I would also expand the discussion with respect to Buffet. First an understanding of the different tax treatments for a couple of the various types of businesses:
A sole proprietor will pay taxes based on his net profit ie:
he will subtract his expenses from his gross receipts and pay the payroll taxes (pays both the employer and employee amount)on the net amount as well as the individual income tax on the net amount.
Any money left is available to spend, save, or invest.
If that same person had chosen to set up his business as a Subchapter C Corporation, He would pay the payroll taxes, and corporate income taxes at the corporate rate which is higher than rates paid by most individuals.
In addition, the distributions he takes as dividends are taxed at an additional 15% (if long term capital gains).Hence the term double taxation.
So the person receiving dividends in lieu of salary actually pays more taxes than the individual proprietor, and would have less money available to spend.
Now, suppose that 4 individuals are the owners of the corporation. Instead of each person reporting their share of the corporate taxes, The corporation pays at the corporate rate, and dividends distribution is taxed individually at 15% on their individual returns.
When a C corporation is public, and sold on one of the stock exchanges, people lose sight of the fact that their share of the corporate tax has been paid already. The corporate rate keeps changing, but I think the top rate is currently 35%.
Back to Buffet, I researched his specific case when he made that outrageous claim, and listened several times to one of his interviews with Tom Brokaw.
First of all, he asserts that his secretary pays the full 15% of payroll taxes(employer and employee portions). Hence, he inflated her % of taxes.
His reasoning(liberal often argue this) is that employers would pay the employees 7.5% more if not for payroll taxes highly unlikely in my opinion, and questionable proposition at best.
Second, he is famous for limiting his yearly salary to $100,000 which means he pays a rather modest amount in regular income taxes comparatively speaking.
His corporation based on the most recent year I could find was taxed at 30%. The dividends he was paid-taxed at 15% would be at least 45% tax rate with out considering his income tax.
Third, the so called Buffet rule which applies to INCOME TAX would raise the tax on MILLIONAIRES and BILLIONAIRES defined variously as above $200,000 or $250,000 etc. Hence it would not change his % of taxes compared to his secretary at all.
It's all LIES LIES and more LIES. People living off their investment income are really paying around 45% or more not a mere 15%.
The employee's taxes do, in fact, include the employer's contribution. The way to look at it is that the employer is paying a given sum of money for a given sum of work from the employee. If that is mandated to be broken into wages, taxes and benefits or whether it is all given as a lump sum makes no difference to the employer. Their cost for the work is the same.
During the last three years, we have had to lay people off and have eliminated employer provided insurance. We have two of our people who have come back on a contract basis. Since that makes them responsible for all the taxes, we are having to pay them a higher rate (but lower total employee cost since we do not pay for benefits) than we did when they were employees for them to get the same net pay.