Academic

At a conference on elections at the University of Maryland School of Law, Dorothy Brown gave a very interesting presentation on tax issues and the presidential elections. She began with an anecdote that Warren Buffett used at a fundraiser last year, and which made the round of some of the blogs.  In 2006, Warren Buffett had $46 million of taxable income, while is secretary earned $60,000.  Warren Buffett?s tax rate was 17.7% and his secretary?s was 30%.  Although he surely did not object to his relatively lower tax rate, Buffett made it a point to emphasize that he was not deliberately trying to avoid paying higher taxes, and hence did not utilize tax shelters.  Of course Buffett?s taxable income stems from capital gains, while his secretary?s taxable income stems from wages.  As Dorothy Brown pointed out, however, Buffett?s point appeared to be that the tax system favored wealth over wages.  For people who believe that giving a preference to wealth creation is critical to stimulating the economy and thereby enhancing the market, Buffett?s comments may not be viewed as troubling.  However, they certainly reflect some inequities in the system.  After an evaluation of all the tax plans of the presidential candidates (at least all of those who were in the race last week), Brown concluded that the tax plans advanced by Senator Obama and Senator Edwards appeared most likely to address Buffett?s concerns because they would increase the capital gains rate, and Obama?s plan would create new tax credits for workers aimed at offsetting payroll taxes.  To be sure, your presidential decision may not be driven be either tax concerns or Warren Buffett.  However, Brown?s talk raised some interesting points of comparison.   Brown also noted that Buffett?s comments were made at a $4600 fundraiser for Senator Clinton, whose tax plan was apparently one of the ones least likely to resolve the issues he raised.