Background: In 2009, Mr. and Mrs. Obama had prepaid $1,800,701 for their individual incoming tax, including a prepaid tax of $104,311 in a W-2 form (an annual salary form, with individual income tax deducted) and other taxes of $1,696,390. According to U.S. law, information on civil servants’ income and individual income tax should be open to the public, even the U.S. president is no exception. By doing so, the taxpayers can monitor civil servants’ conduct and help to prevent them from committing corrupt acts.
I’ve already mentioned in my report, “Chinese Individual Income Tax System: 100 Years Behind America,” that the individual income tax in America is paid by the family unit. The taxpayers document their last year’s total income and tax liability and figure out the tax they’ve prepaid, so that they know whether they’ve paid more than they should, and get a refund for any overpayment or make a supplemental payment for any deficiency. Every taxpayer needs to make this tax declaration by April 15th. So now let’s look at President Obama’s individual incoming tax declaration form, disclosed by the White House on April 15th, 2010.
The individual income tax declaration form (form 1040) from the First Family shows that the total income of Mr. and Mrs. Obama in 2009 is $ 5,623,690 USD, including a salary of $374,460, with an interest earned of $13,473, dividend income of $12,018, bonus and benefits of $4,230, operating revenue (mainly from book sales) of $5,173,777, capital gains of $-3,000 and pensions in personal accounts valued at $48,732. If we deduct Mr. and Mrs. Obama’s self-employment and semi-self-employment expense of $118,281, the total income becomes $5,505,409 dollars. And if we take out another $514,819 of ordinary taxes and $9732 of estovers tax, the total income of the First Family adds up to $4,980,858, which means the duly individual incoming tax should be $1,713,212.
Because Obama has paid foreign governments $59,372 for his two books that sold in other countries, the actual tax he paid to the American government was $1,653,840. And with a self-employment tax at $138,562 and family employment tax of $12 taken into account, the total individual incoming tax Mr. and Mrs. Obama paid to the U.S. Treasury Department in 2009 was $1,792,414.
The Obamas prepaid $1,800,701 in 2009, including $104,311 reflected on the W-2 form that was deducted directly from the salary, and other taxes of $1,696,390. That is to say, the Obamas pre-paid extra $8,287. They should get a refund.
One thing we need to know about the individual income tax system in the U.S. is that it is levied by both the federal and state government. The Obamas not only need to pay their $1,792,414 tax to the federal government, but also another $163,303 to the Illinois state government. Therefore, the total tax the Obamas paid was $1,955,717, which takes up 35% of his total income.
The individual income tax declaration form of President Obama also indicates that he and Michelle donated $329,100 to 40 charity organizations in 2009, among which the largest single donation of $50,000 was given to the anti-poverty organization CARE and the United Negro College Fund, and the smallest check of $150 was given to the United Way, a non-profit social organization in Chicago. In addition, President Obama gave his $1.4 million Nobel Peace Prize reward to ten charitable organizations. According to U.S. tax law, if the Nobel Prize winner donates his reward directly to the charity when he first receives it, the reward will not be counted into personal income.
Compared with the First Family, the income of Vice President Biden’s family seems a bit shabby. Mr. Biden and his wife earned $333,182 in 2009, and paid $71,147 in taxes to the federal government, $12,420 to Delaware and $1,477 to the Virginia state government. The total tax amounted to 26 percent of their annual income.
According to the U.S. law, civil servants’ income and their individual income tax declaration should be open to the public, and the U.S. president is no exception. By doing so, the taxpayers can monitor the civil servants’ conduct. This is the most effective way to fight against the corruption. However, as for when China will be able to make public their civil servants’ income and tax information, we do not know.