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The President and the Teacher, revisited

October 03, 2011 and the Tax Policy Blog say that the President was wrong to say that he pays a lower tax rate than a schoolteacher, as I noted approvingly last week. Tax blogger Mary O'Keeffe says I shouldn't be so hard on the President, because those analyses don't count excise taxes or state and local taxes.

That strikes me as moving the goalposts. For example, excise taxes and state sales taxes are taxes on consumption, not income. Applying a consumption tax to an income tax base compares apples and oranges. Ms. O'Keeffe also compares the President's 3% Illinois tax to teacher taxes in higher tax D.C. and New York, which is inapt.

If we bring enough other stuff into the equation, we can probably show that the President pays a lower rate than the teacher just because he is President. He gets a nice house, rent-free and tax-free, and pays no taxes. He gets personal bodyguards, drivers, gofers, and valets tax-free. He gets the most lavish private airplane there is tax-free. So maybe the President isn't the best measuring stick. As Warren Buffett wouldn't say, data trumps anecdotes. From the Tax Policy Center comes this table estimating true effective federal rates for 2011 for different income levels, accounting for all federal taxes:

At the "teacher" level -- $50,000 -- the effective tax rate is 12.5% to 15%. At the "President" level, the effective rate is 22.7%. Even working sales taxes and property taxes into the picture, that won't get the teacher up to "Presidential" tax levels. And none of this counts government benefits; if you are counting every tax, you should also count government benefits, which skew towards lower incomes.

Related: Tax Policy Blog maximum rate calculator

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