An Explanation as to Why the Wealthy May Pay Tax at Lower Rates

Michael Mundaca

Michael Mundaca

As co-leader of the National Tax Department at Ernst & Young in Washington, DC, Michael Mundaca builds on experience gained as assistant secretary for tax policy at the U.S. Treasury Department. On the Freakonomics blog in 2010, when Mr. Mundaca was the tax policy assistant secretary, as part of an article titled “Your Tax Questions, Asked and Answered,” he responded to a query as to whether Warren Buffett could pay “a lower tax rate than his secretary.”

Noting that he was not aware of the specific tax circumstances of Warren Buffett or his secretary, Mr. Mundaca posited that this was certainly possible under the (then current) tax law. Although wages may be subject to a 35 percent maximum marginal tax rate, long-term capital gains as well as dividends were at that time subject to a maximum 15 percent marginal tax rate.

That can lead to situations in which an individual with long-term capital gains could have paid 15 percent or less on that income; at the same time, an wage earner with significantly lower income might have paid taxes at a rate well in excess of 15 percent. Another factor in play was the exemption of investment income from payroll taxes, which can additionally decrease the tax burden on those with significant income from investments.

The OECD Fights Corruption on a Global Scale

Organization for Economic Cooperation and Development  pic

Organization for Economic Cooperation and Development
Image: oecd.org

Tax planning and consulting professional Michael Mundaca serves as the co-director of the National Tax Department and Americas Tax Center at EY in Washington, DC. Prior to his role as co-director, Michael Mundaca worked as the assistant secretary for tax policy at the US Treasury Department, where his responsibilities included representing America in fora such as the Organization for Economic Cooperation and Development (OECD).

The OECD is an international forum in which representatives from 35 countries work to promote policies that will improve the economic and social well-being of people around the world. Within its work, the OECD dedicates resources to a long list of core issues, one of which is anti-corruption.

To help reduce corruption and limit the impact that it has on the world’s economic health, the OECD adopted in 2009 a policy guarding against the bribery of foreign policy officials. All members of the OECD have officially agreed to abide by the terms of this anti-bribery policy, along with non-member nations including Argentina, South Africa, and Russia. By agreeing to comply with these new corruption-combating standards, all participants have been required to integrate corporate liability for bribery into their legal systems and pass domestic foreign bribery laws of their own.

Ernst & Young Named One of the Top Companies for Diversity

Ernst & Young pic

Ernst & Young
Image: ey.com

A graduate of the School of Law at the University of California at Berkeley, Michael Mundaca has previously held multiple positions with the US Treasury Department’s Office of Tax Policy in Washington, DC. Today, Michael Mundaca works as Co-Director of the National Tax Department and the Americas Tax Center for EY.

EY is a global professional services organization committed to building a better working world. This year, EY has earned accolades from several periodicals and organizations for being a quality employer. When DiversityInc Magazine published its list of the top 50 best workplaces for diversity in the United States, EY ranked in the top three.

Companies that earn recognition on DiversityInc Magazine’s annual list are surveyed on four areas of diversity management, which include leadership accountability, talent development, supplier diversity, and talent pipeline. The survey also measures the gender and racial diversity among company management and senior employees. Other factors taken into account include the prevalence of mentoring programs and the level of involvement that a company’s CEO has in promoting diversity within his or her organization.

Carbon Tax Explained

Carbon Tax pic

Carbon Tax
Image: carbontax.org

Legal executive Michael Mundaca is the co-director of the National Tax Department at Ernst & Young (EY) in Washington, D.C. The former Assistant Secretary for Tax Policy at the U.S. Treasury Department, Michael Mundaca holds an LLM from the University of Miami and a JD from the University of California, Berkeley.

In recent years, the carbon tax has become an increasingly prominent discussion point among policymakers. Also known as the carbon dioxide tax or CO2 tax, the carbon tax is a fee levied on entities that use fossil fuels, and is generally based on the amount of carbon dioxide released into the atmosphere. Because the carbon content of a fuel is in general proportional to the amount of carbon released when the fuel is burned, carbon tax collectors generally tax the fuel itself.

Governments typically use carbon tax systems because they can be relatively simple to implement and can further important policy goals. However, a carbon tax provides no guarantee of emissions reductions, as companies that are willing to pay the tax need not cut back on their burning of fossil fuels. Nevertheless, even though this may be the case, a carbon tax provides a revenue stream for governments while creating an incentive for alternative fuels development.