Calculating a Superhero’s Income Tax Liability

In its Block Talk blog, tax preparation company H&R Block recently had a little fun comparing the lifestyles of two comic book superheroes, including calculating their estimated tax liability for 2012. The two are billionaire industrialist Bruce Wayne (“Batman”) and freelance news photographer Peter Parker (“Spider-man”).

Block estimates Wayne’s 2012 adjusted gross income (AGI) at $145 million, based on his $102 million salary as CEO of Wayne Enterprises and $43 million in capital gains from stock options. (Wayne ranks 8th on Forbes Magazine’s list of the 15 wealthiest fictional characters, with an estimated net worth of $6.9 billion.)  Parker’s estimated AGI of $50,000 comes from his work as a freelance news photographer.

Based on Block’s very simplified calculations, Wayne’s estimated 2012 federal tax liability is $17 million, an effective tax rate of 11.7%. Wayne’s liability is reduced by a charitable deduction of $72.5 million, based on total 2012 charitable donations of $279 million. (Block originally deducted the entire amount only to hastily revise its calculation after bloggers pointed out that the IRS limits annual charitable deductions to 50% of AGI.) Parker’s estimated federal tax liability is $6,250, an effective tax rate of 12.5%.

If the two lived in Connecticut instead of Gotham City and Forest Hills, N.Y., respectively, Wayne’s state income tax would be $9.58 million, while Parker would owe $2,070. Wayne’s effective Connecticut tax rate would be 6.6% and Parker’s, 4.14%. Neither would be eligible for the maximum $300 property tax credit. Wayne, though he owns an estate worth an estimated $600 million, doesn’t qualify because his CT AGI is too high. Parker would qualify based on AGI, but since lives with his Aunt May and doesn’t have a car, he doesn’t pay property tax.