PUBLISHED: 09:27 EST, 14 April 2012 | UPDATED: 09:27 EST, 14 April 2012
As part of President Barack Obama’s push for bringing in the tax raising ‘Buffett Rule’ he has been quick to point out that billionaire investor Warren Buffett pays a lower tax rate than his secretary.
However tax returns released by the White House yesterday reveal that the President himself also pays a lower rate of tax than his secretary.
Obama and his wife Michelle reported income of $789,674 last year, on which they paid $162,074 in tax – a rate of 20.5% whereas Obama’s secretary Anita Decker Breckenridge, makes $95,000 a year on which she pays a higher tax rate.
President Obama released his tax returns Friday which revealed he paid 20.5 percent on an income just under $800,000. He’ll pay a higher tax rate on less income than opponent Mitt Romney
White House spokeswoman Amy Brundage told ABC News that Breckenridge ‘pays a slightly higher rate this year on her substantially lower income, which is exactly why we need to reform our tax code and ask the wealthiest to pay their fair share.’
Obama has been keen to tout the ‘Buffet Rule’ which would require millionaires to pay a minimum of 30% of their income in taxes.
But declining book sales mean that President Barack Obama’s income has dropped so much that he no longer qualifies for the tax raising measure.
Obama and his wife Michelle reported 2011 income of $789,674, about half of it coming from Obama’s book royalties, is the lowest salary for the couple since 2004, when he wrote his best-selling memoir, ‘Dreams From My Father’.
The last time their income was below $1million was in 2006. In 2010 they made $1.7million and in 2009 they earned $5.5million.
This means that the Obamas do not qualify this year for the so-called ‘Buffett Rule’, named after the billionaire investor Warren Buffett and pushed by the White House as a campaign issue.
Under the rule, due to be considered by the Senate next week, millionaires will be made to pay a minimum effective tax rate of at least 30 per cent when annual income is $1million or more.
With less of his income taxed at the higher rate, his tax rate dropped from past years. In 2010 he paid about 26 per cent of his income in federal taxes.
In 2009 and 2008 his burden was more than 32 per cent. For 2011, it was 20.5 per cent.
In January, it was revealed that Romney’s tax rate was 14 per cent, because most of his income was derived from investments and dividends.
Buffett has said his secretary pays a rate of over 35 per cent and Obama has denounced this as unfair.
Obama’s tax forms reveal will add fuel to a Democratic election-year effort to raise taxes on the wealthy.
Romney has estimated he will pay a 15.4 per cent tax rate on income of $20.9 million, though he has not filed his return yet.
Obama and his fellow Democrats have spent much of the week touting the ‘Buffett Rule,’ a plan to ensure that millionaires like Romney pay at least 30 percent income tax.
The proposal has almost no chance of overcoming Republican opposition in Congress, but it will provide ammunition for the November 6 presidential and congressional elections as Democrats say their rivals are more concerned with protecting the wealthy than addressing the concerns of less affluent Americans.
Obama’s campaign also aims to exploit the fortune Romney earned over decades as a private-equity executive, valued at up to $250 million.
Campaign manager Jim Messina highlighted the tax shelters and offshore accounts Romney has used to manage his money, and challenged him to release tax returns that would shed more light on his career as head of investment firm Bain Capital.
‘What does he have to hide?’ Messina said in a statement. ‘Why did he open a Swiss bank account instead of an American bank account and establish a corporation in Bermuda instead of on our shores?’
A Romney spokeswoman called the debate over his personal wealth irrelevant and said he would release his 2011 tax form when it is filed.
‘It’s no surprise with the worst job creation record in modern history that President Obama would try to distract Americans from the real issues with a series of sideshows,’ spokeswoman Andrea Saul said.
Romney’s anticipated 15.4 percent income tax rate is roughly in line with that paid by most Americans, but it is far below the top income rate of 35 percent.
For 2011, about 46 percent of Americans will pay no federal income taxes, most of them because they are too poor, according to the Tax Policy Center, a think tank.
Counting all taxpayers, the average rate is 11 percent, according to the Tax Foundation, another think tank.
Effective tax rates vary wildly from person to person due to the maze of deductions, exemptions and credits that have been carved out since the last overhaul 25 years ago.
The Obamas earned about half of their income from his presidential salary of $400,000, while the remainder came from sales of Obama’s books, the White House said.
They donated $172,130, about 22 percent of their adjusted gross income, to 39 different charities, the White House said.
The biggest beneficiary was the Fisher House Foundation, a scholarship fund for children of soldiers who have been killed or disabled, which received the after-tax proceeds from the sales of a children’s book Obama published after he took office – a total of $117,130.