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The Numbers Behind Obama’s Tax Plan

Thanks to countless deductions and credits, the federal income tax brackets are ruined.

Few people pay 10%, 15%, 25%, 28%, 33% or 35% of even their “marginal” dollar in income taxes. So, Monday’s proposal from President Barack Obama is really about average tax rates.

The plan picks up on one of Warren Buffett’s frequently cited notions — that the richest Americans pay a lower percent of their income in taxes than those earning far less. A progressive tax system, such as the one purportedly used in the United States, is designed to do the opposite.

The Obama Administration has posited the “Buffett rule” to guarantee that “people making more than $1 million a year should not pay a smaller share of their income in taxes than middle class families.” Monday’s announcement also calls for the expiration of the 2001 tax cuts, which lowered income tax rates across the board, and the 2003 tax cuts, which reduced tax rates on dividends and capital gains.

Based on effective tax rates alone, Buffett’s contention is true. Of the 400 largest individual tax returns in 2008, 243 had an average tax rate under 20%. Similarly, the top 0.1% of tax filers by adjusted-gross income have had lower average tax rates relative to the top 1% of returns since 2004. Why does this happen? A mix of  deductions, qualified dividends and capital gains (taxed at 15%) have helped even Warren Buffett cut his tax bill.

Here’s how it works using tax returns from 2009:

  • For returns reporting $100,000-$200,000 adjusted gross income, an average return had $135,000 in total income, of which $115,000 was from salaries and wages, taxed at marginal tax rates. The average return reported just over $3,000 in qualified dividends, $16,000 in net gains and $800 of tax-exempt interest. So, 15% of the income mix pays no more than a 15% tax rate.
  • For returns reporting $500,000-$1,000,000 adjusted gross income, an average return had $688,000 in total income, of which $440,000 was from salaries and wages, taxed at marginal rates. The average return reported $25,000 in qualified dividends, $179,000 in net gains and $31,000 in tax-exempt interest. So, 34% of the income mix pays no more than a 15% tax rate.

As qualified dividends, capital gains and tax-exempt interest make up more of total income, the effective tax rate declines.*

How you view your own taxes, net of deductions and credits, may help you determine where you come down in the debate. Is it possible that with smart tax planning and deduction, you could whittle your effective rate down to the levels of the mega-rich. Our effective tax rate calculator will tell you how much tax you might owe and what your average tax rate is on total income.  (Use your 2010 return as a guide.) And if you’re still confused by the seven numbers at the beginning of this post, our marginal tax rate calculator will help you determine how much more you’d have to earn to get to the next bracket.

*For 2009, the average tax rate on a return claiming $100-$200k in adjusted gross income (the basis for the first example) paid an effective 13% tax rate. The average tax rate on a return claiming $500k-$1m in adjusted gross income (the basis for the second example) paid an effective 25% tax rate. See IRS Table 1.4.


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      set_organizer_rings_front (2).jpg 09-Apr-2012 04:30 5.8K
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      smiley_biggrin_ani.gif 09-Apr-2012 04:30 152
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      smiley_cool_ani.gif 09-Apr-2012 04:30 1.3K
      smiley_crazy_ani.gif 09-Apr-2012 04:30 3.5K
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      v_about_designbydaniel.jpg 09-Apr-2012 04:31 5.4K
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      value.png 09-Apr-2012 04:31 275K
      virus (2).gif 09-Apr-2012 04:31 7.6K
      virus.gif 09-Apr-2012 04:31 7.6K
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      wall_summerwood.jpg 09-Apr-2012 04:31 640K
      warning_blue_big (2).gif 09-Apr-2012 04:32 2.6K
      warning_blue_big.gif 09-Apr-2012 04:32 2.6K
      wave_point_ani (2).gif 09-Apr-2012 04:32 24K
      wave_point_ani.gif 09-Apr-2012 04:32 24K
      web_black2_02.jpg 09-Apr-2012 04:32 2.2K
      web_black2_03.jpg 09-Apr-2012 04:32 8.8K
      web_black2_06.jpg 09-Apr-2012 04:32 2.5K
      web_black2_10.jpg 09-Apr-2012 04:32 4.3K
      web_black2_11.jpg 09-Apr-2012 04:32 3.6K
      web_black2_13.jpg 09-Apr-2012 04:32 6.3K
      wheat_field (2).bmp 09-Apr-2012 04:32 28K
      wheat_field.bmp 09-Apr-2012 04:32 28K
      winfish (2).gif 09-Apr-2012 04:32 452
      winfish.gif 09-Apr-2012 04:32 452
      wts_header.jpg 09-Apr-2012 04:32 77K
      yuck (2).gif 09-Apr-2012 04:32 1.4K
      yuck.gif 09-Apr-2012 04:32 1.4K
      ~ decorative.lnk 09-Apr-2012 04:57 1.7K

    • By WebOsPublisher

      TECHNOSLIDE: How to Make Link Button Work as Default Button in Mozilla Firefox
      /* —( page defaults )— */
      body margin: 0px; padding: 0px; text-align: left; font:normal normal 82% Verdana, sans-serif; color:#555555; background:#980000;
      blockquote margin: 0 0 0 30px; padding: 0px 0 0 20px; font-size: 88%; line-height: 1.5em;
      blockquote p margin-top: 0;
      abbr, acronym cursor: help; font-style: normal;
      code color: #f63;
      hr display: none;
      img border: none;
      /* unordered list style */
      ul list-style: none; margin-left: 7px; padding: 0;
      li list-style: none; padding-left: 8px; margin-bottom: 3px;
      /* links */
      a:link color: #336699; text-decoration: none;
      a:visited color: #336699; text-decoration: none;
      a:hover color: #ff9900; text-decoration: none;
      a:active color: #336699; text-decoration: none;
      /* —( layout structure )—*/
      #outer-wrapper width:850px; margin: 0px auto; text-align: justify;
      #content-wrapper margin: 0px; /* to avoid the border image */ width: 100%;
      #main float:right; width:499px; padding-right:30px; line-height: 1.2em; word-wrap: break-word; /* fix for long text breaking sidebar float in IE */ overflow: hidden; /* fix for long non-text content breaking IE sidebar float */
      #sidebar float:left; width:220px; padding-left:30px; font: normal normal 91% ‘Verdana’,’Arial’; color: #ff9900; line-height: 1.4em; word-wrap: break-word; /* fix for long text breaking sidebar float in IE */ overflow: hidden; /* fix for long non-text content breaking IE sidebar float */
      #center background:#fff;
      /* —( header and site name )— */
      #header-wrapper margin: 0px; padding: 0px
      #header height:276px; overflow: hidden; width:850px; color: #ffffff; background: url(‘lh5.google.com/jvdmds/R329KLfDQuI/AAAAAAAABGs/p00gZudkZNY/color_pencils-1.jpg’) no-repeat top left;
      #header h1 width:710px; font: normal bold 350% ‘Times New Roman’,’Georgia’; margin:50px 30px 5px 60px; padding:5px; filter: glow(color=#000000,Strength=5); text-align:center;
      #header h1 a text-decoration: none; color: #ffffff;
      #header h1 a:hover color: #ffffcc;
      #header .description margin:-10px 30px 5px 60px; text-align:center; width:710px; font: normal normal 85% ‘Verdana’,’Arial’; color: #ffffcc;
      /* —( main column )— */
      h2.date-header height:20px; line-height:20px; font-size: 70%; color: #ffffff; padding:0px 0px 20px 20px; margin:15px 0px 0px 0px; text-align: left;background:#b1c9eb url(‘lh5.google.com/jvdmds/R3294LfDQ5I/AAAAAAAABIc/n-zaavWwn7U/cp-1.jpg’) no-repeat top left;
      .post h3 padding-right:10px; text-align: left; font: normal bold 100% ‘Times New Roman’,’Georgia’; color: #92aacd; margin-top:-20px; padding-top: 10px;
      .post padding:0px 20px; background:#eff4fd url(‘lh5.google.com/jvdmds/R3294LfDQ6I/AAAAAAAABIk/aPUoyDH5X9s/cp-2.jpg’) repeat-y top left;
      .post h3 a color: #92aacd; text-decoration: none;
      .post h3 a:hover color: #ff9900; text-decoration: none;
      .post-footer height:50px; margin:0px -20px; padding-right:20px; text-align: right; font-size: 88%; color:#999999; background: url(‘lh5.google.com/jvdmds/R3294LfDQ7I/AAAAAAAABIs/QbKQq5TZlIU/cp-3.jpg’) no-repeat bottom left;
      .post img padding: 6px; border-top: 1px solid #ddd; border-left: 1px solid #ccc; border-bottom: 1px solid #c0c0c0; border-right: 1px solid #c0c0c0;
      .feed-links clear: both; line-height: 2.5em; color:#999999; padding-right:15px;
      .blog-feeds text-align: right; color:#999999;
      #blog-pager-newer-link float: left;
      #blog-pager-older-link float: right;
      #blog-pager text-align: center;
      /* comment styles */
      #comments padding-top: 10px; font-size: 88%; line-height: 1.5em; color: #666666;
      #comments h4 margin: 20px 0 15px 0; padding: 8px 0 0 40px; font-family: “Lucida Grande”, “Trebuchet MS”; font-size: 105%; color: #666666; height: 29px !important; /* for most browsers */ height /**/:37px; /* for IE5/Win */
      #comments ul margin-left: 0;
      #comments li background: none; padding-left: 0;
      .comment-body padding: 0 10px 0 25px;
      .comment-body p margin-bottom: 0;
      .comment-author margin: 4px 0 0 0; padding: 0 10px 0 60px; color: #999;
      .comment-footer border-bottom: 1px solid #ddd; padding-bottom: 1em;
      .deleted-comment font-style:italic; color:gray;
      /* —( sidebar )— */
      .sidebar h2 margin: 0 0 0 0; padding: 10px 0 0 0px; font: normal bold 150% ‘Times New Roman’,’Georgia’; color: #92aacd; height: 32px; height: 32px !important; /* for most browsers */ height /**/:57px; /* for IE5/Win */
      .sidebar .widget margin: 0; padding: 0 0 10px 10px;
      .sidebar a color: #ff9900; text-decoration: none;
      .sidebar a:hover color: #699d2b;
      .sidebar li
      .profile-textblock margin: 0.5em 0; line-height: 1.6em;
      .profile-img float: right; margin:3px; border: 1px solid #ddd; padding: 3px;
      /* —( footer )— */
      .clear /* to fix IE6 padding-top issue */ clear: both;
      #footer margin: 0; width:850px; height:60px; text-align:center; color: #ffc;
      #footer-wrapper margin: 0; font-size: 75%; clear: both;
      #footer-wrapper a color: #ffc; text-decoration: none; line-height:60px;
      #footer-wrapper a:hover color: #fff; text-decoration: none;
      /** Page structure tweaks for layout editor wireframe */
      body#layout #outer-wrapper,
      body#layout #main,
      body#layout #sidebar padding-top: 0; margin-top: 0;
      body#layout #outer-wrapper,body#layout #content-wrapper padding-top: 0
      body#layout #sidebar margin-right: 0;
      body#layout #header,body#layout #footer,
      body#layout #main padding: 0;
      body#layout #content-wrapper margin: 0px;
      #navbar-iframe height:0px; visibility:hidden; display:none

      gapi.load(“iframes-styles-bubble”, function()
      if (window.iframes && iframes.open)

      container: “navbar-iframe-container”,
      id: “navbar-iframe”


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      Experiences through my journey as a Software Programmer
      Monday, December 22, 2008
      How to Make Link Button Work as Default Button in Mozilla Firefox
      Normal 0 false false false EN-US X-NONE AR-SA /* Style Definitions */ table.MsoNormalTable mso-style-name:”Table Normal”; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:””; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:”Calibri”,”sans-serif”; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:”Times New Roman”; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin; Problem: In ASP.NET 2.0 new property has been added to the Panel and HtmlForm controls — DefaultButton, which can be used to specify ID of the control, which implements IButtonControl interface (usually Button and LinkButton). This button control would be triggered when user pressed ENTER. But there is one big problem exist: LinkButton control would not be triggered in Firefox on ENTER. In this article I will show why this problem takes place and how to solve it. Why it’s happening in the case of Mozilla Firefox. Because ASP.NET JavaScript library didn’t handled the default button attribute script for Anchor tag properly. The JavaScript method WebForm_FireDefaultButton that called for default button attribute is given below. function WebForm_FireDefaultButton(event, target)
      if (event.keyCode == 13 $$ !(event.srcElement $$ (event.srcElement.tagName.toLowerCase() == “textarea”)))
      var defaultButton;
      if (__nonMSDOMBrowser)
      defaultButton = document.getElementById(target);

      defaultButton = document.all[target];

      if (defaultButton $$ typeof(defaultButton.click) != “undefined”)
      event.cancelBubble = true;
      if (event.stopPropagation) event.stopPropagation();
      return false;

      return true;
      The problem occurs in the code typeof(defaultButton.click) != “undefined” — Firefox does not define click() method for the a element, so the form will be submitted without __EVENTTARGET parameter, and button will not be triggered.
      To solve the problem add the arribute onkeypress for the textbox and add the __doPostBack method to the onkeypress event. In the Code Behaind I am cheking the client browser and if its “Firefox” I am attaching the client event to the textbox. The code implementation given below, Control Code behaind: public partial class ButtonControl : System.Web.UI.UserControl protected void Page_Load(object sender, EventArgs e) if (!IsPostBack) if (Request.Browser.Browser.Equals(“Firefox”)) TestButtonTextBox.Attributes.Add(“onKeyPress”, ” if(event.keyCode == 13) __doPostBack(‘”+ TestButton.UniqueID + “‘,”) ; “); protected void TestButton_Click(object sender, EventArgs e) Response.Write(Request.Browser.Browser + ” Its Working Fine………..”);
      Posted by
      Vijay Mohan
      12:04 AM
      ASP.NET 2.0,
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    • US taxes are near 50-year record lows — yet roads, bridges, and electricity networks are allowed to crumble & fail. Under Republican deregulation, investment & maintenance have been forgone in favour of extracting profits..

      The US’s foreign debt has been almost entirely created since Reagan in 1981 — by policies of “unfunded tax cuts”. Clinton was the only president who brought the deficit back down. America’s been captured by “vulture capital”, who want to extract every last ounce of capital & run the business into the ground.

      This kind of management spells death for a company. America should not be allowed to fail, in the same way.

      These are the facts.. draw your own picture. All the rest is BS, lies & politics.


    • Drill baby drill drill baby drill drill baby drill there is not a sand pound of difference beetwen Obama and Sarah Palin two corporate banking cartel whores who spread their legs when their money masters tell them to. If you cannot see the similar patterns beetwen them you are either brain dead or just plain a moron. Do you think for one dipped in shit minute that any politician at the congress senate or white house gives a rats ass about the people who elect them?

    • My comment is, I hate the “Obama Plan” I hate that he is being Ghetto , he himself believes the white man is all the black man problems. Obama is a Great “COMMUNITY ORGANIZER” he knows how to insight anger..And that is on clear display with the many times he plays the race card and now the “Class” war.. I was always taught work hard achieve what you believe in, if it doesn’t work out keep trying because nobody is going to just give to you.. Hard Work, is what allows a person to do what he wants. He takes care of his family and it gives you a sense of pride. I was always taut Charity starts at home.. you”DO NOT” look to a government to help you out, because the government wants you poor he wants to keep you down so he can CONTROL you and your family……. “OBAMA” does not care about “WHITE AMERICA” his teaching came from a group of Black Scholars (Academics)who feel the “WHITE MAN” still owes the Black Man everything… So “Obama” wants to fleece the white man… Instead of being a true leader AND SITTING AT A “TOWN MEETING” WITH BLACK LEADERS AND ASKING THEM.. First saying you do not get to blame the white man. What have you, the leaders of your communities done to lift your trouble youth up…… I am one American who has been very poor,never on welfare, never received food stamps, because there was always family and friends who helped out when they could..I was taut that is what makes AMERICAN GREAT……To Increase taxes and blame/Punish a group of hard working Americans because they get off there couches, and don’t sit around blaming the world for there woes is UN American… We should not have to pay additional taxes so the Government can spend it on pet project,,,THAT IS REDISTRIBUTION.What the President doesn’t get is, you piss off enough of the top percent earners and they decide to get down in the “GUTTER” with the bottom 99 percent, Quit working and blame it on the black man …… OBAMA not CONGRESS will destroy this beautiful country of ours

About The Tax Blog

  • The Tax Blog brings together a team of award-winning tax journalists from the Dow Jones network and around the web to examine the tax issues, changes and legislation that affect families, investors and small business owners. Our contributors include Tax Report columnist Laura Saunders (WSJ), Tax Guy columnist Bill Bischoff and senior reporter Jilian Mincer (SmartMoney.com), retirement-focused reporter Anne Tergesen (WSJ), wealth management writer Arden Dale (Dow Jones Newswires), TaxWatch columnist Eva Rosenberg and personal finance reporter Andrea Coombes (MarketWatch), and reporter Alyssa Abkowitz (SmartMoney). They’ll provide the latest news and insight, mine the tax code for tips and loopholes, and answer your questions about tricky tax situations. Contact the The Tax Blog with ideas, suggestions or tax questions at thetaxblog@dowjones.com.