Clearing up tax rates for rich and poor

Regrettably, a so called "fact check" by the Associated Press muddies the water when it comes to determining who pays the highest tax rates, the rich or not so rich.

The debate was sparked by billionaire Warren Buffet continuing to proclaim he shouldn't pay taxes at a "lower rate" than his secretary or others in his office.

This statement gets summarized a lot in the media to a translation that he shouldn't pay lower taxes than his secretary which is an entirely different thing than a "lower rate" of tax.

What Buffet was really referring to was the capital gains rate that is 15 percent and a typical income tax rate most middle class couples would pay would be about 28 percent.

The AP article gets to that salient point in the 14th paragraph of a 19 paragraph article.

This AP article does a disservice to the whole debate in my opinion because it deals with "average" tax rates, "total" taxes the rich pay (we know they pay more in total taxes, almost all the time and almost always have, so it's kind of irrelevant).

One can make an argument for "average tax rates" because some wealthy folks pay a lot higher rate and others pay nothing. So, I would expect "on average" wealthy folks will pay a higher rate, also including all federal taxes, as the AP analysis does, though it doesn't say if it includes estate taxes.

That wasn't Buffet's point. It was the "rate" at which people are taxed, which, is really the relevant statistic.

So the AP did a fact check,but they left out the relevant facts to be compared. The big question is: Should we tax capital gains at 15 percent and regular income of the same amount at 28 percent? Most wealthy folks have capital gains, most average folks have "regular income" hence the disparity argument.

So, there you have it, a good argument for your next cocktail party.

And at the risk of sounding like a surly editor, don't argue Buffet should just pay taxes voluntarily if he feels this way, or you will get on my list for a free copy of "How to argue effectively."