13
   

Stop Coddling the Super-Rich

 
 
Reply Mon 15 Aug, 2011 08:32 pm
by WARREN E. BUFFETT
Published: August 14, 2011

Source: http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html

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.

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.
A version of this op-ed appeared in print on August 15, 2011, on page A21 of the New York edition with the headline: Stop Coddling the Super-Rich.
 
hingehead
 
  6  
Reply Mon 15 Aug, 2011 08:34 pm
To save Finn the trouble

"The Left's favourite capitalist pig"
Butrflynet
 
  1  
Reply Mon 15 Aug, 2011 08:53 pm
@hingehead,
He'll be on tonight's edition of Charlie Rose on PBS.
hingehead
 
  1  
Reply Mon 15 Aug, 2011 09:04 pm
@Butrflynet,
Will get on the roof and adjust the antenna Wink
0 Replies
 
JTT
 
  4  
Reply Mon 15 Aug, 2011 09:18 pm
@Butrflynet,
Quote:
He'll be on tonight's edition of Charlie Rose on PBS.


FINN??!! That ought to be priceless.
0 Replies
 
JTT
 
  2  
Reply Mon 15 Aug, 2011 09:20 pm
@hingehead,
You know, I doubt that we'll see much from Gob or Finn or the like. They really despise it when honesty is involved.
Sturgis
 
  2  
Reply Tue 16 Aug, 2011 04:48 am
@JTT,
Honesty and a political potato? From either side?

Thanks for the laugh.
0 Replies
 
tsarstepan
 
  3  
Reply Tue 16 Aug, 2011 04:54 am
@hingehead,
This is a bold statement. Kudoos to Mr. Buffett! Smile

Thanks for bringing the article here Hingehead.
0 Replies
 
rosborne979
 
  1  
Reply Tue 16 Aug, 2011 05:00 am
@hingehead,
hingehead wrote:
Stop Coddling the Super-Rich
Or at least come up with a tax code that doesn't allow them to pay proportionally less than everyone else.
0 Replies
 
Below viewing threshold (view)
JTT
 
  1  
Reply Tue 16 Aug, 2011 09:26 am
@gungasnake,
Quote:
The rich and "super rich" do not pay for America's government, there simply are not enough of them.


That's not the kicker. The kicker is you avoiding the meme that the rich pay their fair share, when clearly they do not.

As always when the facts are put in front of you, you either fold up like a tent or you go tangential.
wayne
 
  1  
Reply Tue 16 Aug, 2011 10:10 am
@Butrflynet,
I watched the program, very good show.
His optimism concerning the economy was encouraging.
The hidden message? Invest in home construction industries.
0 Replies
 
hingehead
 
  2  
Reply Tue 16 Aug, 2011 10:44 pm
@JTT,
Quote:
The kicker is you avoiding the meme that the rich pay their fair share, when clearly they do not.


This the central point for me too. It's the perception that counts here. Paying less proportional tax than low income earners wins you no friends and foments discontent (for no tangible gain) - there's no expectation that taxing the super rich will get the US out of trouble, but it least you'll be fighting together.
0 Replies
 
failures art
 
  2  
Reply Tue 16 Aug, 2011 11:30 pm
I think it's funny when I hear conservatives talk about how big the tax code is. It didn't get that large by giving breaks to the middle and lower classes.

Just sayin'

A
R
T
Finn dAbuzz
 
  2  
Reply Wed 17 Aug, 2011 10:46 am
I'm not sure why, because Buffet seems like a decent guy, but he is being dishonest.

The Wall Street Journal editorial board has done a nice job of pointing out his ommisions.

http://online.wsj.com/article/SB10001424053111903918104576504650932556900.html?fb_ref=wsj_share_FB_bot&fb_source=home_multiline

I'm not sure anyone without a subscription to WSJ can access this link and so I will provide excerpts:

Quote:
Mr. Buffett is repeating his now familiar argument this week, coinciding with Mr. Obama's Midwestern road trip on the economy. Since the media are treating Mr. Buffett as a tax oracle, let's take a closer look at some of the billionaire's intellectual tax dodges.

The double tax oversight. The Berkshire Hathaway magnate makes much of the fact that he paid only 17.4% of his income in taxes, which he considers unfair when salaried workers often pay more. But Mr. Buffett makes most of his income from his investments, in particular from dividends and capital gains that are taxed at a rate of 15%.

What he doesn't say is that much of his income was already taxed once as corporate income, which is assessed at a 35% rate (less deductions). The 15% levy on capital gains and dividends to individuals is thus a double tax that takes the overall tax rate on that corporate income closer to 45%.

This onerous tax on capital is a U.S. competitive disadvantage in the global economy, which is why Congress agreed in 2003 to cut the rates on dividends and capital gains. Even as the rest of the world is cutting tax rates on corporate income, Mr. Buffett wants to raise U.S. rates in a way that would make America less attractive for investment. Under a sensible tax reform, the feds would impose either a corporate tax or a dividend and capital gains tax, but not both.


Quote:
The middle-class bait-and-switch. Like Mr. Obama, Mr. Buffett speaks about raising taxes only on the rich. But somehow he ignores that the President's tax increase starts at $200,000 for individuals and $250,000 for couples. Mr. Obama ought to call them "thousandaires," but that probably doesn't poll as well.

The President needs to levy his tax increase at such a lower income level because that's where the money is. In 2009, 237,000 taxpayers reported income above $1 million and they paid $178 billion in taxes. A mere 8,274 filers reported income above $10 million, and they paid only $54 billion in taxes.

But 3.92 million reported income above $200,000 in 2009, and they paid $434 billion in taxes. To put it another way, roughly 90% of the tax filers who would pay more under Mr. Obama's plan aren't millionaires, and 99.99% aren't billionaires.

Mr. Buffett says it's only "fair" to raise his taxes, but he's lending his credibility to raising taxes on millions of middle-class earners for whom a few extra thousand dollars in after-tax income is a big deal. Unlike Mr. Buffett, those middle-class earners aren't rich and may earn $250,000 for only a few years of their working lives. How is that fair?


Quote:
The charity loophole. For billionaires like Mr. Buffett, the single most important deduction in the tax code is for charitable giving. Middle-class earners can't give nearly as much money away to reduce their overall tax burden. Yet we don't hear Mr. Buffett calling for the elimination of that deduction in the name of fairness.

Mr. Buffett has also already sheltered the bulk of his fortune from federal taxes by putting them into a foundation that will give the money away. That's an act of generosity, but if the government's purposes are so vital, why doesn't he simply give the money to the IRS?

Rebecca Quick of CNBC put that question to Mr. Buffett in 2007. His answer: "Well, that's a choice and it's an option . . . If I had to give it to a single individual, or make some young Buffett a multibillionaire, or give it to the government, I'd absolutely give it to the government. I think that on balance the Gates Foundation, my daughter's foundation, my two sons' foundations will do a better job with lower administrative costs and better selection of beneficiaries than the government."

Mr. Buffett is no doubt right about the relative efficiency of private donors, but should billionaire philanthropists get such a large tax preference? Another case of fairness?


We have previously discussed Buffet's charitable efforts in this forum, and by virtue of their sheer size they can easily be deemed generous. I'm very favorably inclined towards his charity, but it is more a demonstration of his sanity than anything approaching generous self-sacrifice.

Buffet acknowledges that he will be retaining a portion of his wealth sufficent to maintain a very lavish lifestyle for him and his children, a lifestyle that includes multiple residences and private aircraft. I've no problem with this and I don't think he's being a hypocrite in doing so. I've also no problem in his urging other members of his very small and select group of mega-rich to give more of their wealth to charity. They probably should, but that's their call and they can agree with Buffet or ignore him.

Now though, he is urging the government to take their money, and although he limits the confiscation to a greater share of income over $1 million per year, his quisling pronouncements are being used as support for folks who want to dip far lower than the level Buffet recommends.

A man as smart as him doesn't realize this?

And if he does realize it, why didn't he make a point to add in his opinion piece that he disagrees with the President's plan to raise taxes on combined incomes of over $250,000 a year?

I think he's become something of an old fool (that special breed of fools) who enjoys the attention of the President and who, in his latter years is, sanely, trying to reconcile the enormous wealth he has accumulated with anything approaching actual needs.

I don't think it figures in his actions or opinions, but his giving away billions and calling for higher taxes on the mega-rich, is not going to spare any of his residences from being stormed by the unfairly oppressed poor when they finally revolt.

It always come back to a very simple fact: If he doesn't think he is paying his fair share of taxes, there is nothing to stop him from sending a big fat check to the US Treasury. Maybe Obama would make him a Czar of something in return.

BumbleBeeBoogie
 
  0  
Reply Wed 17 Aug, 2011 10:52 am
@failures art,
August 16, 2011
Republicans call out Buffett for views on wealthy taxpayers
By Kim Geiger | McClatchy-Tribune News Service

WASHINGTON — Republicans blasted back at Warren Buffett after the billionaire investor argued in a newspaper opinion piece that the mega-rich in the U.S. are "coddled" by the tax code.

The country's wealthiest citizens pay considerably less taxes, as a percentage of income, than the poor and middle class, Buffett said in an article published Monday in The New York Times.

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

Republicans responded with a series of tweets questioning Buffett's sincerity.

"For tax raising advocates like Warren Buffett, I am sure Treasury would take a voluntary payment for deficit reduction," Sen. John Cornyn, R-Texas, wrote in a tweet.

"If Warren Buffet (sic) wants to pay more taxes and send more of his money to Washington, why doesn't he just do it?" tweeted Brad Dayspring, a spokesman for House Majority Leader Rep. Eric Cantor, R-Va., who has led the push against tax increases to help reduce budget deficits.

This is not the first time that Buffett, a friend and donor to Obama, has used his personal tax bill - and those of his employees - to make the case that super-wealthy Americans are under-taxed. In 2007, Buffett raised the issue at a fundraiser for then-Sen. Hillary Rodham Clinton, arguing that secretaries pay higher tax rates than their millionaire bosses and offering to pay $1 million to anyone who could prove him wrong.

This time, Buffett's words come as a bipartisan committee of 12 members of Congress sets out to trim the federal budget gap by $1.5 trillion over 10 years, with the growing national debt becoming a central issue as the 2012 presidential race heats up.

In a Monday interview with PBS' Charlie Rose, Buffett said the op-ed was aimed at that group known as the "super committee."

"If I could pick 12 readers for it, they're the ones," Buffett said.

Buffett rejected the claim that raising taxes to cut U.S. deficits will kill jobs, arguing that the country had higher taxes between 1980 and 2000 and "nearly 40 million jobs were added."

"You know what's happened since then: lower tax rates and far lower job creation."

On Tuesday President Barack Obama took Buffett's op-ed on the campaign trail, citing it in town halls as he traveled through Minnesota and Iowa. As Obama was touting the Buffett piece, conservatives set out to debunk it.

"Apart for (sic) misstating his tax burden, Buffett fails to call for significant reforms in Social Security and Medicare that could reduce federal spending, and he downplays the role of taxation plays in investment decisions," wrote Mike Brownfield, the assistant director of strategic communications at the Heritage Foundation, a conservative think tank in Washington.

"A billionaire calling for more taxes might make great political theater, but there's more to the story than Buffett - and Obama - would have you believe."

Kim Geiger writes for the Tribune Washington Bureau.

Read more: http://www.mcclatchydc.com/2011/08/16/120928/republicans-call-out-buffett-for.html#storylink=omni_popular#ixzz1VItmhyQw
Finn dAbuzz
 
  0  
Reply Wed 17 Aug, 2011 11:13 am
@hingehead,
hingehead wrote:

To save Finn the trouble

"The Left's favourite capitalist pig"


Thank you, but I think that position actually belongs to George Soros.
izzythepush
 
  1  
Reply Wed 17 Aug, 2011 11:16 am
@Finn dAbuzz,
What about Lord Sugar?
0 Replies
 
JTT
 
  2  
Reply Wed 17 Aug, 2011 11:24 am
@Finn dAbuzz,
Quote:
The double tax oversight. The Berkshire Hathaway magnate makes much of the fact that he paid only 17.4% of his income in taxes, which he considers unfair when salaried workers often pay more. But Mr. Buffett makes most of his income from his investments, in particular from dividends and capital gains that are taxed at a rate of 15%.


Speaking of dishonesty, who shows up but Finn.

There is no double tax because the corporation, Berkshire Hathaway, and Mr Buffet are two separate entities. If corporations want to make a case that they are being taxed too heavily, that is their right.

Quote:
"Finn's [plagiarized] idea"

It always come back to a very simple fact: If he doesn't think he is paying his fair share of taxes, there is nothing to stop him from sending a big fat check to the US Treasury. Maybe Obama would make him a Czar of something in return.


You know, honest guy that you are, that this red herring isn't what is being discussed.

There's a great deal more dishonesty in your post, Finn, but that's adequately captured by Finn dAbuzz.
0 Replies
 
Cycloptichorn
 
  2  
Reply Wed 17 Aug, 2011 11:30 am
@Finn dAbuzz,
Quote:


What he doesn't say is that much of his income was already taxed once as corporate income, which is assessed at a 35% rate (less deductions). The 15% levy on capital gains and dividends to individuals is thus a double tax that takes the overall tax rate on that corporate income closer to 45%.


The WSJ is pretty dishonest, in that they don't ever point out that 'less deductions' means that the corporate rate is effectively half the stated 35% rate, and in many cases reduces the tax burden to single digits or even zero. This changes their numbers significantly enough to invalidate their overall point.

Cycloptichorn
 

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