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ByBrett Arends, MarketWatch
BOSTON (MarketWatch) It takes a lot to get me to write about Kim Kardashian. Let alone to come to her defense.
But this week a pressure group in California, campaigning for higher taxes on the rich, has done just that.
The so-called Courage Campaign, which wants to raise Californias top tax rate from 10.3%, has come out with a video arguing that Kardashian is paying way too little tax.See it here.
The video, in the way of the Internet, has gone viral, a term that is ironically appropriate. Its like a cold that people are passing around, entirely bypassing their brains.
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The group says Kim Kardashian made more than $12 million in 2010, but she only paid 1% more in taxes than a middle-class Californian (earning, they estimate, $47,000).
Im sorry. I dont care where you stand politically, or on the topic of Kim Kardashian. But this is nonsense, and I have to call it out.
Why?
Three reasons.
First, the campaign has the Californian tax rates wrong.
Lets accept, for the sake of argument, the campaigns estimates are right about Kim Kardashians income, and that of that of the average middle-class Californian mily.
But someone earning $47,000 a year wouldnt pay 9.3% state income tax. Thats just their marginal rate the tax on the last dollar earned. That rate only kicks in once your income crosses $46,766, if you are single, and $93,500 if youre married.
On most of their income, they are paying much lower rates, starting at just 1%.
According to the State of Californias official tax publication, a single taxpayer earning $47,000 in taxable income in 2010 would have paid just $2,200 in tax. Thats an average rate of 4.7%, not 9.3%.
(The millionaire 10.3% rate on the likes of Kim Kardashian kicks in over $1 million.)
Second, the Courage Campaign is mixing up two different things: The tax rate and the actual amount of taxes paid.
These are totally different.
Kim Kardashian isnt just paying a higher tax rate than a middle-class person. Shes also paying it on a much, much bigger income. The net result is that she is paying vastly more in Kim Kardashianactual taxes.
Based on the Californian income-tax schedule, if she earned $12 million in 2010 she would have paid about $1.23 million in state taxes.
The middle-class mily: $2,200.
In other words, based on the Courage Campaigns own numbers, Kim Kardashian would have paid about 56,000% more in taxes than a middle-class Californian, not 1% more.
Brett Arends is an award-winning financial columnist with many years experience writing about markets, economics and personal finance in Europe and the U.S...
Brett Arends is an award-winning financial columnist with many years experience writing about markets, economics and personal finance in Europe and the U.S. He has received an individual award from the Society of American Business Editors and Writers for his financial writing, and was part of the Boston Herald team that won two others. He was educated at Cambridge and Oxford Universities, and has worked as an analyst at McKinsey & Co. He is a Chartered Financial Consultant (ChFC) and Accredited Asset Management Specialist (AAMS). His latest book, Storm Proof Your Money, has just been published by John Wiley & Co.
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