"Stop Coddling the Super-Rich"

Warren Buffet on the failure of Congress to include tax increases in the deficit reduction package:

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=1

OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.

To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.

Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.

The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.

Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.

But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.

My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.

__

Conservatives argue that tax rates should stay low for "small-business" owners, because they support so many jobs. Even if you buy into that argument, you have to define what a "small-business" owner is.

So, I ask you: above what personal income threshold should someone no longer be considered a "small-business" owner and exempted from tax rates that punish the middle class? Or are all "businesses" indistinguishable from "people"?

Originally posted by wittywonka
Warren Buffet on the failure of Congress to include tax increases in the deficit reduction package:

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=1

[i]OUR leaders have asked for “shared sacrifice.” But [b]when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were ex ...[text shortened]... red a "small-business" owner and exempted from tax rates that punish the middle class[/b]?[/b]

Buffett? Pfff! What does he know?

The idea that Warren Buffett must speaking the truth because he advocates raising taxes on himself right is just stupid. It is not an admission of any sort -- it merely is one persons opinion even if he his opinion is used as if it must obviously be true. When we get complaints that a group of people who average paying $40,000,000 per year in taxes are not paying enough, it is (1) contrary to reality (2) designed simply to get free publicity (3) designed to deferred attention away from issues in the propriety of how he personally earned his money (4) simply an attempt to start class warfare. I personally am very thankful that high earners such as Buffett contribute so much financially in taxes.

Originally posted by quackquack
The idea that Warren Buffett must speaking the truth because he advocates raising taxes on himself right is just stupid. It is not an admission of any sort -- it merely is one persons opinion even if he his opinion is used as if it must obviously be true. When we get complaints that a group of people who average paying $40,000,000 per year in taxes are ...[text shortened]... ally am very thankful that high earners such as Buffett contribute so much financially in taxes.

Originally posted by quackquack
The idea that Warren Buffett must speaking the truth because he advocates raising taxes on himself right is just stupid. It is not an admission of any sort -- it merely is one persons opinion even if he his opinion is used as if it must obviously be true. When we get complaints that a group of people who average paying $40,000,000 per year in taxes are ...[text shortened]... ally am very thankful that high earners such as Buffett contribute so much financially in taxes.

Originally posted by USArmyParatrooper
Funny, according to Buffett he's not contributing "so much" in taxes. Which group are you claiming pays an average of $40 million in taxes, and what's your source?

Also what he said about giving the rich tax breaks not creating jobs is absolutely true.

Our tax rates are the lowest they've been since the '50s and we're running huge defi ...[text shortened]... 993 Budget Reconciliatin Act. Unless of course you think it "killed jobs" in the '90s.

Originally posted by quackquack
According to the article the group pays 21.5% of 227M. That's over 48.8M each. The government should be able to get by with a check that size from people. Maybe if we went back to 2008 levels of spending -- instead of the 31% increase we had since then, we would not have to pin the financial responsibility of paying for our wasteful government.
Raising taxes simply does not create jobs.

Originally posted by KazetNagorra
I don't think Buffett is concerned with what the government is "able to get by" with (obviously the government could get by with far less than the current budget), but what works best for the US economy. And as Buffett rightly recognizes, having the rich pay a low nominal rate is bad for the economy. And even if you were to keep current tax revenue flat ...[text shortened]... be used for tax breaks for the poor and middle class, and this would definitely create jobs.

Originally posted by quackquack
I think Buffett is concerned with making money and having his name in the headlines increases his exposure for his fund. He'd be just as happy if his investment hurt the US as if it helped them.
Raising tax on one group and cutting it on another is a distribution arguement -- but it certainly does not create jobs and should not be the justification for our tax policies.

Originally posted by KazetNagorra
[b]I think Buffett is concerned with making money and having his name in the headlines increases his exposure for his fund. He'd be just as happy if his investment hurt the US as if it helped them.

That's perhaps a bit too cynical.

Raising tax on one group and cutting it on another is a distribution arguement -- but it certainly does not ...[text shortened]... ainly an unorthodox position. And why should jobs not be relevant for determining tax policy?

Originally posted by wittywonka
Warren Buffet on the failure of Congress to include tax increases in the deficit reduction package:

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=1

[i]OUR leaders have asked for “shared sacrifice.” But [b]when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were ex punish the middle class[/b]? Or are all "businesses" indistinguishable from "people"?[/b]

Originally posted by quackquack
I think Buffett is concerned with making money and having his name in the headlines increases his exposure for his fund. He'd be just as happy if his investment hurt the US as if it helped them.
Raising tax on one group and cutting it on another is a distribution arguement -- but it certainly does not create jobs and should not be the justification for our tax policies.

Originally posted by quackquack
There is as an assumption that because Bufett is wealthy and he articulates the shocking position that taxes on people like himself should be raised that (1) it must be true (2) he has the best interest of the American people at heart. We live in a society that is very cynical about professionals, politicians, bankers, mortgage brokers, car salesmen and ...[text shortened]... ies in the private sector and we need to let the market decide what is and isn't beneficial.

Originally posted by quackquack
I think Buffett is concerned with making money and having his name in the headlines increases his exposure for his fund. He'd be just as happy if his investment hurt the US as if it helped them.
Raising tax on one group and cutting it on another is a distribution arguement -- but it certainly does not create jobs and should not be the justification for our tax policies.