Harvey Golub, former CEO of American Express, takes to the opinion pages of the August 22, 2011 issue of the Wall Street Journal to whine about how unfair the current tax system is to rich people like him and that it would be an outrage if his taxes are raised. But he has solutions to the budget deficit! He feels that eliminating the departments of education and energy is better than him paying more taxes.
There is one statement that is flat-out incredible, where he says: “Of my current income this year, I expect to pay 80%-90% in federal income taxes, state income taxes, Social Security and Medicare taxes, and federal and state estate taxes.”
80-90% of his current income goes in taxes? To the calculators, Batman!
I have no idea what Golub’s income is this year is but let’s say it is one million dollars. Let’s be most generous in our calculations in his favor and assume that it is all from salary and that he is a single person and claims no deductions at all.
First off, federal and state estate taxes are not based on income at all, so it is deceitful for him to include that in the list of taxes that are set off against income. Furthermore, aren’t those taxes a one-time thing imposed at death? Does he die at the end of every year, pay the tax, and come back to life the following year? If so, he should really write about that, rather than this bilge.
As for the rest, he would pay federal income tax $327,643, social security tax $11,106 (assuming that he generously pays the employer’s contribution as well), Medicare $29,000 (again picking up the employer’s tab), and state income tax (if he lived in Ohio) $56,464, for a grand total of $424,213, or 42% of his income.
In reality, people like him claim a lot of deductions, have tax shelters, and get a lot of their income from investments that are taxed at a lower rate. I would be surprised if he pays even half that amount.