Obama fails math in tax plan pitch

US President Barack Obama speaks in the Rose Garden at the White House in Washington (AFP Photo / Nicholas KAMM)
During Monday morning’s address from the White House, President Obama drove home his demands that millionaires and billionaires need to start paying higher tax rates that America’s middle class. The only catch here is that they already do.

“Explain why somebody who is making $50 million a year in the financial market should be paying 15 percent on their taxes, when a teacher making $50,000 a year is paying more than that?” asked Obama on Monday from the Rose Garden. 

And although the so-called “Buffet Rule” from Obama looks towards correcting this gaff, it seems as if the president offered up a goof of his own.

According to private and governmental data made available to the Associated Press, the wealthiest Americans pay much more in taxes than the middle class and poor, and on average pay at a higher rate and contribute a larger share of the overall amount of taxes that the government rakes in.

While Warren Buffet wrote in a recent editorial published to The New York Times that he paid a lower tax rate than anyone else in his office last year; the billionaire investor happens to be just one exception, however. The AP reports that households making more than $1 million this year will pay an average of 29.1 percent of their revenue in federal taxes, while households in the $50,000-$75,000 rage will pay nearly half that rate with an average payback of 15 percent.

According to Buffet, he paid 17.4 percent of his taxable income last year

The information, obtained from the Tax Policy Center based out of DC, reveals that households making only $20,000 will on average pay only 5.7 percent in federal taxes this year.

“Middle class families shouldn’t pay higher taxes than millionaires and billionaires. That’s pretty straightforward,” President Obama said yesterday. If you agree or disagree with the commander-in-chief, you have to give it to him this time: he’s right.

Speaking to reporters from the White House, Treasury Secretary Timothy Geithner said that people who make most of their money in wages pay a higher tax rate, compared to those who get their income from investments, reports the AP.

The lesson here? Maybe Buffet’s secretary should start looking into stocks.