Warren Buffett, the billionaire CEO, has brought attention to the fact that he is taxed at a lower rate than his secretary, who pays almost 30% of her income in federal taxes each year. Why is Mr. Buffett taxed at a lower rate?
A. His salary is diverted into Roth IRA accounts, which are not taxed until the money is dispersed.
B. He has diverted 30% of his salary into U.S. Treasury bonds and those are taxed at a lower rate than salaries.
C. He has diverted 30% of his salary into pretax investment funds, which are not taxed until the money is dispersed.
D. His income comes from dividends, which are taxed at 15 to 20%.
E. He is older than his secretary and current tax rates are based on income as well as on age.
Answer: D
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