Fantastic news. My wife’s surgery went very well. At a place like MD Anderson, surgeons know that even the tiniest fraction of a millimeter matters. We’re so grateful. She’ll be staying in Houston for another week to recover and attend follow-up appointments. The best part was a precious surprise: our daughter flew out to be with her, which lifted her spirits tremendously.
Meanwhile, back at home, life with three teenage boys feels a bit like living alone. I lure them out of their rooms just long enough to grab a couple of donuts, then disappear again into their own worlds. I keep trying to draw them out, but most of the time I get nothing but sighs and rolled eyes for my efforts.
That leaves me with the pets for company. Walking the dogs isn’t my favorite thing, so I came up with a new routine. I hop on the golf cart, grab one of their favorite toys, and let them chase me up and down the property. After a few laps across the five acres, they come back completely worn out, happy, and exercised. Of course, I hand over the toy at the end.
Fantastic news. My wife’s surgery went very well. At a place like MD Anderson, surgeons know that even the tiniest fraction of a millimeter matters. We’re so grateful. She’ll be staying in Houston for another week to recover and attend follow-up appointments. The best part was a precious surprise: our daughter flew out to be with her, which lifted her spirits tremendously.
Meanwhile, back at home, life with three teenage boys feels a bit like living alone. I lure them out of their rooms just long enough to grab a couple of donuts, then disappear again into their own worlds. I keep trying to draw them out, but most of the time I get nothing but sighs and rolled eyes for my efforts.
That leaves me with the pets for company. Walking the dogs isn’t my favorite thing, so I came up with a new routine. I hop on the golf cart, grab one of their favorite toys, and let them chase me up and down the property. After a few laps across the five acres, they come back completely worn out, happy, and exercised. Of course, I hand over the toy at the end.
You may remember when Warren Buffett famously pointed out that he paid a lower tax rate than his secretary. The claim turned into a media storm, triggering endless debates about fairness in the tax code.
It’s a compelling idea. But what does it actually mean?
The Secretary vs. The Billionaire
Let’s imagine Buffett’s secretary makes $50,000 a year.
We live under a progressive tax system, which means the more you earn, the higher percentage you pay in federal income tax. At $50,000, her federal income tax bracket would be approximately 12%, resulting in a tax of roughly $4,000 (not all of the income is taxed at 12%).
However, here’s the kicker: she also pays into Social Security (6.2%) and Medicare (1.45%), which amounts to another $4,000 combined.
Therefore, her total tax burden is close to 20% of her income, or $8,000.
That’s not pocket change. And here’s an important detail often overlooked in Buffett’s story: lower- and middle-income workers actually pay the majority of Social Security and Medicare payroll taxes in this country. These flat payroll taxes are deducted from every paycheck, and for many families, they add up faster than income taxes.
Buffett, on the other hand, doesn’t need a salary. He pays only a small amount into Social Security and Medicare, but almost all of his income comes from investments.
•Dividends (taxed as ordinary income up to 37% for the wealthiest).
•Capital gains (long-term gains taxed at 20%, plus the 3.8% Net Investment Income Tax from Obamacare).
So when he sells stock, he pays around 24%. On dividends, he pays 37%. And when he dies, the estate tax could claim up to 40% of his fortune or tens of billions in “death taxes.”
When you add it up, Buffett actually pays somewhere between 25–30% annually, plus that massive estate tax down the line.
So the statement that he pays less than his secretary can be a bit… disingenuous. His secretary pays ~20%. Buffett pays ~25–30% (with a gigantic estate bill waiting). It’s not nothing.
This raises a larger question: Do the wealthy pay their fair share of taxes?
Most people would quickly say “no.” It feels like the middle class is left to bear the brunt of everything, while the wealthy use their influence to escape.
But the data tell a more complicated story:
•The top 1% of earners pay about 40% of all federal income taxes.
•The top 10% pay 71%.
•The top 50% pay 97%.
•The bottom 50% contribute just 3% to federal income taxes.
How can this be?
Progressive rates, deductions, and credits. Many in the bottom 50% of the income distribution benefit from programs such as the Child Tax Credit and the Earned Income Tax Credit, which reduce or eliminate their federal income tax liability. Additionally, the standard deduction ($14,600 for singles and $29,200 for married couples in 2024) shields a significant portion of income from taxes altogether.
And remember, many lower earners also qualify for programs that can result in a negative net federal income tax rate. Roughly, the bottom 15% of earners actually get back more from credits and aid than they pay in federal taxes. In other words, not only do they not pay any taxes, but the government actually gives them additional money.
But don't applaud the billionaires just yet.
Yes, the wealthy bear the majority of the federal income tax burden. But let’s not ignore the other side: the top 1% also own about 20% of all the money in this country.
Be Blessed,
Dave
P.S.
Rich people have even more tricks up their sleeves. They are way too complicated to explain in this article, but feel free to research on your own.
Strategies Billionaires Use to Reduce or Delay Taxes
Borrowing against assets instead of selling – take out loans using stock or real estate as collateral, so no taxable capital gains are triggered.
Step-up in basis at death – heirs inherit assets at current market value, wiping out decades of capital gains.
Generation-skipping trusts – transfer wealth directly to grandchildren, avoiding estate taxes at the children’s level.
Grantor Retained Annuity Trusts (GRATs) – place appreciating assets into a trust, then pass extra growth to heirs tax-free.
Relocating or offshore trusts – establish residency in no-income-tax states (like Florida or Texas) or use overseas trusts to lower or delay tax.
Carried interest loophole – Private equity and hedge fund managers classify income as capital gains, which are taxed at lower rates.
Real estate depreciation and 1031 exchanges – write down property value for tax purposes and roll gains into new properties to keep deferring taxes forever.