Mark Fernald’s tax ‘misinformation’
To the editor:It is ironic that an article entitled “Beware of misinformation on taxes” (Nov. 4-17 NHBR) actually engages in misinformation. Although the information presented in the article is accurate as far as I know, it purposefully leaves out some very important information to tell the whole story.What Fernald left out was what the top tax rate is for people earning more than $380,000 — 35 percent. Why? Only Fernald can answer that question. For dramatics, he chose instead to “cherry-pick” the example of a millionaire who receives dividends or capital gains. Many middle class people/families receive stock dividends and capital gains and I believe the historical logic for the 15 percent tax rate on these gains is because the money used in the investments has already been taxed once before it was invested.I attended a small dinner in Omaha in April in which Warren Buffett spoke about how he paid an average tax rate in one particular year of 15.6 percent, even though his total income was over $60 million. The reason for the low tax rate is that his salary to run Berkshire Hathaway is only $100,000 a year, but he also sold $60 million in Berkshire stock in the same year.Warren is an extreme example, and I have no issues with taxing hundred million-plus or billionaires at a higher rate when they receive extraordinary capital gains or dividends. The irony of Warren Buffett’s situation is that he is giving most of his fortune to the Bill and Melinda Gates Foundation and other charitable organizations run by his children to distribute for worldwide charitable needs rather than for his own personal benefit or that of his family’s.I believe Warren Buffett is a brilliant capitalist and a great American and I understood his personal tax example to apply only to super-wealthy individuals like himself, not to anyone who is considered a millionaire.Mark Fernald’s article should have included an example of someone whose taxable income was $500,000 (taxed at 35 percent after $380,000) with a reasonable amount of dividends in non-qualified plans, say a generous amount of $20,000 taxed at 15 percent. In this example, this individual is paying 7.65 percent on their wages up to $106,800 for Social Security and Medicare, plus 15 percent on dividends plus up to 35 percent on their wages of $500,000 for federal taxes only, as this article does not address state or local taxes.I am not an accountant and I know there are standard deductions and the tax rate is graduated, but I assure you that the total percentage of tax paid on this example’s entire income is probably close to 30 percent and not the 15.6 percent that Warren Buffett paid.If Mark Fernald and others want this typical high-wage earner to pay higher federal taxes than 30 percent, then they need to be clearer in their arguments.Jeffrey M. FoyChief Operating OfficerFoy InsuranceManchester
