Obama's income falls in election year, pays 18.4% tax rate
President Barack Obama paid an effective federal tax rate of 18.4% in 2012 and saw income from his best-selling books drop as he ran for re-election, according to his tax returns released by the White House on Friday.world Updated: Apr 13, 2013 07:46 IST
President Barack Obama paid an effective federal tax rate of 18.4% in 2012 and saw income from his best-selling books drop as he ran for re-election, according to his tax returns released by the White House on Friday.
Obama and his wife Michelle had adjusted gross income of $608,611 last year, down from $789,674 in 2011, and paid $112,214 in total taxes, compared to $162,074 in 2011.
Their total income came in at $662,076 - down almost 22% from $844,585 the previous year.
As President, Obama is entitled to a $400,000 annual salary. He reported salary income in 2011 and 2012 of $394,800, however, after deducting pre-tax amounts he paid for his health insurance premium, according to a White House official.
The Obamas' outside business income fell sharply as the president's book sales declined. In 2012, the couple had business income of $258,772, down from $441,369 in 2011.
Book sales have declined dramatically since the early days of his presidency. In 2009, his profits from book sales came in at $5.6 million.
'Dreams From My Father,' a autobiographical look at his early life, was published in 2008, and 'The Audacity of Hope,' which sketched out his policy vision, was published in 2004.
For 2012, the Obamas overpaid their taxes, which entitled them to a refund of $16,815. They chose to apply that total to their 2013 estimated tax. They made the same decision for 2011, applying their $24,515 refund for that year to their 2012 estimated tax.
In 2013, Obama plans to give back 5% of his pay in a gesture of solidarity with government workers who must take unpaid leave as a result of deep spending cuts that went into effect last month.
Paying their share
Obama has pressed for wealthy people like himself to pay a greater share in taxes.
The issue was a sticking point in his campaign against Republican Mitt Romney, a wealthy former private equity executive who had an effective tax rate of 14.1% in 2011.
'Under the president's own tax proposals, including limitations on the value of tax preferences for high-income households, he would pay more in taxes while ensuring we cut taxes for the middle class and those trying to get in it,' White House spokesman Jay Carney said in a statement.
The Obamas were subject to the alternative minimum tax (AMT) - a parallel tax system set up to ensure the affluent do not avoid tax altogether. They paid about $21,220 extra in tax because the president was subject to the AMT in 2012, up from about $12,500 in 2011.
The 2014 White House budget released this week proposed a new type of minimum tax for the wealthy known as the Buffett Rule, named for billionaire Warren Buffett, who has complained that his tax rate is lower than that paid by his secretary.
The wealthiest taxpayers get most of their income from investments - which are taxed at about half the rate of ordinary wages. Virtually all of the Obamas' income was subject to the top tax rate of 39.6% in 2012.
The Obamas reported giving $150,034 to charities, representing roughly 24.6% of their adjusted gross income. The largest gift was $103,871 to the Fisher House Foundation, an organization that helps military families.