What Warren Buffett Made (and Paid in Taxes) in 2010

Billionaire investor Warren Buffett made $63 million and paid $6.9 million in taxes. Why do we know this juicy fact? Because Buffett and Representative Tim Huelskamp (R-KS) have been engaged in a war of the words and it looks like Buffett has won this round.

Here's the background: after Buffett penned the now-famous New York Times op-ed ("Stop Coddling the Super-Rich"), in which he argued that the wealthiest Americans should pay more in taxes, Huelskamp demanded that Buffett release his tax returns to prove his thesis.

Buffett was happy to oblige. In a letter to the Congressman, which he shared with CNNMoney, the Oracle of Omaha said that he would be delighted to release his returns, as long as other ultra-rich Americans would do the same. Short of that long-shot, he spelled out the numbers to make his case:

My adjusted gross income (line 37) was $62,855,038, my taxable income (line 43) was $39,814,784 and my federal income tax (line 60) was $6,923,494. In addition, my payroll taxes were $15,300.

Buffett didn't do the math for Huelskamp, but based on these numbers, Buffett paid taxes totaling 17.4 percent of his $39.8 million in taxable income, a level that is far lower than the average American who pays something closer to 30-something percent. Buffett challenged Huelskamp to find out the average tax paid by his co-workers, guessing that "it's likely that a very large percentage Senators and Representatives and their staffs, will be in the 30's as well. Contrast that to the 21.4% enjoyed in 2008 by the 400 highest-income Americans whose income averaged $227 million each."

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Buffett also pointed out that this elite group has seen "their incomes quintuple since 1992 while their tax rate fell by more than seven percentage points."

Before you write in and complain that the rich pay the lion's share of taxes, please note that we are taking about the mega-rich. As my colleague Carla Fried points out, As a share of total income and taxes paid in the U.S. in 2008, here's what the 400 wealthiest households contributed:

13.1 percent of all capital gains
4.6 percent of all dividend income
3.6 percent of all taxable interest
1.3 percent of the value of all itemized deductions
1.3 percent of total adjusted gross income
0.15 percent of all salaries and wages
5.2 percent of all charitable deductions

Add it all up, and in 2008 the total tax bill for the 400 wealthiest was $19.6 billion, accounting for 1.9 percent of all the income tax collected by the IRS. Everyone knows that taxing this one group will not dig us out of our $14 trillion debt hole, but he sure does make a compelling case of basic fairness. I can't wait to read the Huelskamp response.

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Jill Schlesinger

Jill Schlesinger, CFP® is the Emmy-nominated Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.

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