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    Effective tax rate for Warren Buffet vs a single taxpayer

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    Why might the effective tax rate for the extremely wealthy Warren Buffett be lower than the effective tax rate for a single taxpayer with an AGI of $75,000 (2011)?

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    Solution Preview

    First, we should define what the effective tax rate is: Actual income tax paid divided by total taxable income before tax, and usually expressed as a percentage.

    Next we look at a Form 1040 to see that it is the amounts on line 43 and line 60 on page 2 (2010 Form 1040). http://www.irs.gov/pub/irs-pdf/f1040.pdf

    The reasons why Warren Buffet's ...

    Solution Summary

    The 287 word solution explains the concepts and gives 9 reasons why Warren Buffet's effective tax rate may be less than a single taxpayer with an AGI of $75,000.