Warren Buffet: stop coddling the richest Americans

[Ice]

http://www.reuters.com/article/2011/08/15/obama-buffett-idUSN1E77E1QI20110815


Buffett says "stop coddling" the richest Americans

* Theme for Obama as he embarks on campaign (Adds Romney quote, paras 13-15)

Aug 15 (Reuters) - Small-town Americans probably don't make as much money as Warren Buffett, but they pay more of their income in taxes, President Barack Obama said on Monday, citing the billionaire investor to argue that the government needs more revenues to balance the budget.

Obama referred to an opinion column written by the Berkshire Hathaway Inc (BRKa.N) chairman as he made the case to about 500 people at a town hall meeting in rural Minnesota that any attempt to close the U.S. deficit gap should include tax increases for the rich as well as spending cuts.

Cannon Falls was the first stop on Obama's three-state bus tour through middle America intended to connect with voters as he embarks on his 2012 re-election campaign.

He is expected to focus on jobs and the economy after a bitter debate in Washington over debt and deficits that triggered a downgrade in the U.S. credit rating.

"I put a deal before the Speaker of the House, John Boehner, that would have solved this problem.

"And he walked away because his belief was we can't ask anything of millionaires and billionaires and big corporations in order to close our deficit," Obama said, referring to the divisive fight with congressional Republicans over how best to deal with the country's massive budget deficit.

In a column headlined "Stop Coddling the Super-Rich," Buffett wrote in The New York Times on Monday that he paid $6,938,744 in income tax last year, only 17.4 percent of his taxable income.

"That's actually a lower percentage than was paid by any of the other 20 people in our office," Buffett wrote. "Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent."

Buffett urged members of a new congressional "supercommittee" looking at ways to balance the budget to raise rates immediately on taxable income in excess of $1 million, and even more for those making more than $10 million.

"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."

Congressional Republicans -- and Republican candidates vying for the party's nomination to run against Obama next year -- oppose any increase in taxes. Obama wants taxes to be increased for the wealthiest Americans.

"You don't get those tax breaks. You're paying more than that. Now I may be wrong, but I think you're a little less wealthy than Warren Buffett. Now that's just a guess," Obama said, to laughter from his Minnesota audience.

Republican presidential nomination front-runner Mitt Romney, a multimillionaire ex-businessman, said Buffett had failed to take into account corporate taxes paid by his conglomerate Berkshire Hathaway.

"The problem with rich people is that many of them are smart," Romney said in the key primary state of New Hampshire.

"High taxes on entrepreneurs and investors dissuade them from putting Americans to work," he said.


Going to agree with the Buffett on this one over Romney.

*As my Knight Templar friend astutely pointed out... title is spelled wrong... please correct*

[Centurion1]

http://www.reuters.com/article/2011/08/15/obama-buffett-idUSN1E77E1QI20110815



Going to agree with the Buffet on this one over Romney.

It must hurt to spell part of your title wrong...

Anyway this article is full of huge holes. Obama wants to raise taxes for a certain percentage of Americans when they say, "the super rich"

These numbers always give me some insight into what these super rich are,


Top 1%: $380,354

Top 5%: $159,619

Top 10%: $113,799

Top 25%: $67,280

Top 50%: >$33,048

Average income of these groups. Obama's tax increases seem to target thses super rich factions starting with either the mighty 10 or 5%. You can call someone who makes 150k a year rich but I most certainly do not. I call them hovering between upper middle class and middle class depending on where they reside.

Finally I would like to address this,


In a column headlined "Stop Coddling the Super-Rich," Buffett wrote in The New York Times on Monday that he paid $6,938,744 in income tax last year, only 17.4 percent of his taxable income.

"That's actually a lower percentage than was paid by any of the other 20 people in our office," Buffett wrote. "Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent."

Half the country (about 47-51% of the nation pay no federal income tax whatsoever) so these people that buffet is speaking to are already of good stature in the US.

Now lets address the glaring inaccuracies which Buffet is bringing up. His characterization of payroll taxes is absurd. Those taxes are capped for the very reason of avoiding a huge retirement payout to the wealthy later on. So obviously he does not have as high a burden. Every capped tax in the Us meant to protect the payout service later on is obviously going to have a higher burden on the less wealthy. And Romney's comment regarding corporate taxes, let alone where Buffet made the majority of his money last fiscal year is highly relevant and conveniently avoided by buffet in his op-ed.


Buffets constant griping about taxes are all self serving. If he really wants to give more money to the federal government he should just donate it, which is totally legal and doesn't garner him any benefits.

So if you want to tax the mega rich at higher rates okay maybe i could tolerate that but make sure its the actual mega rich....... someone making 380k a year doesn't even sound mega rich to me. This fictional hyper rich 5% they want to tax the hell out of is just the upper middle class.

[gaelic cowboy]

So if you want to tax the mega rich at higher rates okay maybe i could tolerate that but make sure its the actual mega rich....... someone making 380k a year doesn't even sound mega rich to me. This fictional hyper rich 5% they want to tax the hell out of is just the upper middle class.

308k a year is more than comfortable, personally I wont weep for them if there squeezed a bit more.

[Centurion1]

308k a year is more than comfortable, personally I wont weep for them if there squeezed a bit more.

It certainly is not mega rich.

[Tellos Athenaios]

Odd, for a politician you would've thought Romney could choose his words more carefully so as not to look a complete tool:


"The problem with rich people is that many of them are smart," Romney said in the key primary state of New Hampshire.



"High taxes on entrepreneurs and investors dissuade them from putting Americans to work," he said.

And smart people would be able to make the distinction between corporate profit and personal income. Smart people, especially entrepreneurs, can generally get their head around how percentages work, too. They know that 50% of $200K is more than 100% of $40K. Smart people could also point out that the vast majority of entrepreneurs are owners of small/medium business for whom taxes don't make the tiniest bit of difference when it comes to the number of people they have on the payroll: their companies are too small to have (afford) positions which are pure overhead, instead what makes a difference is the amount of spending by their customers (again, typically small & medium business and/or consumers). And finally, smart people could point out that for entrepreneurs what matters most is the feeling of freedom from being your own boss, not the net pay. Startups would not ever be founded, if those entrepreneurs looked at it from the paycheck angle.

[gaelic cowboy]

It certainly is not mega rich.

No it's not mega rich but then the bar is so much higher these days, 308k per year is greater than the average house price in the majority of the USA.

308k is I would safely say rich they can afford one or two percent more per year.

[Centurion1]

No it's not mega rich but then the bar is so much higher these days, 308k per year is greater than the average house price in the majority of the USA.

308k is I would safely say rich they can afford one or two percent more per year.

Only 80k.

Someone living in say SD California is going to pay around 300k for a decent townhouse in an area like La Mesa which isn't that great a location. By the same note I could spend 300k in Georgia and buy a sprawling abode.

Also you seem blissfully unaware of the actual point, that is the top 1% of earners in the united states. And it is an average......... which means that number includes people who make millions upon millions of dollars per year...... does say 200k sound like a rich person to you as well?


And smart people would be able to make the distinction between corporate profit and personal income. Smart people, especially entrepreneurs, can generally get their head around how percentages work, too. They know that 50% of $200K is more than 100% of $40K. Smart people could also point out that the vast majority of entrepreneurs are owners of small/medium business for whom taxes don't make the tiniest bit of difference when it comes to the number of people they have on the payroll: their companies are too small to have (afford) positions which are pure overhead, instead what makes a difference is the amount of spending by their customers (again, typically small & medium business and/or consumers). And finally, smart people could point out that for entrepreneurs what matters most is the feeling of freedom from being your own boss, not the net pay. Startups would not ever be founded, if those entrepreneurs looked at it from the paycheck angle.

Start ups are formed with the desire to get ahead and become wealthy..... not to be your own boss. That is a secondary factor at best for most entrepeneurs and the desire to make oodles of cash and expand is the goal of the majority of people.

By what your implying smart people believe if a small business owner is presented with a proposal that would require a 150k expansion for profits far exceeding that they would first make sure that they would not lose their precious freedom of choice. I counter that the vast majority of human beings on the planet want the additional cash and knowledge that expansion of their business is always capable.

[Montmorency]

https://i494.photobucket.com/albums/rr309/desertSypglass/tax1.jpg
https://i494.photobucket.com/albums/rr309/desertSypglass/tax2.jpg

Gee, the government sure did go hard on our poor, poor, forefathers.

[Tellos Athenaios]

Start ups are formed with the desire to get ahead and become wealthy..... not to be your own boss. That is a secondary factor at best for most entrepeneurs and the desire to make oodles of cash and expand is the goal of the majority of people.

The failure rate of start ups, the paperwork etc. etc. all dispel this notion. People who merely want to “get ahead in life” make a career in the employ of someone else without the financial liability should things go wrong. I agree that being your own boss is not necessarily the driving force behind start ups or entrepreneurs in general, but it is a recurring theme in what these people value much more than what they might hypothetically end up earning if this startup turns out to be among the tiny minority which does not fail within the first year.

... But more pertinently: in this tax debate the issue is not whether or not 5% hike in income tax would reduce the number of jobs. That's simply not an issue, at all: large companies don't hire nearly as much staff as what they lay off, it is the small and medium businesses where the jobs are created. And for those businesses it is the money spent by customers that counts, rather than an modest income tax hike which assuming a uniform distribution* of customer incomes affects spending of less than 10% of their customers anyway.

* And this distribution of affected spending will not be uniform, actually: most small and medium business sells relatively mundane articles which are in demand. It's the small & medium business which specialise in luxuries such as jewelry that would be affected more than the petrol station for instance.

[HoreTore]

Warren Buffet is a COMMUNIST!!!!

And he obviously knows nothing about how to create values and jobs! All he knows is how to steal money from hard-working americans!

[Papewaio]

Now lets address the glaring inaccuracies which Buffet is bringing up. His characterization of payroll taxes is absurd. Those taxes are capped for the very reason of avoiding a huge retirement payout to the wealthy later on. So obviously he does not have as high a burden. Every capped tax in the Us meant to protect the payout service later on is obviously going to have a higher burden on the less wealthy. And Romney's comment regarding corporate taxes, let alone where Buffet made the majority of his money last fiscal year is highly relevant and conveniently avoided by buffet in his op-ed.


Buffets constant griping about taxes are all self serving. If he really wants to give more money to the federal government he should just donate it, which is totally legal and doesn't garner him any benefits.


Why should there be a retirement payout based on taxes?

Surely retirement should be up to the individual with a pension for those who haven't saved enough (which should be above the poverty line). In Australia we are a social democracy, but we do not pay back anyone more then the pension... those who are wealthy do not get an extra handout... instead for the last twenty years we have had superannuation... very similar to a tax, but ultimately it functions more like a private pension fund... so the government doesn't have to fund retirement to the same degree.

Warren Buffet has already pledged most of his wealth to charities, the statements he has made are consistent with this and with one of the greater American tradition of philanthropy. How is it self-serving to serve ones nation?

I find it distasteful that after all the corporate bailouts that the rich and the corporations are not ready to help dig the US out of it's collective hole... one that was dug by those avoiding their duties. As modern nations we admire our young who join the military and serve their nations in their time of need. But for some reason we think it is fine for our old to be Scrooges and not serve their nation with their wealth. There is a logical inconsistency in this, it seems to me that we are expecting the poor to die for the wealth of the rich, but the rich aren't expected to do anything for the poor.

[gaelic cowboy]

Only 80k.

Eh wha??


Someone living in say SD California is going to pay around 300k for a decent townhouse in an area like La Mesa which isn't that great a location. By the same note I could spend 300k in Georgia and buy a sprawling abode.

Even if the average is greater they can well afford that house in SD on 308k.


Also you seem blissfully unaware of the actual point, that is the top 1% of earners in the united states. And it is an average......... which means that number includes people who make millions upon millions of dollars per year...... does say 200k sound like a rich person to you as well?

200k does sound quite comfortable afterall it's prob about 4-5 times the average yearly wage in the USA.

average wage USA but it only goes to 2009 still it hardly changed that much lately (http://www.ssa.gov/oact/cola/AWI.html)


Start ups are formed with the desire to get ahead and become wealthy..... not to be your own boss. That is a secondary factor at best for most entrepeneurs and the desire to make oodles of cash and expand is the goal of the majority of people.

There are a lots of reasons people start companies and profit while a big one tis not the only reason people start there own company.

[Centurion1]

Eh wha??



Even if the average is greater they can well afford that house in SD on 308k.



200k does sound quite comfortable afterall it's prob about 4-5 times the average yearly wage in the USA.

average wage USA but it only goes to 2009 still it hardly changed that much lately (http://www.ssa.gov/oact/cola/AWI.html)



There are a lots of reasons people start companies and profit while a big one tis not the only reason people start there own company.

Someone with a wage of 308k is not living in a townhouse in SD la mesa. :rolleyes:

its only 80k higher.

200k before taxes. and it sounds upper middle class to me nothing more nothing less.

[gaelic cowboy]

Someone with a wage of 308k is not living in a townhouse in SD la mesa. :rolleyes:

Come on now Centurion1 308k in a year is more than comfortable, you used the example of an SD house being worth 300k if I earn 308k a year I can afford that house easy. Most people have to buy a house that is 2-3 times there yearly wage however in your example the wage is 8000 more than the house itself even with the credit crunch the bank would practically murder people to give you a mortgage on that wage. Even if we take it that this is before tax there bringing home around 205-210 a year and they can still afford that house in SD.

Say they put aside 28-30% a month for the house thats 60-70k a year roughly (I didnt work it out it could be more or less) which means they spend after tax and the mortgage somewhere between 120-130k a year to live.

So there not Warren Buffett big deal there not worrying about there meals either.



its only 80k higher.

so what


200k before taxes. and it sounds upper middle class to me nothing more nothing less.

Upper middle class denote better than most though, the average middle class family is probably closer to 100-150 (before tax)

[Centurion1]

Come on now Centurion 308k in a year is more than comfortable, you used the example of an SD house being worth 300k if I earn 308k a year I can afford that house easy. Most people have to buy a house that is 2-3 times there yearly wage however in your example the wage is 8000 more than the house itself even with the credit crunch the bank would practically murder people to give you a mortgage on that wage. Even if we take it that this is before tax there bringing home around 205-210 a year and they can still afford that house in SD.

Say they put aside 28-30% a month for the house thats 60-70k a year roughly (I didnt work it out it could be more or less) which means they spend after tax and the mortgage somewhere between 120-130k a year to live.

So there not Warren Buffet big deal there not worrying about there meals either.




so what



Upper middle class denote better than most though, the average middle class family is probably closer to 100-150 (before tax)

I'm not disagreeing with you. I just find it annoying when people hear about the evil top 1-10%. When in reality we both no someone making say 200k a year is by no means wealthy. Living pretty comfortably (depending on the location if I was in nyc it would be more like middle class) and their kids may go to private school sure but would I say that person is some evil rich person? Hell no.

[gaelic cowboy]

I'm not disagreeing with you. I just find it annoying when people hear about the evil top 1-10%. When in reality we both no someone making say 200k a year is by no means wealthy. Living pretty comfortably (depending on the location if I was in nyc it would be more like middle class) and their kids may go to private school sure but would I say that person is some evil rich person? Hell no.

True there not evil which is why it should be only a percent or two at that level.

[Ice]

It must hurt to spell part of your title wrong...

Protip, when you are going to call someone out, it's probably a good idea not to then proceed to spell the name in question incorrectly. As for the rest of the response, I'll answer tomorrow as I'm in the same sleep deprived state that caused me to misspell the title to begin with.

Buffett... not Bufet or Buffet... =/

[Centurion1]

Protip, when you are going to call someone out, it's probably a good idea not to then proceed to spell the name in question incorrectly. As for the rest of the response, I'll answer tomorrow as I'm in the same sleep deprived state that caused me to misspell the title to begin with.

Buffett... not Bufet or Buffet... =/

wasn't an insult.

protip: sometimes people point out a mistake for you in case you didn't notice figuring you may have wanted it brought to your attention.

being thin skinned isn't a good thing especially on the internet.

[Xiahou]

Anyone want to bet that he'd use this to screw over his competitors and get richer?


"That's actually a lower percentage than was paid by any of the other 20 people in our office," Buffett wrote. "Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent."I also call shenanigans on this. The only logical conclusion you can draw from this is that all 20 people in his office are very rich and Buffett is just better at sheltering his taxes. My income falls above the median household income in my state and my effective tax rate (according to TurboTax) is typically under 10%.

His "shared sacrifice" claptrap is complete nonsense as well. Almost half of Americans pay nothing in federal taxes- shared sacrifice would start with them paying anything. He's not talking about shared sacrifice, he's talking about soaking a certain class. Lastly, if Buffett thinks he should pay more in taxes, the IRS takes donations- as I'm sure he's aware.

[Ironside]

being thin skinned isn't a good thing especially on the internet.

......... You should know I suppose. :creep:


Anyway, what kind of job do you have if you're making 200k or 309k respectivly? Middle boss or something?

Oh and cooperate taxes doesn't apply, since it's taken from a different pot. The CEO salary is payed before cooperate taxes is payed and it's very rare for a rich CEO to have their own private company, making company profits different from private profits.

You might get double taxed by having own stocks and getting the divends (that's certainly a greed is good encuragement), the company profit part that's defined as being the non-reinvested part. But those capital gains taxes are much lower (10%-20%, better number if you're richer) than regular taxes.




I also call shenanigans on this. The only logical conclusion you can draw from this is that all 20 people in his office are very rich and Buffett is just better at sheltering his taxes. My income falls above the median household income in my state and my effective tax rate (according to TurboTax) is typically under 10%.

While the people in the office are probably very rich, it's quite possibly enough that he gets most of his income as capital gains to get the difference.

[Centurion1]

......... You should know I suppose. :creep:


Anyway, what kind of job do you have if you're making 200k or 309k respectivly? Middle boss or something?

Oh and cooperate taxes doesn't apply, since it's taken from a different pot. The CEO salary is payed before cooperate taxes is payed and it's very rare for a rich CEO to have their own private company, making company profits different from private profits.

You might get double taxed by having own stocks and getting the divends (that's certainly a greed is good encuragement), the company profit part that's defined as being the non-reinvested part. But those capital gains taxes are much lower (10%-20%, better number if you're richer) than regular taxes.




While the people in the office are probably very rich, it's quite possibly enough that he gets most of his income as capital gains to get the difference.

your right i am too thin skinned sometimes.

its 4 in the morning ill address your other points later.

[Major Robert Dump]

A person making 300k a year is rich.

A household making 300k a year is pretty well off.

If 300k is middle class because you live in a town where the cost of living is high then cry me a river, and move to Indiana. Then keep an apartment in the big city and fly "home" on the weekends, as all those expenses are tax deductable.

Oh wait, that's what the smart ones already do.

[Ronin]

courageous statement by Buffett,

unfortunately as we all have been informed, there are no rich people in America....only "job creators"......so this ends up being an empty statement.

[HoreTore]

I laugh when I hear people lamenting the woes of those making more than 100k USD. I laugh hard.

Seriously, if you make 100k and still have financial troubles, might I suggest that you retake a 3rd grade math class?

[Papewaio]

Anyone want to bet that he'd use this to screw over his competitors and get richer?
I also call shenanigans on this. The only logical conclusion you can draw from this is that all 20 people in his office are very rich and Buffett is just better at sheltering his taxes. My income falls above the median household income in my state and my effective tax rate (according to TurboTax) is typically under 10%.


To get under 10% income tax in Aus you'd have to be earning well less then 20k and you'd not be factoring in Medicare

[Vladimir]

A person making 300k a year is rich.

A household making 300k a year is pretty well off.

If 300k is middle class because you live in a town where the cost of living is high then cry me a river, and move to Indiana. Then keep an apartment in the big city and fly "home" on the weekends, as all those expenses are tax deductable.

Oh wait, that's what the smart ones already do.

First of all, there are no smart people in Indiana. Secondly, how many 300k jobs exist in middle America? I live in a land where $400,000 is not an unreasonable amount for a family home.

All I got from this thread is that gaelic cowboy is poor and Warren Buffett feels guilty about not paying enough taxes.

For the poor people it's about soaking the rich. For the rich people it's about getting an angle on other rich people.

[Ironside]

First of all, there are no smart people in Indiana. Secondly, how many 300k jobs exist in middle America? I live in a land where $400,000 is not an unreasonable amount for a family home.

All I got from this thread is that gaelic cowboy is poor and Warren Buffett feels guilty about not paying enough taxes.

For the poor people it's about soaking the rich. For the rich people it's about getting an angle on other rich people.

You're telling me that it's going to take 2 years (if you earn 300k that is) instead of 20 to pay back that house?? :lost: Omg, that's horribly poor. Woe those poor souls earning nothing. :drama1:

[Ronin]

You're telling me that it's going to take 2 years (if you earn 300k that is) instead of 20 to pay back that house?? :lost: Omg, that's horribly poor. Woe those poor souls earning nothing. :drama1:

may I add, won´t someone please think of the children???

[Ironside]

may I add, won´t someone please think of the children???

Most certainly. Evidently, this low turn rate of house buying must be the reason why the US does poorly on child poverty (http://www.unicef-irc.org/publications/pdf/rc7_eng.pdf). Those poor souls gets stunted growth since the houses are too small and the parents cannot afford to buy new houses as fast as the children grow. Seeing those children walking around their outgrown houses are a horrible blight on the otherwise magnificence of the US.

Obviously this can only be solved by reducing the taxes. Lower taxes today, give your children a new house tomorrow.

[Major Robert Dump]

First of all, there are no smart people in Indiana. Secondly, how many 300k jobs exist in middle America? I live in a land where $400,000 is not an unreasonable amount for a family home.

All I got from this thread is that gaelic cowboy is poor and Warren Buffett feels guilty about not paying enough taxes.

For the poor people it's about soaking the rich. For the rich people it's about getting an angle on other rich people.

I can't figure out if you are agreeing or diagreeing with me. Indiana was just an example. If you make a 300k per year salary then you are not middle class.

But for your last sentence I would add...... "and denying that they are rich."

[Vladimir]

You're telling me that it's going to take 2 years (if you earn 300k that is) instead of 20 to pay back that house?? :lost: Omg, that's horribly poor. Woe those poor souls earning nothing. :drama1:

Yes, that's it :rolleyes:. The people buying that house wouldn't have but a third of that money. That's not taking income taxes and cost of living into account. We're talking vs. 100,000 for the same house in Indiana.


I can't figure out if you are agreeing or diagreeing with me. Indiana was just an example. If you make a 300k per year salary then you are not middle class.

But for your last sentence I would add...... "and denying that they are rich."

Sorry, poking a little fun of Indiana. Your suggestion is impossible because people are leaving Midwest states and high salary jobs rarely exist in low cost of living states.

[Ironside]

Yes, that's it :rolleyes:. The people buying that house wouldn't have but a third of that money. That's not taking income taxes and cost of living into account. We're talking vs. 100,000 for the same house in Indiana.


Right, forgot about income taxes. Teh horror. And overcharged housing isn't exactly unique. The difference is that for normal people, this can be a significant payback problem when the prices are high.

300k-30% (overcharging a bit by the simplification) = 210k.

Median household income (that stuff 50% of America lives on, I think that's enough)= 45k-5k (taxes)=40k (and that's even more since owning your house drops living costs quite a bit, and no since it's no mansion the cost will be the same as for normal people).

Oh no, only 170k left!!!! It will take 2,35 years with this! This kind of child abuse beats even Germany!

For normal people, payback time of 10 years is quick and probably puts you in upper middle class.

Oh, and since our CEO knows how to shift his income to divends, he'll be dropping down to 15% income tax, so he can still easily get those 200k to spare.

Really, dragging in housing shows with perfect clearity how much these kind of people are earning compared to the majority. No, they won't really suffer anything by getting taxed more, even if they are "only" rich and not superrich.

[Seamus Fermanagh]

Nice post, MRD.


There are quite a number of rich persons in the USA, with the latest data suggesting roughly 29,000 persons with a net worth of $20 millions or more. While not a small number, this figure means that fewer then one person in a thousand has this kind of wealth.

Some points to remember about taxation and revenue:

1. We are NOT talking about a wealth tax or a consumption tax -- both of which MIGHT generate more revenue from the truly wealthy since you would be directly taxing that wealth or taxing the purchases it makes. INSTEAD, we have the income tax. The more "progressively" this is structured, the more it is difficult to become rich...but this means little to those who already are as they often have relatively little "income" per se and hire excellent shysters to recategorize any that they must report so as to minimize the portion taken as tax. Talking about taxing the "wealthy" using an income tax is silly. By the time you had a tax code that closed every "loophole" in which the money growth of the wealthy was hidden so as to not be classified as income, you would have....a wealth tax. So enact one or get over this platitudes and move on.

2. Any income tax that will generate meaningful revenue must put the burden of that taxation on the middle class and upper middle class or it will generate little revenue at all. Let's assume that each of those 29k rich folk were actually making $20 million a year as an average (they're not, but let's just stipulate it). Jack the tax on such incomes to 90% like it was in the late 1950s. Those 29k persons would then generate $522 millions in revenue. Then tax the lowest half of our population a flat $10 head tax regardless of income and you get $1.505 billions in revenue. If you seriously wish to generate revenue through an income tax, create an alterative minimum tax of $1000 for the 47% of the USA that pay no tax whatsoever and watch revenues jump.

"Tax the rich" doesn't generate the revenues needed -- but it sure let's the voter stick it to the person who was luckier/smarter/chose the right parents. Principal result? The politico who gives them their periodic **** the rich voting opportunity gets to stay in power and enjoy the perks and privileges thereof.


3. Corporations do not pay taxes. They collect them from consumers for the benefit of those running the government. At BEST, some of those customers are foreigners, thus allowing the government to dip its hands into the back pockets of people who are not even their own citizens, but any notion that the corporations themselves are going to pay the tax by cutting the profits to their shareholders/investors is patently fatuous.

4. Progressive Income taxes, in practice, do NOT beget the social "leveling" that might have been their sole value (assuming you accept the premise involved). What you get is not equalized wealth, but government dependency. Since the dependents usually have the right to vote themselves more largess -- by electing representatives who promise to fill their troughs/not take as much away as those other jerks -- you end up with electoral power concentrated among government dependents...whose only self-interest would be to increase their benefits at the expense of those still paying. Does the phrase inmates running the asuylum come to mind for you too?

Rome believed in Panem et Circum....but the Head Count did not get to decide the amounts.

[Montmorency]

Jack the tax on such incomes to 90% like it was in the late 1950s. Those 29k persons would then generate $522 millions in revenue.

522 billions.

[PanzerJaeger]

It seems to me that Mr. Buffett is making a stronger case for reforming and simplifying the tax code than soaking the rich. The biggest issue is not the rates themselves, but the ability to count short term gains as long term ones. That's a one page bill if I've ever seen one.

Interestingly, he also seems unaware that in 2013, the current rates will be raised both on short and long term gains to an individual's income bracket and 20% respectively. Or maybe he's worried about the current president's job prospects. ~;)

[Vladimir]

Nice post, MRD.

etc

Excellent, but poor people will disregard everything in your post and still spout uneducated comments.

As an aspiring rich person I concur with your statements.

[Centurion1]

What I am taking away from this thread is that Europeans are poor.

[Montmorency]

What I'm taking away from this thread is that the forces of reaction will soon overwhelm the pathetic leftist experiments in social democracy. :)

[Ironside]

1. We are NOT talking about a wealth tax or a consumption tax -- both of which MIGHT generate more revenue from the truly wealthy since you would be directly taxing that wealth or taxing the purchases it makes. INSTEAD, we have the income tax. The more "progressively" this is structured, the more it is difficult to become rich...but this means little to those who already are as they often have relatively little "income" per se and hire excellent shysters to recategorize any that they must report so as to minimize the portion taken as tax. Talking about taxing the "wealthy" using an income tax is silly. By the time you had a tax code that closed every "loophole" in which the money growth of the wealthy was hidden so as to not be classified as income, you would have....a wealth tax. So enact one or get over this platitudes and move on.

Wealth taxes (like inheiritence tax) seems to drav alot of ire though, making them unpopular. Property taxes is another example (my house just went up in value thanks to a market bubble. Thanks for the extra taxes). So taxing income is much, easier.
Closing the loopholes keeps the wealth distribution from going more unequal though.

I approve of VAT.


2. Any income tax that will generate meaningful revenue must put the burden of that taxation on the middle class and upper middle class or it will generate little revenue at all.

Bush's tax cuts reduced state income by about 10%. While certainly not the entire budget, it's not exactly small either.


3. Corporations do not pay taxes. They collect them from consumers for the benefit of those running the government. At BEST, some of those customers are foreigners, thus allowing the government to dip its hands into the back pockets of people who are not even their own citizens, but any notion that the corporations themselves are going to pay the tax by cutting the profits to their shareholders/investors is patently fatuous.

Passing it on to the costumer only works if the competition also agrees to it. Take company profit vs company goes around. Company goes around doesn't pay taxes (since it doesn't make profit) so there no exta cost to pass to the costumers, while company profit has to reduce profits or lose market shares to company goes around.

The costumers lost nothing on this.


4. Progressive Income taxes, in practice, do NOT beget the social "leveling" that might have been their sole value (assuming you accept the premise involved). What you get is not equalized wealth, but government dependency. Since the dependents usually have the right to vote themselves more largess -- by electing representatives who promise to fill their troughs/not take as much away as those other jerks -- you end up with electoral power concentrated among government dependents...whose only self-interest would be to increase their benefits at the expense of those still paying. Does the phrase inmates running the asuylum come to mind for you too?

Rome believed in Panem et Circum....but the Head Count did not get to decide the amounts.

I think you got a point here, but not the way you think. The US got a very progressive system, while having low social mobillity for a western nation. While less progressive systems (Scandinavia, Germany), but with a higher total tax ratio do better in social mobillity.

Since the total tax ratio are making more people "dependant" on the goverment (as in more people will get payed in some way from the goverment), either your anology is flawed or the lunatics are running the asylum better than the shrinks.


What I am taking away from this thread is that Europeans are poor.

So is 99% of the Americans. :yes:

Come to think about it. How large (as in % of the population) do you expect the upper class to be?

[HoreTore]

What I'm taking away from this thread is that the forces of reaction will soon overwhelm the pathetic leftist experiments in social democracy. :)

With countries like Brazil, India and China set to dominate this century, I find that rather unlikely.

[Vladimir]

With countries like Brazil, India and China set to dominate this century, I find that rather unlikely.

Brazil will forever be the world's next economic superpower. A shame really. I would like to see them succeed.

[HoreTore]

Brazil will forever be the world's next economic superpower. A shame really. I would like to see them succeed.

Sounds like someone haven't paid attention to what has happened there since the social democrat Lula took power ~;)




But of course, that does not in any way mean that they can't revert to their old habits of tanking when the future looks the brightest... Only time will tell, I guess. Though that applies to all the major economies of today really. The US, EU, China, India, Russia and Brazil can all either go all in and win, or crash and burn spectacularly...

[jirisys]

or crash and burn spectacularly...

I'm up for that, makes life interesting.

~Jirisys ()

[Papewaio]

Yes because social democracy clearly isn't working for Sweden, Norway, Denmark, New Zealand or Australia.

Just look how crap Australia's economy is going at the moment. Income taxes two or more times those in America, a Goods and Service Tax of 10% on everything we buy, a 9% pseudo tax called superannuation on top of our income (for every $1.09 dollars we earn the first 9c goes into super, then the rest is considered taxable income), medicare of at least 1%, flood levy ~ .1% & a Carbon Tax coming soon with an increase of the tax free threshold from $6k to $18k Aus.

Our economy is clearly stalling: Unemployment has shot up in the last month 0.1% to 5.1%, interest on government debt is around 0.4% of GDP and it's going to take 2, two, TWO! years at least to get back into surplus. It's terrible the pain a social democracy is going through and clearly investors are avoiding here like the plague because of the high income tax rates...

[Centurion1]

Yes because social democracy clearly isn't working for Sweden, Norway, Denmark, New Zealand or Australia.

Just look how crap Australia's economy is going at the moment. Income taxes two or more times those in America, a Goods and Service Tax of 10% on everything we buy, a 9% pseudo tax called superannuation on top of our income (for every $1.09 dollars we earn the first 9c goes into super, then the rest is considered taxable income), medicare of at least 1%, flood levy ~ .1% & a Carbon Tax coming soon with an increase of the tax free threshold from $6k to $18k Aus.

Our economy is clearly stalling: Unemployment has shot up in the last month 0.1% to 5.1%, interest on government debt is around 0.4% of GDP and it's going to take 2, two, TWO! years at least to get back into surplus. It's terrible the pain a social democracy is going through and clearly investors are avoiding here like the plague because of the high income tax rates...

Well investment doesn't necessarily have any anything to do with you said. And start up business and middle class people are who suffer in Australia.

[HoreTore]

Do you by any chance have some tales of middle class woes from Australia?

I'm rather interested in reading the tale of the down-trodden Australian lawyer, for example...

I'll give you a nice example of how start-ups are doing in Norway though: Kiwi, a grocery store chain, had one store in my town, Drammen, in the late eighties. It passed 500 stores in 2000. And it's not just them either. We have four chains which owns basically every grocery store(except for immigrant stores and its like). All of them consisted of just a couple stores in the 80's. How's that for being start-up friendly?

[a completely inoffensive name]

Considering that Warren Buffett has already pledged to give 99% of his wealth to charity when he dies, I am willing to throw out any doubt on the motivations behind this opinion piece (sorry Xiahou).

To be honest, I really don't see how America is at risk for losing its investors or its "job creating" class by raising personal income rates. Europe goes above and beyond at "punishing" the job creators and they are in the same situation we are in, more or less.

[Major Robert Dump]

You guys are picking on me.

I never called for any higher taxes on a specific.

I am making fun of people who like to pretend they are middle class when raking in 6x the average salary. And no, it's not "impossible" to work in the high-cost area and live in the low cost area, because I know plenty of people who live in Oklahoma and work in Dallas, to include myself. The traveling sucks, but its a tax write off.

I've always been a fan of more of a flat, consumption based tax, but what do I know?

I like how 90% of the Fox News Commentators are asking why Bufftet isn't just donating money to the government?

[PanzerJaeger]

The morality of imposing higher taxes on the rich is certainly up for debate, but the effect of such proposed hikes on the budget is pretty clear... and pretty microscopic (http://blogs.wsj.com/wealth/2011/08/15/would-taxing-the-super-rich-raise-much-revenue/).


But would the Buffett Tax really help the country’s finances?

Yes, but not as much you might think.

In 2008, there were 236,883 tax filers reporting income of $1 million or more. The Patriotic Millionaires, a group advocating the repeal of the Bush tax cuts on tax filers making $1 million or more a year, estimated that their plan would raise $500 billion to $600 billion over 10 years. That sounds like a lot.

But only $100 billion of that is projected savings from lower government debt costs. So the tax would actually raise $40 billion to $50 billion a year: equal to about 3% of the annual federal deficit.

Granted, it’s something. And if you hiked the rates higher than the Clinton levels, and added another level for $10 million earners, it would be more.

As Erica Payne of the Patriotic Millionaires told me:

“There are two issues here. One is the actual dollar amount to meet our financial obligations. And the other is what is the fair way to allocate expenses across our society.” She added that the millionaire-earners make more from “lazy money,” i.e. capital gains and dividends. “They’re not working for that money. They’re sitting on the couch and having money come to them.”

Millionaires who earned their money from starting and building companies would disagree, of course. And more wealth today comes from earned income than at any point in history.

But one thing is certain: While raising taxes on millionaires might be emotionally and politically satisfying for some, it would only begin to fill the nation’s budget hole.


3% huh... Even with a rate higher than the 39% Clinton era top bracket, additional taxes on those making over $1 million, and changes to the short term gains and other loopholes, would soaking the rich even break 10% of the deficit? Seems doubtful, which highlights how disproportionately tilted our debt problem is towards spending.

I'm sorry, I support reforming the tax code to ensure that people (of all brackets) pay closer to their stated rates, but this clamor for soaking the rich is pure populist garbage propagated by a political ideology and its captive political party that is desperately looking for a scapegoat to explain why it's vote-buying schemes are bankrupting the nation.

[Papewaio]

Well investment doesn't necessarily have any anything to do with you said. And start up business and middle class people are who suffer in Australia.

Um, like, er the argument is that higher taxes makes an anti-investment environment... which clearly is not the case in Australia.

In fact I would argue the opposite... since income tax is higher then the US it makes it far more attractive to own a business as they get taxed less and only on the profits... so it means people who earn a lot look for investments to put their money into... some as tax credits, some to earn more via capital gains.

So income tax both funds the government ie defence, firefighters, police, hospitals, fibre to the home, etc and makes it a bigger incentive to invest in other profit vehicles that get taxed less.

BTW
My wife has a start up business and I would be in the middle class wage earner bracket.

[Montmorency]

Why not raise taxes and reform entitlements? Speaking of taxes, why not just force the corporations to pay up?

http://www.nytimes.com/2011/05/03/business/economy/03rates.html?_r=1

No one is certain how much creative accounting costs the federal government in lost revenue, but most estimates say it easily exceeds $50 billion a year. Targeted tax preferences, which Congress created to intentionally benefit specific companies or industries, cost an estimated $100 billion more a year.


Why do corporate taxes look like this anyway?

https://i494.photobucket.com/albums/rr309/desertSypglass/55y.jpg

[a completely inoffensive name]

Um, like, er the argument is that higher taxes makes an anti-investment environment... which clearly is not the case in Australia.

In fact I would argue the opposite... since income tax is higher then the US it makes it far more attractive to own a business as they get taxed less and only on the profits... so it means people who earn a lot look for investments to put their money into... some as tax credits, some to earn more via capital gains.

So income tax both funds the government ie defence, firefighters, police, hospitals, fibre to the home, etc and makes it a bigger incentive to invest in other profit vehicles that get taxed less.

BTW
My wife has a start up business and I would be in the middle class wage earner bracket.

I like this. If the job creators are supposedly taking their money and reinvesting it why not hold them to their word? If they simply want to keep their own money, then they admit that they not really job creators and as such they have no economic imperative to lower taxes.

I also wish that the tax brackets were more specific. 100,000-500,000 is upper middle to lower upper. I want the 1,000,000+ to be taxed at an extremely high rate because to me, those that fall between 10^5 and 10^6 are the real hard workers who got to where they are through education and hard work. Those that make over 10^6 are mostly bankers manipulating money, celebrities, or sports players.

[PanzerJaeger]

Why do corporate taxes look like this anyway?

https://i494.photobucket.com/albums/rr309/desertSypglass/55y.jpg

I'm not sure what you're specifically referring to. Tax rates are lower on the left side of the chart because small businesses create most of the jobs in the US economy. You'll note that as you move to the right, rates are not all that different from their historical levels. I definitely agree that government should not be subsidizing some companies through the tax system, though.

[Montmorency]

I was specifically referring to the 39% on $100000-338000 vs. 38% on above $18,333,333.

Not significantly different? They're lower by a third (from the peak).

[HoreTore]

To me, tax rates should be linked to risk more than actual income.

When someone is starting up a business, they usually take on a lot of debt to get things started. That debt is also the big obstacle for people, as it represents a significant risk. That people shun starting up something because they'll be taxed hard should they succeed sojnds absurd to me. It's far more likely that people don't start up something because they're afraid of the risk they take in the first few years. Thus, I want a lower tax in that situation.

People with little risk, on the other hand, can be taxed harder. That means the people who have succeeded and those who have a comfy wage but does not take on the risk of creating something. For the former, it can be seen as a payback. We helped them with lower taxes in the beginning, now that things are going smoothly they can pay a little more. For the latter, it also creates an incentitive to take on risk.

But is this communism?

[Sarmatian]

To me, tax rates should be linked to risk more than actual income.

When someone is starting up a business, they usually take on a lot of debt to get things started. That debt is also the big obstacle for people, as it represents a significant risk. That people shun starting up something because they'll be taxed hard should they succeed sojnds absurd to me. It's far more likely that people don't start up something because they're afraid of the risk they take in the first few years. Thus, I want a lower tax in that situation.

People with little risk, on the other hand, can be taxed harder. That means the people who have succeeded and those who have a comfy wage but does not take on the risk of creating something. For the former, it can be seen as a payback. We helped them with lower taxes in the beginning, now that things are going smoothly they can pay a little more. For the latter, it also creates an incentitive to take on risk.

But is this communism?

Everything except 0% taxes on the rich is communism.

[Papewaio]

Company tax rates are a flat 30% on profit in Aus (there are some special case exceptions base do industry not profit margin).

It therefore makes sense for most people running a small business to give themselves an income upto the point they would hit more then 30% (which is 80k in Aus)... and reinvest the rest in the company.

[Strike For The South]

300k in Texas is king money, no matter where you live

I have an idea, How about we print money but don't tell anyone. Clear our debts and ride off into the sunset. Bernanke can make his runs from the Fed to the medicare office in the dead of night and when they employees arrive to work the next day money will be stashed under the water cooler like some bizzaro Xmas morning.


I know plenty of people who live in Oklahoma and work in Dallas



I would rather import all the Mexicans than 1 Okie HARUMPH ~:)

[PanzerJaeger]

I was specifically referring to the 39% on $100000-338000 vs. 38% on above $18,333,333.

Not sure on that one. Ice is our resident tax expert. Maybe he'll chime in.


Not significantly different? They're lower by a third (from the peak).

That chart begins rather arbitrarily, don't you think? A fuller picture of historic corporate tax rates (http://www.taxpolicycenter.org/taxfacts/Content/PDF/corporate_historical_bracket.pdf) shows that the rather high post-war rates were more of an anomaly than those that are currently in place.

[Montmorency]

Well obviously taxes were lower in the early 20th century. Heck, personal income taxes topped out in the single digits. You think that's appropriate?

Edit: The high tax rates lasted longer than the low ones, and therefore are not anomalous (41 years of 40% or more highest).

[Vladimir]

Well obviously taxes were lower in the early 20th century. Heck, personal income taxes topped out in the single digits. You think that's appropriate?

Yes.

[Montmorency]

Quelle surprise. :shrug:

[PanzerJaeger]

Well obviously taxes were lower in the early 20th century. Heck, personal income taxes topped out in the single digits. You think that's appropriate?

The horror! Responsible fiscal leadership, budget surpluses more often than deficits, and genuine (and successful) efforts at paying down the debt - hardly an era we would want to emulate! :laugh4:

Why are tax rates in excess of 50% any more appropriate? Why should we accept continually growing rates as the most beneficial social and/or economic scheme? Because we're now forced to pay for ever more crippling entitlements? It seems pretty clear where the problem lies, and it's not with the rates.


Edit: The high tax rates lasted longer than the low ones, and therefore are not anomalous (41 years of 40% or more highest).

I count 60 years of tax rates below 40%. :inquisitive:

[Montmorency]

Responsible fiscal leadership, or just lack of spending? Emulate? So WW3 then?

Top rate 40% or higher - years: 1942-5, 1950-87.
Top rate below modern - years: 1909 - 1941

Entitlements aren't the only things the government pays for. The extra revenue from high(er) taxes would be useful for those.



And I still don't get why the top tax bracket doesn't have the highest rate these days.

[a completely inoffensive name]

The US patent office needs more money for staff. I just read an article saying that the 8th millionth patent was just approved, but it was filed by the inventor in 2007. 4 years to get a patent approved is waaaay too long.

[Tellos Athenaios]

No. The US patent system needs a major overhaul so the vast majority of applications submitted can be sent to /dev/null, the shredder etc. etc. since they're invariably trivialities or invalid; and so it is not left to the courts to separating the wheat from the chaff. Additionally, the USPTO budget could do with a major overhaul so it doesn't actively reward doing a botched job on the part of the USPTO staff (it currently does).

[a completely inoffensive name]

No. The US patent system needs a major overhaul so the vast majority of applications submitted can be sent to /dev/null, the shredder etc. etc. since they're invariably trivialities or invalid; and so it is not left to the courts to separating the wheat from the chaff. Additionally, the USPTO budget could do with a major overhaul so it doesn't actively reward doing a botched job on the part of the USPTO staff (it currently does).

I don't understand. I was under the impression that engineers and scientists at the patent office look over and determine if an idea is good enough for a patent or not. Where do the courts come in except for enforcing the patents?

[Seamus Fermanagh]

I don't understand. I was under the impression that engineers and scientists at the patent office look over and determine if an idea is good enough for a patent or not. Where do the courts come in except for enforcing the patents?

Many of those denied patents promptly sue to have the decision reversed and/or for damages resulting from lost protection of revenue. Think of it as a jobs program (http://wiki.answers.com/Q/What_country_in_the_world_has_most_lawyers_per_capita). We are talking a lot of families to feed here and a lawsuit is the best means to keep little Lilith happy in her Peg Perego.

[drone]

At the risk of taking this off-topic, software patents need to go. Software is, at the base level, mathematical algorithms, which are already unpatentable. Source code can already be protected under copyright. Business model patents are also ridiculous.

[Tellos Athenaios]

I don't understand. I was under the impression that engineers and scientists at the patent office look over and determine if an idea is good enough for a patent or not. Where do the courts come in except for enforcing the patents?

Seamus answered a part, I'll answer another: in the US of A, the patent office is not just supposed to rubber stamp patent applications. It is supposed to determine if these applications have merit in the first place. This requires expertise, or time to get expertise from the outside -- none of which is available with the current deluge of patents. Additionally it is possible for patent applications to be invalid because, say, there is prior art or because other patents already cover the topic. Software patents and hardware (design) patents are notorious for this because there are so many iterations of a given innovation and the industry moves very fast with at the same time a particularly voracious appetite for patents, patent litigation, patent trolling (litigation by a non-practicing entity), and awash with cash to pursue these goals.

So the USPTO is in the habit of rubberstamping patent applications instead, and then let the courts decide retroactively about the merits of the application when inevitably somebody gets sued over the granted patent. Quite a few patents have simply been thrown out like that in court cases this way.

But on the other hand when it comes to patents, courts and in particular juries in the USA tend to defer to the USPTO. “That's not our job to sort out, that was theirs. It was granted so it must be valid.” For instance the East District of Texas is a favourite hangout place for patent trolls because the jury almost always takes this somewhat dimwitted view.

EDIT: Just to give an example: meetings over lunch breaks are actually covered by a patent in the USA. The patent was filed and granted to IBM. Another one: SUN employees used to have a game which was “who can get the wackiest patent past the USPTO?”