Paul Roderick Gregory

Paul Roderick Gregory, Contributor

I cover domestic and world economics from a free-market perspective

Economics & Finance
1/25/2012 @ 4:02PM |333,601 views

Warren Buffett's Secretary Likely Makes Between $200,000 And $500,000/Year

Warren Buffett’s secretary, Debbie Bosanek, served as a stage prop for President Obama’s State of the Union speech. She was the president’s chief display of the alleged unfairness of our tax system – a little person paying a higher tax rate than her billionaire boss.

Bosanek’s prominent role in Obama’s “fairness” campaign piqued my curiosity, and I imagine the curiosity of others. How much does her boss pay this downtrodden woman? So far, no one has volunteered this information.

We can get an approximate answer by consulting IRS data on tax rates by adjusted gross income, which would approximate her salary, assuming she does not have significant dividend, interest or capital-gains income (like her boss). I assume Buffett keeps her too busy for her to hold a second job. I also do not know if she is married and filing jointly. If so, it is deceptive for Obama to use her as an example. The higher rate may be due to her husband’s income.  So I assume the tax rate referred to is from her own earnings.

Insofar as Buffett (like Mitt Romney) earns income primarily from capital gains, which are taxed at 15 percent (and according to Obama need to be raised for reasons of fairness), we need to determine how much income a taxpayer like Bosanek must earn in order to pay her  tax rate. This is easy to do within ranges.

Buffet himself declares that he pays a 17.4 percent rate on taxable income. His staff, like Bosanek,  pay an average of 34 percent. The IRS publishes detailed tax tables by income level. The 2009 results  show that the average taxpayer paying Buffet’s 17.4 rate earns an adjusted gross income between $100,000 and $200,000. But an average taxpayer in Bosaneck’s rate (after downward adjustment for payroll taxes) earns an adjusted gross income  of $200,000 to $500,000. Therefore Buffett must pay Debbie Bosanke a salary well above two hundred thousand.

We must wait for further details to learn how much more than $200,000 she earns. The tax tables tell us about average ranges. For all we know she earns closer to a half million each year, but that is pure speculation.

I have nothing against Debbie Bosanke earning a half million or even more. Buffett is a major player in the world economy. His secretary deserves good compensation. At her income, however, she is scarcely the symbol of injustice that Obama wishes her to project.

I imagine that there are any number of secretaries who would want her job and her place in the Congress gallery for the President’s State of the Union address.

Paul Roderick Gregory‘s latest book,  ”Politics, Murder, and Love in Stalin’s Kremlin: The Story of Nikolai Bukharin and Anna Larina, ” can be found at

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  • jlou jlou 2 years ago

    OMG…his secretary is RICH and therefore EVIL. How did they let her in the box with her royal highniness.

  • Paul Roderick Gregory Paul Roderick Gregory, Contributor 2 years ago

    I wish to express my thanks to the many people who took the time to comment on this piece. This has proven to me the power of the internet. They added new information. I am particularly grateful to Mary, Janet, and XChristopherous, Their combined comments showed me a much simpler way to calculate Bosanek’s income — namely from Buffet’s own statements as to his and their tax rates. I have changed a few lines in my original post using their information in place of my very circuitous calculations. The results are unchanged but more straightforward.

    I looked up Kashmir’s comment that Buffet said Bosaneck’s income was $60 k, but this statement was made in 2007, presumably about 2oo6. It also did not mention whether she received bonuses on top of base pay.

    If Bosanek wishes to correct my calculation based on average taxpayer results by income category, that would resolve the matter once and for all. Until then, we must rely on IRS information on averages by income range.

    I remain confused, however, about whether Bosanek filed a joint return that includes her husband’s income. If so, then Buffet is really compariring apples and oranges.

  • seasaw6499 seasaw6499 2 years ago

    Paul Roderick Gregroy:

    I will give you a chance to put your money where you mouth is. I will bet that Buffett’s secretary makes less than $200,000.00 per year. Following in the Mit Romney let’s bet fashion, I am willing to to bet $10,000, or more if you like. This is your chance to see how much faith you have in your projection. Once we set the bet, we can see if they will disclose her salary in a way that satsifies us.
    Should be easy money for you. What an opportunity i am giving you!

  • cigee cigee 2 years ago

    Very poor show from you, Mr Gregory.
    First you guess (incorrectly).

    Second you say she should release the figure to prove you’re not wrong. If in writing your piece youd properly and painstakingly tried to collect all the information before, you’d have a point. It is not up to her to correct the glaring inaccuracies made in your rush to judgement.
    hird, you, a scholar of sorts, were unbelievably sloppy in not checking whether the information was freely available in the public domain, as it was.

    Fourth, your retraction is half hearted and self justifying. Buffet said it in 2007, nearly 5 years ago. That’s irrelevant. It does not justify your wild overestimate. Leading to..

    Fifth, just fess up and say you got in badly wrong.

    Sixth, you really should take a cue from one of the fine writers at Forbes about the BASIC rules of this journalism thing.

  • deraj deraj 2 years ago

    Duh. If I were a billionaire I would HAVE to pay people in the millions for them to not poison me, and for them to seem as though they are on a similar socioeconomic level as I am as to not stir up trouble.

    Also, the whole “raise the taxes on me” jig Warren has is a farce. All he wants to do is push the smaller players out of the market. So he can foreclose on their houses and remain the big fish of all the ponds.

    Newt Gingrich is a pathetic waste of a conservative vote.

  • judester judester 2 years ago

    There are people in the DPW in NYC that make that much.

  • ad16 ad16 2 years ago

    Ms. Bosanek and Mr. Buffet should release their tax returns. That way all the questions can be resolved.

  • klg1956 klg1956 2 years ago

    Now we need to know if she invested any of her taxed earnings and then find out if she paid additional “capital gains” on that money…’s really simple but why can’t more people understand it…you make money, you are taxed on that money, you invest some of that money that has already taxed, and your investment makes you money, it’s called a “gain” and your “gain” is taxed again at a smaller rate…thank you Uncle Sam…..double taxation? You bet…so really Mitt, and Warren and Warren Buffet’s secretary are paying more than 48 percent in taxes……get it?….got it?…good!

  • realist431 realist431 2 years ago

    You left off the fact that the business you invest in pays corporate income taxes on that money before you get a dividend, so really it is triple taxation. If you add the rate of the corporate income tax to the dividend income tax rate together you get the actual rate of income tax. I’ll bet that is higher than the rate Warren’s secretary pays.

  • mattack mattack 2 years ago

    It’s not “double taxation”, as you yourself stated. It’s a GAIN, thus that GAIN is taxed. That is not taxing your existing income again, it’s taxing the NEW MONEY you made.

    (BTW, it seems to me that if we’re going to tax “income” at all, we should tax all income the same way, regardless of how you earned it… I’m far right wing fiscally, btw, and think we should have FAR lower taxes.. But if we do have taxes, it should be consistently applied.)

  • vijaymd44 vijaymd44 2 years ago

    lies, damned lies and statistics .. ladies and gentlemen.. welcome to the statistics for the insane

  • Janet Novack Janet Novack, Forbes Staff 2 years ago

    I have no idea how much money Warren Buffett’s secretary earns and perhaps she does earn more than $200,000. But your post is based on two incorrect premises.

    1. Buffett’s tax rate, as a percentage of adjusted gross income, is NOT higher than 12%——it is actually just 11%, as you can read in my post here. When you hear a higher rate discussed, it is based on his taxable income (after his substantial deductions for charitable giving.) So, just based on AGI, he pays an income tax rate below the rate for those with AGI of $100,000 to $200,000.

    2. Buffett doesn’t contend that his entire staff pays a higher effective INCOME tax rate than he does (whatever you want to calculate it on). What he says is that they pay a higher tax on their incomes when payroll taxes (Social Security and Medicare) are included.
    For those who are curious about the average effective INCOME tax rates at various income levels, they are in my post here. and I have pasted them below.

    Here, for 2008, are the average effective individual income tax rates, as a percentage of adjusted gross income, for various income groups. Note that the last number is for the 400 highest income returns the IRS got that year.

    Size of AGI Average Tax
    (in $) 2008 % of AGI

    1-25,000 1.76
    25-50,000 5.32
    50-100,000 8.41
    100-200,000 12.59
    200-500,000 19.50
    500-1,000,000 23.92
    1-10,000,000 24.47
    10,000,000 + 20.89
    109,736,000+ 18.11
    (top 400)

  • wbmccl wbmccl 2 years ago


    You both may be dancing around accurate statements, but I think your post highlights something that Paul’s post really gets at. More than the raw data, it is the actual complexity involved in calculating these things.

    The “Buffet rule” is often presented as a common sense and simple solution to a gross and obvious unfairness, but the more you start to debate it the more you realise that just isn’t the case. The President’s (and many other’s) use of the Buffet/Secretary anecdote does a disservice to the citizens who actually care about these issues.

    It does this disservice by presenting something which is actually complex and solvable by a number of different possible policies as straight-forward and solvable by only one policy. Paul’s post, but more importantly your reply, highlight this fact.

  • Paul Roderick Gregory Paul Roderick Gregory, Contributor 2 years ago

    Janet: I am no authority on Buffet’s taxes. The Romney business has stuck the 15% capital gains rate in the public mind, and Buffet earns primarily capital gains, I presume. I think that AGI is proper because we can associate this with the salary his secretary earns.

    I calculated her income from the limited information that is available. If my figure is wrong, then there is an easy way to correct it. Buffet’s secretary ihas become a public figure and can release information on what Buffet pays her.

  • nlbergie nlbergie 2 years ago

    It is time that we make a decision regarding Social Security and Medicare – Are they programs that we contribute to or are they welfare-state entitlement programs for which we pay taxes.
    Increasingly they are treated and funded (or not funded) like the latter and we need to be honest with the American people. We keep talking about tax rates and including payments into benefit programs (Soc. Sec. and Medicare) and they should be called what they are supposed to be – contributions.
    They are not monies for discretionary spending programs but for payments related to what is paid in.
    Quick question: would it make sense to find a way to take income taxes paid on Social Security payments (generally from the wealthiest) and contribute them back into the Soc. Security program to help rebuild its funding, especially in light of the currently reduced Soc. Securities collections?

  • edbarbar edbarbar 2 years ago

    How about this. A married filing jointly with no deductions making $108K each in 2010 pays an effective tax rate of 37%.

    That doesn’t include their support of corporate taxes, state taxes, etc.

    It’s a joke to suggest the wealthy are paying their fair share. In fact, its downright obscene. What happened? Under Reagan, Alan Greenspan and Patrick Moynihan got together and solved the big conundrum. How to lower taxes on the wealthy, while placating Liberals with their increasing desire for larger government.

    The answer? Tax the middle class by increasing social security to the point at which in excess of $2 Trillion dollars has been spent on government programs. The money is now gone. That, and borrow money from future generations.

    Meanwhile, the middle class is burdened disproportionately with supporting cheap illegal immigration that benefits ownership class types. They also are the revenue for corporate taxes. There wouldn’t be any corporate taxes without consumers. They pay to police the seas so corporations can outsource. They support artificial markets by forced government spending, all which benefits the ownership class.

  • gwiech gwiech 2 years ago

    You only pay Social Security tax on the first $106K of earned income. Those that earn via capital gains don’t contribute at all to these social programs. Therefore we should eliminate the cap and we should treat capital gains as regular income. Problem solved.

  • dangcit dangcit 2 years ago

    Since when can you deduct charitable expenses against passive income?

    As for payroll taxes, that’s just a red herring — allegedly, the taxpayer will get that money back with (paltry) interest. Lifting the cap on the “deductions” onbl increases the liability to the government (again, assuming that some or any of that money is actually paid back). So, considering the whole point of the issue — i.e. that the federal government doesn’t have enough tax revenue — payroll taxes don’t do anything to help the situation. Accordingly, they really aren’t germane to the question of what Buffet actually pays in taxes (as opposed to contributions that the gov’t will pay him back with interest), nor to what his secretary claims is her tax rate (which I have seen reported as an impossbly high 35.8%).

  • dangcit dangcit 2 years ago

    Enter Your Comment

  • dangcit dangcit 2 years ago

    Since when can you deduct charitable expenses against passive income? Something’s not right with your calculations.

    Regarding payroll taxes, that’s a red herring. Assuming that those “contributions” will be paid back with (paltry) interest, these taxes represent a drain on federal tax revenues. Lifting the cap on someone like Buffet only increases the long term liability of the government, which will not help the supposed situation (i.e. too little tax revenue). So discussing it in this context really doesn’t answer anything, but instead obfuscates the true issue. That is, do we need to raise taxes on the “wealthy” in order to run our government?

    Personally, I say we have a spending problem, not a tax revenue problem, but either way, we should keep the discussion firmly on the ground of true taxes as opposed to “contributions” that are a net cost to the Treasury (allegedly).

  • I am 100% AGAINST eliminating the social security cap. Why? Because WHY should someone have to pay more into social security than they can get out? You are taking the system way beyond what it was meant to be.

  • ruserious ruserious 2 years ago


    …and her birth certificate and her college transcriptions, and her high school gra… oh wait. Was this really about Debbie B. or was it to illustrate the tax inequality of our current system?

  • Janet Novack Janet Novack, Forbes Staff 2 years ago

    I agree with wbmccl that the Buffett rule tends to gloss over (and obscure) the fact that this is very complicated subject and our tax code is already way too complicated. In fact, the Obama Administration has not been clear on how it would achieve that 30% effective minimum tax rate on millionaires. Does it really want to apply yet another insanely complicated AMT? How would it get to an effective minimum rate of 30% without raising the capital gains rate substantially? The Administration hasn’t said, but it hasn’t really worked out a plan, just a slogan/goal. (It’s fair to say that the Obama Administration has never put a high priority on tax simplification.)

    For those who want more detail on what Buffett paid (his AGI, taxable income and tax), and how he is calculating his staff’s taxes, read the text of a letter he sent to Rep. Tim Huelskamp, posted by the Congressman here.

    If you read Buffett’s letter carefully, you can see that in his calculation of the burden of taxes on ordinary wage earners, he includes both the employer-paid and the employee-paid Social Security and Medicare taxes. Misleading? Perhaps. But economists do generally believe that the employer paid side of Social Security taxes is in fact paid by the employee in the form of lower wages.

    Returning to the income tax alone, however, let’s compare marginal rates—that is the rate imposed on your next dollar of taxable income, NOT the average or effective rate on all your income. For 2012, the marginal rate on the next dollar of capital gains is 15%. But for ordinary income–wages, interest from a CD, interest from a business you run– the 25% marginal rate begins at just $70,700 of taxable income for a couple and $35,350 for a single. A single taxpayer gets a personal exemption of $3,800 and a standard deduction of $5,950. So a single worker with a salary of $50,000 would have taxable income (after subtracting the $3,800 personal exemption and the $5,950 standard deduction) of $40,250 and would therefore be paying federal income tax at a 25% marginal rate, which is higher than Buffett’s marginal rate. (The worker’s average or effective rate, of course, would be much lower than 25%. Plus, there are other ways he or she could reduce taxable income, such as contributing to a 401k or IRA.)

    Even if restrict the discussion to income tax, the 15% rate on capital gains looks very low compared to the tax on average wage earners.

  • xhristopherus xhristopherus 2 years ago

    Warren Buffet and his silly complaint. All he need do is fire his army of tax lawyers who keep him from paying a higher rate than his secretary.

    He could also stop hiding Hathaway stock (when it is overpriced) in the Bill and Melinda Gates foundation and taking the deduction when it is valued at fair market price.

    A third option would be for Mr Buffet to simply make a donation to the IRS. A nice big fat check each year for an additional 7 or 8 million dollars should ease his billionaire’s guilt about not paying his “fair share”.

    The simple fact is that you could confiscate all the wealth of the so called 1%, all of it, 100% of their stock holdings, property, cash, jewelry, cars, hell let’s take the lint out of their pockets too, and we could not make a dent in the national debt.

    My question is simple. It’s not what is anyone’s fair share to pay in taxes, but what is a fair share of this nation’s wealth that the government should be able to control?

  • seasaw6499 seasaw6499 2 years ago

    Paul Roderick Gregory:
    you didn’t calculate his secretarie’s income. you might consider that it is better not to post anything at all, rather than to post articles with obviouis erroneous information in it.

  • seasaw6499 seasaw6499 2 years ago


    good point, except Warren Buffet does his own tax returns and does them in a straightforward way, not using any loopholes or that type of thing. so there is no army of tax lawyers keeping his tax rate down, as your overactive imagination fantasizes about.

  • ramrods ramrods 2 years ago

    I am NOT an economist or a major player in the market. However, I am Joe Average Citizen.

    Your estimates of taxes may be AVERAGES, but MANY of us don’t fall there. I own a modest home, pay property taxes, make donations to charity within my means, and I make just over $100,000 per year.

    My tax is NOWHERE NEAR 8+%. Uncle Sugar KEEPS 17.5% of my income after all deductions are taken.

    Again, please speak to the average citizen when you make these wild accusations. She makes excellent money and is NOT representative, as Obama thinks, of the average American taxpayer.

  • stopthe stopthe 2 years ago

    Paul and Janet,

    The entire discussion here, the topic of the article, and all the numbers you quote are beside the point.

    What Americans care about is fair taxation. A comparison of effective tax rates, tax brackets, etc. misses the point.

    The point is that a tax on earnings is immoral and inherently unfair. No matter how “progressive” you make the tax rates, it’s always going to be immoral and unfair. And a tax on savings and investment (like a capital gains tax) is also immoral and unfair, and will always be inherently regressive.

    The only kind of taxes that are not inherently unfair and immoral are the kind that the constitution originally provided for: consumption taxes.

    There is only one serious proposal for tax reform in America that addresses this issue, and it is the FairTax. It would be nice to see experts like yourselves acknowledge this proposal and start propounding it — thereby talking about something serious and important — instead of quibbling about numbers that don’t matter.

  • tallron47 tallron47 2 years ago

    Ms Novack seems to be infiffernt (perhaps intentionally) to the reality that MR Buffet/ Romney has already paid taxes once as earned income. Afler paying at those rates , now the investment income is again taxed. THe people who are not paying their ” fair share” are the nearly 50% of Americans paying NO federal taxes. A meritocracy has been replaced by a Parasitocracy.

  • maryokeeffe maryokeeffe 2 years ago

    Hi Paul,

    This is a long-ago former colleague of yours writing from upstate New York.

    There is no need to ask Warren Buffett’s secretary for her income in order to verify the claim that he made that her effective average tax rate was lower than his.

    You are overlooking Janet’s point that Warren Buffett’s original claim was a statement about his income AND payroll tax rate combined.

    According to standard CBO incidence assumptions, the entire burden of the payroll tax (both the employer share and employee share) falls on the employee.

    The payroll tax is currently 13.2% on the first $110,000 of wage income. (It was 15.2% of the first $106,800 of wage income during 2010, the year for which Warren Buffett made the statement.)

    Assuming no dependents and just a standard deduction, even a secretary making a modest $30,000 per year pays more than 15% in combined income and payroll taxes.

    In fact, the very first (simplest) case in the Volunteer Income Tax Assistance (VITA) workbook that my students use involves a waitress who made $32,000 in 2011, almost entirely in wages. Her effective average federal tax rate (income and payroll combined) is over 20% of her adjusted gross income.

    More details about her income tax situation in my blog post here:

    Mary O’Keeffe

  • hwychile hwychile 2 years ago

    All of this talk about rich people paying a lower effective tax rate than middle class is a lie.

    What people are missing is that there are two levels of tax on capital gains and dividends, and the liberals are only counting the one level to be dishonest in their argument. The first level is paid at the corporation and the second level is paid by the individual who owns the stock in the corporation. When you add those up, the effective tax rate is well over 30%. Remember, Buffett owns stock in various C corporations, which pay tax at C corporation rates (15% up to 35%), and then he either gets a dividend (which is currently taxed 15%) or he can sell the stock and get a capital gain (which is taxed at 15%), so when you combine those you get an effective tax rate that is much higher than what is being reported (over 30%). Also, the liberals are focusing on capital gains, but they really want to raise tax on ordinary income as well (which is already 35%). They are just using the capital gains because they can dishonestly say that it is 15%, when they are leaving out the fact that the corporation is earning money and getting taxed at another level. By the way, I am a tax attorney so I have to laugh at all this nonsense about Buffett or Romney paying a lower rate that the average American. The rich pay most of the taxes in this country, and that is a fact no matter how you slice it or dice it. This is typical Marxist, class warfare, wealth redistribution garbage that the liberal democrats keep spouting.

  • maryokeeffe maryokeeffe 2 years ago

    I have an additional post spelling out more details here:

    Those IRS average tables Paul used mask the huge amount of variability in effective average tax rates for different taxpayers with the same income. Modestly paid taxpayers with young children pay much lower income tax rates than Debbie likely does, because she is unlikely to have any children still young enough to live at home.

  • innocentious innocentious 2 years ago


    Honestly… So now the employer, who pays the employees share of the Social Security and Medicare Tax is technically not paying them it is still the employee because the employer simply pays them less? So if there was no tax the employer would pay employees more?

    There may be a LITTLE truth to that in the fact that when employers go out to hire someone they look at what they can AFFORD to pay WITH the Payroll tax Figured In… So if I am looking for a person at $100,000 I know I am really going to be paying $107,650 for them. So I may change and look for someone at a $90,000 Price point as I could long afford $100,000 in Payroll. But to go as far as to say it is ‘built into’ the compensation package is disingenuous.

    Second, Honestly the point behind Payroll taxes is an ‘enforced’ savings plan. Either it is a tax or it is not. If it is REALLY a tax Democrats need to stop bilking it as a Savings Plan, if it is a tax then Democrats need to be willing to deal with it as such and Social Security really is little more than a Ponzi scheme, there is no ‘trust fund’ or ‘lock box’ and the whole charade needs to come down.

    So for Buffet to Add BOTH the Employer and Employee side of Social Security and Medicare taxes it is more than misleading it is taking something that is MEANT to be an enforced savings program via the Government and calling it a tax, and saying that ONLY the employee pays both sides. That is more than misleading it is… well I am shocked that ANYONE is taking it seriously, but it fits the agenda so it is included. I mean honestly don’t you see it as slightly dishonest lol.

    Finally why talk about marginal rates since they don’t matter? In the sense that the tax code is SO messed up that someone making $50,000 pays and effective rate of 6%?

    You go back to the Marginal rate versus the Capital Gains rate, but in the end it is a hollow argument because even on that the EFFECTIVE rate versus the Capital Gains rate IS LOWER until you get above $250,000.

    You know that Buffets position is INDEFENSIBLE. That using him as a process to show that the system is broken is in itself simply highlighting the fact that most people pay little to no Federal Tax and that in fact the ONLY effective tax that actually brings in money at a STANDARD rate is Capital Gains and if you want to call it a tax Social Security and Medicare!!! Both of which are essentially FLAT TAXES!!!

    Simplify the tax code, don’e worry about raising rates. Flatten them. You know as well as I do that there is a huge gap between the rates that ‘the rich’ pay versus someone making $50,000 a year.

  • innocentious innocentious 2 years ago


    Okay lets take what you say into consideration. the ‘Rich’ making over $200,000 a year make effectively 20% – 30% of all the income earned in the United States. So lets average it out to be 27% ( slightly higher than average as we have more ‘good years’ than bad years. ) Now as a part of income we average about 60% a year in income as a portion of GDP.

    That would mean this last year we would have had a total of $9 Trillion in ‘income’

    Now throw that at the 27% rate to the rich and they earned a total of $2.43 Trillion in income. At your 37% effective tax rate they will have paid $900 Billion in taxes rather than the $560 Billion they did. So an increase of $340 Billion.

    Now here is the kicker that still leaves a shortfall of $860 Billion that we need to fund to ‘balance the budget’ at the current tax rates. So lets now reverse it and place it onto US the people who are NOT rich and see how much higher our effective tax rates would need to be… We will eliminate the ‘poor’ anyone who makes less than $50,000 so we are not Regressive in our taxation okay? That takes out about another 23% of revenue that we will not tax at a higher rate. Leaving us with $4.5 Trillion to make up the additional $860 Billion. Heck lets take out $ $60 Billion due to an assumption of a normal economy with full employment and lets add back in the $100 Billion in payroll tax cuts that occurred last year. So it is down to $700 Billion in additional revenue we need to balance the budget.

    That means we only need to increase taxes on the middle class by 15.5% Giving them an effective tax rate of about 25%. NOT INCLUDING Social Security and Medicare for a tax rate of ( according to how Buffet does it ) 40% still higher than what the rich are paying.

    The reason for this is simple. Out of $9 Trillion in cash that we earn the FEDERAL government is spending $3.6 Trillion… That is 40% of what we earn. and since only about $350 Billion comes from sources other than US it means that the majority of taxes have to come from, well us.

  • Kashmir Hill Kashmir Hill, Forbes Staff 2 years ago

    Warren Buffett is on the record saying he pays her $60,000:

  • jgspurs jgspurs 2 years ago

    If we assume the worst possible scenario for Mrs. Bosanek, that she has a salary of $60,000 (as Mr. Buffett claimed in a 2008 interview) and uses the married filing separately status with only the standard deduction and one personal exemption, she would pay $8,756 in federal income tax for 2011 (14.6% of AGI).

    In all likelihood, Mrs. Bosanek has some deductions (e.g., 401(k) contributions or itemized deductions) which would drive her effective rate to well below 10% of AGI (although we have no way to confirm this).

    The only possible justification for her 35.8% effective rate claims are that she is counting payroll taxes (including the employer’s portion) and she compared her tax liability to taxable income (which gives a very false impression because it ignores the many deductions she likely claims) rather than AGI as is standard practice. I am very suspect of any attempt to compare payroll tax liability to taxable income – because payroll taxes are not imposed on taxable income.

  • juicelee juicelee 2 years ago

    When you go to your job and work for your boss, you are pretty sure you will get paid at the end of the week. If you invest the same amount of money in the stock market that you made last week, you can make more money, but you can also lose all of it. The risk is higher for an investor than for a wage earner. The rewards may be higher as well, but can also be lower. In fact, you can lose your total investment. You can’t lose your total wages from your boss.

    That being said, with increased risk and no guarantees on your investment, in order to encourage equity capitalism, the tax rate is lower on any amount earned. One must also remember that money invested has to be earned somewhere first. So you pay taxes when you earn it, and you pay taxes again when you invest it and have a profit. Let’s get real about this “fairness” issue. It is political division pure and simple and you can see Obama, in Obama’s own words, saying that taxing investment at 30% would be detrimental to the economy.

    Obama is making me very angry with his specious arguments about “fairness.” What is fair to some is usually patently unfair to others. How about we all earn our own money, pay our own taxes, and try to get to a point where we get some of the benefits? If the increase in tax rates was coupled with debt reduction or spending cuts, I might feel a little different. Obama just needs more money to pass around to potential voters, his backers, unions, and his cronies. He needs everything you make.

  • mtaheny mtaheny 2 years ago

    I appreciate how you framed your argument. The issue at hand is not how much, exactly, the secretary pays in taxes, as much as the weakness of using her as a point of contention. It becomes very challenging to view someone in a sympathetic light when their woes are focused on paying a tax bill that equals the median income level of America. Whether she pays fifty or seventy thousand in taxes overall is a moot point in contrast to the fact that there are millions of Americans who have lost their entire income and several million who are in foreclosure. Pitting the rich against the poor is a weak man’s argument.

    A person arguing from a position of strength would focus on where he could improve his own weaknesses. A person of character would recognize the part he plays in the situation and not blame the opposite side for being “worse.”

    If one is going to illicit sympathy for one’s cause, it is best not to be inside the glass house at the time one incites the masses to throw stones.

  • Janet Novack Janet Novack, Forbes Staff 2 years ago

    What a cheapskate!

  • amac1234 amac1234 2 years ago

    Isn’t another component that isn’t being addressed here the fact that capital gains tax is a tax on earnings off of moneythat was already taxed as ordinary income and then invested.

    To compare ordinary income and investment returns as equal is misleading. The entire reason for lower tax rates on capital gains is to get people to reinvest the money they earn, drive the economy. I guess they could just hoard what they earn but that doesn’t stimulate the economy.

  • lucky72 lucky72 2 years ago

    Any reason why we have given up on addressing the inequality in double taxation that buffet and the like are hit with. The fact that he has to pay any income tax on his dividends should be the real debate. As for his secretary’s salary, that should not be the focus, what she earns is between her and her boss. He effective tax rate is also none of our business given the complexity of the system, one
    s rate can change year to year. We live in a dynamic world, not a static one. The main issue is should government set up a progressive tax code that at some level becomes confiscatory on ones ability to generate income, so that the income inequality will be have a narrower standard of deviation. If the answer is yes, then based on the 2008 data above, all is good until you get to the $1 mil level. Create two new brackets and set them at a flat rate of 25%, and 30%. That will maintain the integrity of the progressive tax code and allow the government to smooth out the income inequality curve. However this will in no way solve our deficit problems, which will only be solved by capping government spending over the next decade, mostly through updating the actuarial tables that calculate SS benefits and setting up a National Health Care System that eliminates Medicare completely over the next 20 years and allows the market to provide health care for those that want private insurance and care and then a government subsidized National Health Care System, similar to the USPS.

  • trixlette trixlette 2 years ago

    They are mixing apples and oranges. There is a difference between Income tax and Capital Gains tax. I want to see her tax returns. Since everyone is making such a big deal about this. I want to see both Buffet and his secretary’s income tax returns for 2010. Speculate all you want, but just saying she pays more does not mean it’s true. She probably told her boss, I pay more than you in taxes, knowing he takes every deduction he can, that she cannot take, and he said that to obama who ran with it without even checking the facts. So, lets see both returns! Then we can talk. And while we are talking about Buffet, let’s talk about how he is suing the IRS, because he refuses to pa his fair share of the taxes he owes on his fat cat Jet company. Not to mention obama kills the Keystone project, because by doing so it benefits Buffets railroad from Canada to Texas. o unless and until they both show their tax returns this is nothing but a bunch of here say, and not true.

  • jwinston2 jwinston2 2 years ago

    Janet you make an interesting argument except for one fallacy. Typically the capital gains tax is being applied to previously taxed income. At a minimum you would need to take this into account when comparing a taxable income and capital gains income. In other words it is too complicated to compare a capital gains tax rate to an income tax rate unless you like comparing an apple to an orange.

  • bnicolai bnicolai 2 years ago

    Kashmir… You put a link for us to check out the secretary’s salary and the first thing you notice is that the site itself say’s it’s “UNOFFICIAL.” Not only that it’s the unofficial total from the year 2007 and written by a guy named Jason…no last name. Also he just says that what Mr. Buffett said, however he doesn’t put the sentence in qoutation marks so how do we know if it’s a fact or made up. An editor couldn’t even do his/her job correctly by checking it out…something we learn in journalism class. Your looking at the wrong year and an unofficial number honey. Paul’s going to be much closer then you are to her salary.

  • xhristopherus xhristopherus 2 years ago

    No sir, I do not want to buy shares in your bridge project.

    If you believe that Warren Buffet files his own taxes without the help of tax attorneys and an army of accountants, then there is no help for you.

    Put the kool-aid cup down sir.

  • xhristopherus xhristopherus 2 years ago

    From Heritage foundation Direct quote from Warren Buffet:

    “Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.”

    IN order to get to those tax burden ranges, these people must be earning upwards of 400k per year with no substantial deductions, and no capital gains taxes on unearned income to spread out and lower the overall burden.

    Capital gains is double taxation, it is a tax on money that taxes were already paid on which are now working for the individual earning interest.

  • dublidu dublidu 2 years ago

    Interest is taxed as regular income, it’s a double tax, but so is pretty much everything in life if you actually think about it. I go eat a a restaurant, spend my after tax money, AND pay a sales tax, and the restaurant and its workers still have to pay tax.
    Preferred rates for dividend and capital gains is supposed to encourage investments, but the tax would be more progressive if it was, let’s say, a 60% of your regular income tax instead of a flat 15%.

  • ripfree ripfree 2 years ago

    correct me if I’m wrong here, but I think the problem is the rhetoric surrounding Buffet’s admin’s income. Her ordinary income TAX RATE is probably 28%, which is being compared to Buffet’s CG TAX RATE of 15% to make it sound unfair. The folks attempting counter the unfairness claims are incorrectly comparing her effective tax rate (probably much lower) with Buffet’s official Cap Gains TAX RATE of 15%. It’s apples & oranges. If one really wants to counter the silly unfairness claim, ask the Admin if she’s willing to trade tax bills with her boss.

  • edbarbar edbarbar 2 years ago

    Marginal tax rates as one enters AMT territory can exceed 50%! Consider roughly 15% for Social Security, plus the base rate, plus reductions in write offs. Another thing to consider, if one goes to the Social Security Web page, uses their numbers for inflation, their numbers for returns, and a person making $108K income in 2010, the rate of return on the real dollar is 50 cents only!

  • obamizacorn obamizacorn 2 years ago



    Its not the governments job to encourage “income inequality” arguments


    Fear to defend capitalism, fear to defend the wealthy, fear of challenging obamacare etc


  • anjo1 anjo1 2 years ago

    There’s are several good reasons to tax capital gains at a lower rate than income.

    One, of course, is that much of what passes for capital gains is actually fake gains from inflation. If I bought a capital asset for $100 25 years ago and sold it today for $200, I would have “capital gains” of $100, but after inflation, my real profit would be $2. After 15% capital gains tax, I’ve lost money on the investment.

    But the second reason is that, in order to obtain that $100 with which to purchase my capital asset, at some point I had to receive enough income to save it up, after paying taxes on the income. If my average overall tax rate is 20%, I’d have to earn $125 in order to acquire the $100 to invest.

  • Paul Roderick Gregory Paul Roderick Gregory, Contributor 2 years ago

    Dear xhristopherus:

    This is extremely useful information that allows us to get closer to the secretary’s salary. In fact, it suggests a neater way to do it. If Buffet has a 17.4 percent tax rate (We can forget payroll taxes for him), The IRS’s Table 1.4 (All Returns: Sources of Income, Adjustments, and Tax Items, by Size of Adjusted Gross Income, Tax Year 2009) tells us that taxpayers paying this rate on taxable income earn between 100 and 200K in adjusted gross income. But Buffet claims that his staff pay much higher rates (in the 30 percent plus ranges). If we deduct maximum payroll taxes), each of them would be well above 200K.

    It is very difficult and confusing to use IRS data to make these calculation because they relate to averages. But I think we can be confident that his secretaries are earning pretty healthy sums.

    The only way to resolve this is to have the secretary tells us what Buffet pays her. If it is a small sum (say under 100k, then I am clearly wrong.

    You seem to have looked at the numbers too and you get salaries in the 400K range — higher than my own.

  • mattack mattack 2 years ago

    Better solution, get rid of Social Security entirely.
    (Though I also think all income should be taxed the same way.)

  • chad11 chad11 2 years ago

    But I think the point is that we SHOULD call out that Mr. Buffett’s figures are misleading. Yes, economists agree that wage-earners “pay” the employer share of payroll taxes, so it may be reasonable to include those. But economists also agree that company owners “pay” corporate income taxes, but Mr. Buffet clearly doesn’t add his companies’ 35% corporate rate to his own.

    But I’m surprised that no one is talking about the deceptiveness of including payroll taxes as an argument about regressivity in the tax code. In fact, they are probably the MOST progressive taxes – it’s just that all the progressivity is in the payout. Here’s what the SSA says:

    For an individual who first becomes eligible for old-age insurance benefits or disability insurance benefits in 2012, or who dies in 2012 before becoming eligible for benefits, his/her PIA will be the sum of:

    (a) 90 percent of the first $767 of his/her average indexed monthly earnings, plus
    (b) 32 percent of his/her average indexed monthly earnings over $767 and through $4,624, plus
    (c) 15 percent of his/her average indexed monthly earnings over $4,624.

    So a low wage earner paying the 10.4% payroll tax has a marginal replacement rate of 90% of income, while the higher wage worker paying the same 10.4% has a marginal replacement rate of 15%. Um, I think a 6x difference in marginal payout rates is pretty progressive.

    There’s a serious discussion out there about taxation, but Mr. Buffett’s folksy story is too clever by half, and he shouldn’t be given a pass on it. He didn’t get to where he is by being sloppy in his numbers, so I can only conclude he’s not interested in being forthright with them.

  • gladrocks gladrocks 2 years ago

    It seems to me his Secretary maybe needs a new tax accountant. Maybe Turbotax would give her a better return, because if she’s only earning $60,000 she’s getting hosed for no reason.

  • winstons winstons 2 years ago

    Two quick points:

    1. To me, the irony here is that the discussion surrounding Buffett’s secretary omits a very important component: to wit, how entitlement programs like SS and Medicare are funded (or not funded) via payroll taxes. Understandably, demagoguery aimed at millionaires and billionaires is much easier than fleshing out entitlement reform. But it is a shame the GOP has failed to turn this poorly supported populist appeal back to SS and Medicare.

    2. You mention that Buffett doesn’t claim EVERYONE in his office pays a higher rate–however, his interview with ABC yesterday suggests Ms. Bosanek is the “average” employee in his office as well as the proposition that everyone pays a higher rate than their boss.

  • ilia ilia 2 years ago

    I believe it is much simpler than that. There is another difference between the investment income and the salary – AFAIK, Social Security and Medicare contributions (which are in essence other federal taxes) are subtracted from the salary, not the investment income. If you subtract these taxes from 34%, it effectively lowers the tax bracket into less than 100K range

  • alephnull12 alephnull12 2 years ago


    It may be true that his staff pays a higher tax on incomes when payroll taxes are included.

    But if this all-inclusive approach to including all tax payment is to be taken seriously, then for example the total income in the divisor in this equation should also include capital gains from investments in 401k, Roth, life insurance and other tax-advantaged investment instruments the employee holds. Most of this income (and it is income that is not taxed for the very purpose of lowering tax rates) could not even be seen or determined from Bosanek’s tax returns, even if we could see them — it’s not included at all in Adjusted Gross Income. But it is income, and it is not at all taxed. Most very wealthy individuals in Buffett’s category have a proportionally small percentage of their assets placed in such investment instruments (because of contribution limits), though in cases of extremely extraordinary tax planning and investment performance, I suppose it’s conceivably possible to accomplish this (not even sure Warren Buffett could do it).

    And c’mon please. The entire purpose of payroll taxes, is that this is income that should flow back to the individual taxpayer in retirement. Financially, it acts a bit like a 401k or retirement program rather than a strict tax, though as we all know there is a wealth redistribution component and generational redistribution component that figures into even that.

  • alephnull12 alephnull12 2 years ago

    Also, I have heard of secretaries who started off with microsoft back in the 80′s, who ended up being multimillionaires from stocks.

    I have seen at least web site that said that Buffett sometimes gifts Berkshire Hathaway shares to some of his employees. Even if her salary is on $60k per year, it’s very possible she is a very wealthy individual.

    And just because Buffett is a buy-and-hold investor, doesn’t mean his employees would necessarily be. Or, some of them could be sitting on very large unrealized long term capital gains, with a large realized investment income they have in a given year being predominantly short term capital gains or other sources (real estate income).

  • mfontz mfontz 2 years ago

    Ms. Novak,
    The average worker in America doesn’t even get paid $60,000/yr, that’s the going rate for a secretary. Am I to assume that you pay your office workers more or since Buffet earns more he should pay more?

  • onemanarmy onemanarmy 2 years ago

    Kashmir, so you’re saying that Warren Buffett is an outright liar than? Either he lied about paying her $60,000 or he lied when he said she pays 30% in taxes because NO ONE who makes a mere $60,000 a year pays that high a rate. So, which one did Buffett lie about? How much he pays her, or how much she pays on her taxes?

  • Kevin Barry Kevin Barry 1 year ago

    $60,000 ? If that’s true, then I’ll bet she’s making less than any Man who works for Mr. Buffet, this is evidence of Warren Buffet’s “War on Women” where’s Nancy Pelosi ?

  • stans stans 2 years ago

    The number that is floating around the internet and the news media is that the secretary pays 28% in federal income tax. Using the IRS tax tables, she would have to earn approximately $400,000 in order to pay 28%. That is based on a single person using standard deductions. Itemizing deductions would probably result in lower taxes.

  • danb danb 2 years ago

    Your assumption is that the MSM is comparing apples to apples. My assumption is the MSM is comparing Buffet’s total tax as a % of his taxable income with his secretaries marginal rate. AKA the MSM is lying with statistics. That would explain why Buffet and his secretary refuse to release their tax returns and why the MSM refuses to ask for them. The bait and switch will become too obvious.

  • Paul Roderick Gregory Paul Roderick Gregory, Contributor 2 years ago

    Stans: I had not heard the 28% figure, but you are right with your calculation. According to the IRS tables she would have to be near a half million to pay that ratio of income tax to adjusted gross income.

  • willbradley willbradley 2 years ago

    Paul, when I put my modest salary into TurboTax’s free tax calculator (I have no special situations or deductions, just a single guy) it comes back with me owing 16% to the Federal Government. That doesn’t include state tax, social security, 401k, insurance, or any of the other things that come out of my paycheck, which when added up come closer to 30%.

    Americans have always wanted a sense of basic fairness, the no-nonsense end-of-the-day gut check. If the government takes less than about 30% of Mr. Buffet or Mr. Romney’s “paycheck” every month, that offends a basic sense of decency.

    I’m a hardworking guy who manages the occasional roadtrip or vacation, and I’m way luckier than most. But I always tip 20%, and although taxes are a bastard, I’d gladly pay more tax if that meant less tax for those struggling to put food on the table.

    10% more on my taxes means maybe I vacation in Hawaii instead of Japan. 10% more on my employee’s means the difference between buying a house versus renting, or buying a car versus keeping his clunker running, and again– he’s got it better than most. That a multi-millionaire couldn’t afford a 10% tax increase strikes me as ludicrous, because I CAN.

  • edbarbar edbarbar 2 years ago

    Married filing jointly earning $108K each with no deductions gives an effective tax rate of 37%. That includes the payroll tax, of course, but why not. That’s what it is. A person earning $108K in 2010, born in 1960, and retiring in 2027 will get a return of 50c on the real dollar from Social Security using Social Securities own numbers for inflation, etc.

  • emulpedmon emulpedmon 2 years ago

    Easy fix, will. Go to hawaii instead of japan, give your underpaid employees the 10% raise they deserve, tip at 15% instead of 20% (you’re running that through the company any way, right?) – and keep your stinking hands off my wallet! Basic decency and taking 30% of ANYONE’S earnings seem like two diametrically opposing concepts.

  • seasaw6499 seasaw6499 2 years ago

    number floating around – might be a good idea not to spread unsupported, baseless rumors.
    using the IRS tax tables, she would have to earn $400,000 in order to pay 28% – wrong, you are using incorrect methodology, as the author did, to greatly overestimate her income. perhaps read Warren Buffett’s article to see exactly the point he was making rather than making up a different point and responding to it.