romney’s defiance of decades of precedent set by presidential candidates on both sides of the aisle, including his own father, begs the question — what does he have to hide?”
Late on Friday, Romney’s campaign announced that he had filed with the Internal Revenue Service for a six-month extension to file his 2011 return. Andrea Saul, a spokesperson, said Romney would file his return “sometime in the next six months, and prior to the election”. It will be filed, she said, when “there is sufficient information to provide an accurate return”.
In January, under pressure from his Republican rivals, Romney released documents estimating that he had earned $20.9 million in 2011 and paid about $3.2 million in taxes, for an effective tax rate of about 15.4 per cent. On a form requesting the extension, he estimated his taxes to be $3,226,623.
In 2011, Obama and his wife reported paying $162,074 in income taxes, an effective tax rate of 20.5 per cent. That is a lower rate than in 2010, when the Obamas reported paying $453,770 in federal taxes on adjusted gross income of $1,728,096 — an effective tax rate of just over 26 per cent.
It is also lower than the rate paid by vice-president Joseph R. Biden Jr., whose returns were also released on Friday. Biden and his wife, Jill, reported adjusted gross income of $379,035 and paid $87,900 in federal tax, an effective tax rate of 23 per cent. That is roughly the same as what the couple reported last year.