Obama's Job Speech Reference to Buffett Was An Argument In Favor of Fair Tax

In Obama's job speech, he argued in favor of a tax system that takes more money from the "rich".  Without knowing it, Obama made an excellent argument in favor of Fair Tax.  

Obama said that Buffett pays at a lower tax rate than his secretary. 

I did some research to provide a conjectured scenario that would make this true.  

Tax rate is based on net income not gross income. 

Part of Buffett's income comes from his salary - $100,000 per year (available on web). His secretary apparently has a much larger salary (not available). 

Most of Buffett's gross income comes from non-salary sources. These investments have the lower capitol gains rate.  Also, he donates a large amount of money to charities ($billion to Gates Foundation per news articles) (big deductions). Buffett also has additional miscellaneous deductions from all of his business activites, which may or may not be part of his personal return. 

His salaried secretary probably has limited deduction and credit opportunities. And she does not earn enough to donate one $billion to the Bill Gates charity.  

Consequently, Buffett's lower rate is a function of the complicated tax code. 

Under Fair Tax, Buffett would not have a lower tax rate than his secretary. In addition, Buffett would pay more taxes than his secretary because he would spend much more money for his business than his secretary - and there would be no deductions (lot's of sales taxes here).  

Also, Fair Tax would bring in a lot more money from all the rich in society. That's because the velocity of money would increase under Fair Tax. That means that there would be more taxable transactions. More transactions convert into higher salaries and more jobs - it would take a lot of new people to make these transactions.  As a result there would be many more "rich" people paying taxes (people who make more than $200,000 per Obama's definition). 

So, if Obama wants to get more money from the "rich", he should support Fair Tax. 

This speech has provided us with an opportunity to contact pro-Obama Democratic Congressmen and tell them the good news!