Most people who want tax increases seem to think the rate hikes should apply only to people wealthier than themselves. And many who want across-the-board tax cuts believe that lightening the tax load on the richest folks will create a trickle-down effect that helps everyone.
In an ABC News interview that deflates both questionable arguments, investor extraordinaire Warren Buffett somewhat shockingly said he and other Scrooge McDuck types should be paying more taxes than they are.
Here are a couple of his money quotes from the piece, which is embedded at the end of this post:
“I think that people at the high end, people like myself, should be paying a lot more in taxes. We have it better than we’ve ever had it.”“The rich are always going to say that, you know, ‘Just give us more money, and we’ll go out and spend more, and then it will all trickle down to the rest of you.’ But that has not worked the last 10 years, and I hope the American public is catching on.”
With the White House and Congress set to tangle over tax rates, the government will have to weigh opposing taxation philosophies. Where do you stand on the issue of taxing the rich progressively?
Warren Buffett: I ‘Should Be Paying A Lot More In Taxes’ [ABC News via Huffington Post]
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Flat Tax?
Ah yes, another code word for “screw the poor”.
Trickle-down doesn’t work, and has been proven to not work by the past 30 years, ESPECIALLY the past 10.
If you think a flat tax won’t tax the average person more you are very wrong…. a flat tax is designed to lighten the load on the rich and tax the poorer people more
Thats because 45% of people in this country dont pay any taxes anyway.
Wrong, they still pay payroll taxes. So if someone making $18,000/yr pays no income tax they’re still paying 1/2 of FICA (7.65%).
Do you think a flat tax is going to help poor people?
Cash is king. Lots of small businesses pay cash.
If you wanna gripe about everyone paying payroll taxes, then gripe at the dumbass politicians who sold and continue to sell SS as retirement and not the massive welfare program that it is. The whole reason everyone pays in is to maintain the illusion of it being retirement…
That is for SS, yes the poor still pay for their retirement. Payroll tax is not paying for our general government.
Since when does someone making $18,000/year pay no income tax? I make only a few hundred dollars over that, and have had to pay income tax for the last six years.
There seems to be a huge misunderstanding about income taxes floating around. Income taxes are paid out of your paycheck. If you get a refund at the end of the year, it’s because your payroll deduction covered your tax burden. If you must pay in, why not just ask HR to adjust your payroll deduction? Either way, unless nearly half of the population is making less than $5000 a year, I seriously doubt that “45% pay no taxes” figure.
Earned Income Credit is another topic entirely.
And get public benefits for it.
You mean don’t pay income tax. You do realize that the bulk of the taxation on the citizens of this country is not from income tax.
Fully agree, and I’m (while nowhere near Buffett!) someone who would definitely be affected by the elimination of the Bush tax cuts on those earnings more than $250k/year.
Over the last ~30 years, we’ve seen a huge increase in income inequality in the US through the whole spread – the portion of total pre-tax income going to the top 10% has risen, the top 1% are getting a larger share of the income of the top 10%, and the top 0.1% are getting a larger share of the income earned by the top 1%. Even without resorting to punitive levels, we could materially increase gov’t revenue by increasing tax rates at the top of the scale.
Would there be some level of work discouragement? Sure, there always is. Would someone making $10MM/year work materially less hard if he’s getting to keep 50% of the next million, rather than 60.4%? Very doubtful. For those who say “what about the Laffer Curve,” well, everybody agrees on the endpoints (at 100% and 0% tax rates, tax receipts are zero), but all the evidence is that we’re well to the left of the peak of it in the US. Higher rates would generate more revenue.
Fair tax is a better idea. You are taxed on consumption not income. Make sure it applies to anything imported as well, and put in some exceptions for people retired or drawing Social Security, and you have a great system.
Aargh, that wasn’t supposed to be a response to GreatWhiteNorth – I DON’T fully agree with the Flat Tax, I agree with Buffett. We need more tax brackets, not fewer.
Wouldn’t the flat tax mean I pay the same percentage in taxes as the rich? I think Warren Buffett would disagree.
No. Work on your maths. If you exclude the first X dollars of income from tax, the effective rate is worse for the rich even if the base rate is the same for all.
So you are basically saying that income equality is some sort of right? Or attainable? let me see. where have I heard that concept before….
Income equality?
What part of “everyone pays 15%” do you not get?
If everyone PAYS 15%, that means everyone KEEPS 85%.
And 85% of $500K > 85% of $50K; 85% of 50K > 85% of $25K.
Flat tax rate on all incomes above a certain level. Everyone gets their first 50K tax free. After that flat rate no loop holes, no tax credits, no deductions.
And what’s the magical tax rate? Do you want capital gains to be taxed at that rate as well? Do you know all the credits and deductions and their relevant impacts on spending?
Sorry, you’re living in a fantasy world if you think it’s that simple.
It is that simple. Quit using taxes as a tool of social engineering and put it at 15-20% with no deductions, exemptions or credits. No deductions, exemptions or credits means EVERYBODY is going to pay that 15-20%. At that point you can both reduce compliance costs of the individuals, you increase overall compliance and you can cut the IRS down to size since they don’t have a massive 5000 page tax code to deal with….
Think of all the CPA’s and tax preparers you’ll put out of business!
Think of all the talented people wasting their time as CPA’s and tax attorneys that would be released into to society to do more productive work!
Like pickling strawberries?
Did you mean picking strawberries? Because pickled strawberries seems to be an exotic dish.
Notwithstanding the massive amounts of unemployment this would create in an already weakened economy, just as arbitrary and “social engineering” as our current progressive tax system would be selecting that 15-20% and at what income level is starts.
If you tax every dollar at that amount, you might get a decent decrease in your taxes, and anyone earning above the mean average income would as well.
But what is the social fallout from such a plan? I’m sure those earning at or near or even significantly above the poverty line would be devastated by such a move. But who cares, they’re only poor and suckling off the government teat already, amiright? Amiright? No thanks.
sooo….
- The harder I work the more I have to pay.
- The less I work, The more the hard workers pay for me.
I wonder why so many people are on the government dole. Fantastic system!
Once you realize that “working harder” does not equate to “making more money” your argument falls flat. But thanks for playing.
I’ve never met a person that feels they don’t “work hard” for their money, no matter how much (or little) they make.
The problem is that the more you make the less (percentage-wise) you pay due to various deductions and exemptions only the wealthy can take advantage of. And that’s the biggest problem. Corporate taxes are another huge issue, as the wealthiest of them generally pay NOTHING.
The rates don’t reflect what you say, and many deductions get phased out at higher incomes. How the rich can play the system is at the very least exaggerated.
Most people who make more money make more because of sacrifices, higher skills or chances they have taken. These behaviors should be encouraged because our society benefits from them.
No sorry, the facts are pretty clear if your born rich or well off you tend to do well(not always). And if your born poor or not so well of you tend to stay in that bracket working hard has almost no effect. (not always).
This is a fact, and its documented, and its getting worse. The money is getting concentrated in the higher reaches and those people are not spending it, they can’t since they already own almost everything, what are they going to buy?
You ignored my response to you on deductions phasing out.
How most people make there money is open to debate, there is some disparity as you suggest, but some also get there from hard work. If you try to even everything out you will probably make things worse and really hurt those that make it on their own. I started with nothing and am doing OK by having gone to school and making sacrifices. That is the way it should be, it really wasn’t that hard.
Broken window fallacy – fixing our tax code would be equivalent to inventing a new, better way of ‘doing taxes’ that saves labor with insignificant implementation costs. Win Win.
There’s plenty of other work for the accountants to do.
So most people pay NO tax? Doesn’t seem fair, and not going to help with our national debt. I think we all need to contribute to our services. Right now it is too easy to ask that everything be provided, especially when we can get them rich people to pay for it.
Sure, the poor don’t pay taxes, so the poor don’t get represented. Isn’t that how it’s supposed to work?
Some people pay no tax because we set the minimum wage below the acceptable living wage for an area. When corporations don’t pay an actual living wage, we are obligated to pay extra taxes to cover what their underpaid workers cannot. It’s corporate welfare, and we’re on the hook for it. Ta-Dah!
Living wages really are a separate issue, lower wages are for kids just starting out, they do not need a living wage. There also needs to be an incentive to invest in oneself so as to be able to make more than minimum wages. Any adult should be able to make the determination they have reached the point where they can raise a family.
Then what do you do with the marginal workers who’s contributions just aren’t worth the new ‘living minimum wage’?
I’d rather suppliment them than to pay them even more to completely sit on their ass.
what services? gov’t does fuck-all for me.
That’s nonsense. Even a granola/hillbilly living off the grid derives benefits from numerous services from the government. Just because you pretend not to value them doesn’t mean they don’t exist.
http://www.southdacola.com/blog/wp-content/uploads/2009/05/teapartydouches_a28cd.jpg
Do you build your own roads? Generate your own electricity? Provide our own fire/police/education/water services?Test your own drugs and food for lead and other “enhancements”?
Yeah, I didn’t think so.
I don’t know about setting the line at 50K.
Set it at 20K, maybe.
Or have a system with very limited tiers:
$0 to $10,000: NO tax
$10,001 to $30,000: 1/3 of tax rate
$30,001 to $50,000: 2/3 of tax rate
$50,001+: full tax rate.
If, for illustration, the “tax rate” were pegged at 15% … that means someone making $100,000 would pay:
0% of the first $10K, or $0
5% of the next $20K, or $1K
10% of the next $20K, or $2K
15% of everything else, or $7.5K
GRAND TOTAL: $10,500. (Leaving them $89,500)
Someone making $60K?
0% of the first $10K, or $0
5% of the next $20K, or $1K
10% of the next $20K, or $2K
15% of everything else, or $1.5K
GRAND TOTAL: $3,500. (Leaving them $56,500)
Someone making $45K?
0% of the first $10K, or $0
5% of the next $20K, or $1K
10% of the next $15K, or $1.5K
GRAND TOTAL: $2,500. (Leaving them $42,500)
Someone making $30k?
0% of the first $10K, or $0
5% of the next $20K, or $1K
GRAND TOTAL: $1,000. (Leaving them $29,000)
Some poor schlub scraping by on $15K?
0% of the first $10K, or $0
5% of the next $5K, or $250
GRAND TOTAL: $250. (Leaving them $)14,750
Someone making $5,000,000 …?!?
0% of the first $10K, or $0
5% of the next $20K, or $1K
10% of the next $20K, or $2K
15% of everything else, or $742,500K
GRAND TOTAL: $745,500. (Leaving them $4,354,500.)
Folks… I mean flat tax for everyone, no deductions, no brackets, no nothing… You Net $1 or $1m you pay the same percent.
I would also apply this to corporations especially now that they are starting to exercise rights as if they were actually people. Flat %. Also, cut out all the loop holes, tax deductions, dodges and programs that enable them to pay next to nothing including off-shoring part of the corp to take advantage of funneling profits through tax haven countries. Close all that shit down.
Everyone pays their part.
Flat tax is a regressive tax, placing the burden of taxes upon the backs of the poor.
If you don’t believe it, go sit in on day 1 of an Economics 101 class and learn about “declining marginal utility”.
I agree with this just like I agree with his stance on cheeseburgers in paradise.
I see what you did there.
That however almost didn’t stop me from googleing to figure out what Warren has against Jimmy’s restaurant chain. There is one near my parent’s house and believe me there is plenty of fault to be found.
“…some people claim there’s a woman to blame, but it’s nobody’s fault.”
Maybe he stepped on an errant pop tart, and blew out his flip-flop?
that’s Jimmy Buffett who sings about cheeseburgers. Warren Bufffett was like founder of Berkshire Hathaway.
You’ve lost your internet privileges for 24 hours.
The problem is that the rich make a lot of their money in capital gains and/or other means that aren’t taxed at the same rate as regular wages. As a result, they pay a smaller percentage, and our taxation is actually regressive.
I think taxation should be progressive. I also think we could get by on a much smaller budget if we would just cut defense already.
And the solution is, of course, to increase the capital gains tax. Such a tax would barely have any impact on 90%+ of the population, and only have a significant impact on the very wealthy.
I don’t know how people possibly spin a capital gains tax increase as a burden on the poor, but somehow they do. It’s kinda crazy.
A lot of people like to say that increasing a capital gains tax reduces investment. Personally I think that’s crap. It’s gambling, and like any other gambling, the income should be taxed according to your regular income bracket.
They say that because based on all available evidence, it happens. A prime example is when they cut capital gains rates in the early part of the decade. Post-cut, revenues actually went up despite the economy still being in recession ie they stimulated investment…
Uh, revenue has nothing to do with investment. Revenue has to do with sales.
Unless we’re talking about revenues of companies like Schwab and Fidelity.
Usually they do it by saying “about half of US households own stocks, so it benefits a large number of people.” While technically true, that statement ignores _how much_ stock each American owns.
Anyway, it doesn’t affect those households until they actually sell the stock anyway, so it’s a moot point.
Why buy stock if the government will take away your gains? Why invest at all?
Stop thinking so much about who the taxes affect but how the taxes will affect their decisions.
They prey on ignorance. I read that a very large percentage of Americans believe that Obama has raised our taxes. The truth is that most of us have actually had our taxes cut. He only wants to raise taxes on a small portion of the population. Yet the tea baggers have all of their minions believing that taxes have been raised on everyone.
You are correct about ignorance. Its a big problem about 20% of Americans think Obama is Muslim 20% of Americans dont think we landed on the moon :/
Why do I get the feeling that’s the same 20%?
I think Bill Mahr(sp?) said it best.
“Don’t you think it’s odd that you get told you want the same things millionaires want?
The problem with that is that is the one thing outlined in the Constitution as the responsibility if the Federal Government. I’m not saying that they couldn’t use a pinch here and there in their budget, but there are plenty of other areas of our federal government that could use a large cut because it’s a waste of money.
Yes, like the waste of money going on overseas in the middle east by the US gov.
If you tax people fairly as dollars are paid in wages, there is no need to worry about capital gains taxes (on US based assets).
The tax system is in no way “regressive”. The more you make, the more you pay. That is the definition of progressive.
Now the RATE may not be as progressive as you would like, but that does not make the tax system regressive.
The less you make, the larger a percentage of your income you pay. That is regressive.
That is the OPPOSITE of what we actually have.
On paper, yes. But I think there are arguments that a lot of rich people are able to find loopholes to avoid taxes (legally) that the poor simply can’t do because they don’t have excess income. Meaning, the rich find ways to avoid paying taxes on their surplus through various means. So their net tax is less than it should be.
I have no idea about the details, but I know the argument exists.
There are not that many “loopholes” for a person getting a W-2 income and putting that on their 1040, even if they itemize. They actually get screwed. Phaseouts galore. caps on most credits.
Look up the EIC some families get a huge “bonus” at the end of year.
The poor pay little to no taxes, but the middle class pay WAY more of their income than the rich, percentage wise.
Yes but if the poor paid their taxes, they would all be dead starving in the streets. Which then would raise everybody else’s taxes cleaning up dead families off the streets. Besides the poor still pay property taxes, and sales tax that have it. Also the poor generally have to pay more for services that middle and richer people take for granted. Your co pay is 20 dollars, they pay 100. Most are not on medicaid, because you have to be dirt dirt poor for that. At least in ohio.
It’s actually not the opposite of what we have. It is what we have.
The problem is that the rich have figured out ways to take their income as capital gains and dividends, and taxes on capital gains and dividends are ridiculously low. This is why Warren Buffet has publicly said that in one year he paid an effective tax rate of 17.7% on $46 million while his secretary making $60,000 was taxed at 30%.
If the rich actually had to take their income as income subject to the income tax, you’d be right, and we’d also have a ton more government revenue as the rich actually paid their share.
I say tax away since they have already shown that they are not going to spend domestically right now. Too bad it will never happen though since they have bought most of Congress. Trickle down never works since they won’t spend more then they are made to on employee pay.
Warren, if you don’t think you are being taxed enough, you can write Uncle Sam an extra check. The rest of us generally think we can spend our money better than the government can.
Exactly – you can send extra money to the government. They won’t make you take it back.
This relates to game theory. He wants to pay higher taxes as long as people in his same situation are taxed higher as well.
Hear hear! If Limousine Liberals think that “rich” people aren’t paying enough, they can always send a check to the Treasury Dept to put into the general revenue account.
Mr. Buffett, show us your records of how you paid extra to the IRS than what you were required to pay.
Unlike you, Mr Buffett, some “rich” people actually work for a living. If one makes good decisions and works hard, why should they not be compensated?
Milton Friedman, F.A. Hayek, et al, have shown that Socialist Keynesian economics don’t work. The individual knows better how to spend their money than some bureaucrat.
If individuals have different spending priorities than you do, Mr. Buffett, why don’t you spend your own money on those things? Why do the rest of us have to have the fruits of our labor wasted? Why don’t you spend your investors’ money on those things? I’m sure they won’t mind their money not being used to improve the business and increase the value of their investments.
You should calm down. Buffett is leading a huge charge for the very wealthy to increase their philanthropic giving, and he has promised to give away half of his wealth in the next decade. He is not the enemy, here.
He is perceived to be by those rich who think they became so solely through the sweat of their brow or luck of their spawn-parents. As if they operated in a vacuum bereft of context or civic responsibility.
The whole making good decisions, working hard and being compensated seems to be what the upper tax bracket is fighting against given they complain about decent standards of living for everyone not just those who are in the upper tax brackets.
“Milton Friedman, F.A. Hayek, et al, have shown that Socialist Keynesian economics don’t work. The individual knows better how to spend their money than some bureaucrat.”
This isn’t actually about telling the rich how to spend their money. It’s to unburden the poor so they can spend theirs.
Mr Dragon, why don’t you go out and buy a gun, a firehose, a packet of seeds, and a shovel. Because you could kill a terrorist, put out a fire, grow wheat, and dig a ditch for cheaper than the government can.
Your kind of argument makes very little sense because there are certain things that an individual CAN do cheaper, but don’t because it makes much more financial sense to pay the government to get involved. There is waste, but I’m happy the government is there for many things (especially the terrorist thing… I have a pretty weak stomach for killing). Even in my tax bracket, I’d be happy with a 3% increase costing my family less than $300 more a year. A good value for those of us who don’t have access to anything more than a fire extinguisher.
you don’t sound like you’re in the 250,000+ bracket that is being discussed. go back to sleep.
I’m not in the 250,000+ bracket, but I have many family members and friends who are. They work their butts off and pay plenty in taxes. Progressive taxes are not the hallmark of a just tax system.
I don’t think you should bring in justice in a conversation about the rich and poor.
Poverty isn’t justice either.
Oh, please! Like the poor don’t work just as hard for less? Lack of wealth is not an inherent moral failure, you know.
So those of us unemployed by the decisions of the rich should be content to live off the government that the rich doesn’t want to help pay for?
okay, first, he’s talking about Rich in a category you almost certainly don’t fit into, nor do most people.
Secondly, even if he were to do so, the government can’t legally accept it.
Thirdly, even if he were to write out his entire fortune to the Government, that would only last for about one week of government spending.
Of course they can keep it – all it takes is a check written out to the Bureau of the Public Debt. Buffet’s been beating his chest for years about how unfair it is that he pays so little in taxes, yet has not done anything to remedy the situation by whipping out his own checkbook. Put your money where your mouth is, Warren.
You mean by giving 80 billion away to help the poor all over the world via the Bill & Melinda Gates Foundation? And encouraging other billionairs to pony up 1/2 of their fortunes for similar endeavors since a net worth in the multiple of billions means none of your offspring have to worry about jack for generations?
I believe if you want to throw down with Warren either in philanthropy or in understanding economics, internet chest thumping is major fail on your part.
You mean by giving 80 billion away to help the poor all over the world via the Bill & Melinda Gates Foundation? And encouraging other billionairs to pony up 1/2 of their fortunes for similar endeavors since a net worth in the multiple of billions means none of your offspring have to worry about jack for generations?
I believe if you want to throw down with Warren either in philanthropy or in understanding economics, internet chest thumping is major fail on your part.
Warren isn’t talking about private donations and charity though. He’s talking about the government taking by force.
Most people like the idea of private charities. But that’s not what Warren is advocating. If he believes in the force of government so much, then he needs to stop giving his money to private charities and let the government decide how it’s best spent.
Warren isn’t talking about private donations and charity though. He’s talking about the government taking by force.
Most people like the idea of private charities. But that’s not what Warren is advocating. If he believes in the force of government so much, then he needs to stop giving his money to private charities and let the government decide how it’s best spent.
Yes, let’s take all arguments to their illogical extremes. That’s a fun way to communicate.
It’s like me saying, “if the republicans don’t like gov’t spending so much, they can put out their own house fires, and walk to work while us liberals drive on the interstate.”
If it would have any practical effect on the deficit, I’m sure Buffett would be glad to donate money to the US gov’t. Besides. . .he uses his fortune for the public good in other spheres. He donates so much money to the Gates Foundation, for example, because he thinks that’s where public tax dollars should go. For what he believes in, he’s found a more efficient way of getting the money there.
Buffett has been an ardent supporter of wealthy people paying more taxes, and likes to point out that he pays less as a percentage in taxes than his secretary does. Most of Buffett’s income though, isn’t from a regular salary, but is from long term capital gains, which are currently taxed at 15%, which effectively puts most of his income in the 2nd lowest tax bracket (this is why people like Steve Jobs will take a 1$ salary, it’s not altruistic, it’s a tax thing).
A $1 salary with $1 million in stock or options isn’t just a tax thing – Steve Jobs’ options could have expired worthless, or the stock could have tanked. He was giving up a pile of cash today, for a chance has a larger pile of cash in the future.
Then by all means, Warren, make that check payable to the “U. S. Treasury.” They’ll be happy to take it. No questions asked.
Then STFU and let the grown-ups handle it from here…
You’re mistaking the willingness to pay more with a desire to pay more.
Or ability
And the grown-ups should realize that, like he said, trickle-down doesn’t work.
Taxing the very rich at a higher rate than the rest of us still leaves them with bazillions of dollars.
What grown-ups?
The extremely stupid ones who think that the trickle-down theory works?
Or the tiny percentage of Americans who, like Warren Buffet, are extrememly rich?
How much would one rich crank paying extra money to the Treasury actually solve, I mean, really?
Not much, but it’d be a good gesture. He wants to pay more taxes, there’s nothing stopping him from doing so. Its’ that he wants OTHERS to pay more taxes that get people irate.
Personally, I’d be willing to write the $45k or so check to pay off my portion of the national debt*, but would only do so if I had the assurance that congress wouldn’t take it as a indicator to spend more money.
Heck, let’s pay it off in 10 years – that’s $375 more a month in taxes(car payment!), which I wouldn’t like, but we’d be so much better off debt free. Then start building a reserve fund for economic downturns.
*I’d have to liquidate much of my retirement savings to do so, but I think it’d be worth it.
That’s not a reason not to do the right thing.
I’m all for a progressive tax and agree with Buffet that the rich are having it too easy in recent years. It should also be important to make sure companies doing business in a country pay a realistic tax as well.
It’s easier for him to argue for higher personal income tax rates when his income is almost exclusively capital gains. This is just like his arguments in favor of estate taxes that help give BH leverage in buying out small businesses.
It is kind of pathetic how so many liberals view this guy as a shining example of benevolence.
The capital gains tax is part of the personal income tax
He’s also advocating for taxing capital gains like regular income. As for estate taxes, BH hasn’t made a meaningful acquisition of a private company in at least a decade.
Cap gains is lower for a real reason, not just for them rich. The income we are invested was already taxed, then we are putting it at risk. There are limits to deductions on losses.
If you are risking losing all your capital why should the upside be that you have to give almost have of it away?
You’re not double taxed on capital gains. You paid tax on the money you invested, but capital gains is a tax on capital GAINS, meaning the profit you made from the investment.
If you invest $100,000 and turn that into $125,000, that’s a capital gain of $25,000.
I just rewatched the segment. He did not say (nor has he ever to my recollection said) that capital gains should be taxed at the standard marginal rates. He loves to give the impression that is what he is saying, but if it was really what he meant, he would state it explicitly rather than just give the impression that is what he wants.
I am not sure what your definition of meaningful is, but they are purchasing companies, big and small, all the time. When the estate tax comes back next year, expect even more.
Yeah, he is using his facts of paying less than his secretary due to cap gains to argue for higher marginal rates. He is using a false argument.
If he wants to raise marginal rates he should use someone actually paying them as an example, and not cap gain rates.
It is kind of pathetic how so many people have no clue what they’re talking about.
He’s not just suggesting that the top income tax brackets should be raised.
He’s also suggesting that (some or most) capital gains be taxed like income so that the rich get taxed equitably.
You should educate yourself on a topic before posting.
While capital gains tax is a type of personal income tax — as it is not subject to the bracketed federal marginal income tax rates, people generally consider personal income tax to be the sum of W2 and 1099-MISC income.
Do you really think it is just a coincidence that his tax-the-rich mantra has only become louder as his yearly earnings have declined?
Nevermind all that though. All hail the magnanimous Lord Buffett!
Wait — are people still honestly throwing around the “trickle down” effect to justify lowering the taxes of the rich? Didn’t the 80′s teach us that was a bunch of bullshit?
That’s a half-truth from the MSM. Tax revenues increase when the tax rate is lowered. When people are permitted to keep more of what they earn, they use it in ways that result in tax revenue.
The problem with the 1980s is that we had a free-spending Democrat congress that increased non-Constitutional spending.
Looks like someone needs a history lesson.
“Reagan asked for $29.4 billion more than Congress passed.”
http://www.huppi.com/kangaroo/56More.htm
“If Congress had passed Reagan’s budgets exactly as proposed, the national debt would have been $29.4 billion worse.”
http://www.huppi.com/kangaroo/5Debt.htm#Back56
That and the senate was controlled by republicans 81-87.
Watch faux much?
Democrats are the big spenders? So why did Reagan and both Bushes leave office with ridiculous deficits, yet Clinton left office with a ridiculous surplus? Congress is not the be-all and end-all of expenditure decisions.
Yeah, that theory has been debunked a long time ago along with trickly down economics.
The amount of money we “lose” from the tax cuts, compared to the increased tax receipts aren’t even close. That’s why there’s all this discussion about paying for (i.e. off-setting) the Bush tax cuts. The same thing happened with Reagan’s tax cuts and Bush II’s tax cuts. If they were really stimulative and don’t add to the debt, then why is it adding to the debt. It should be reducing it right?
>>investor extraordinaire Warren Buffett somewhat shockingly said he and other Scrooge McDuck types should be paying more taxes than they are.
How is this shocking? He says the same thing every year. In addition, every year he declines to pay more in taxes.
It’s just another “I think YOU should pay more” speech.
As someone before said, it’s not a case of “I’ve got too much money; here, take it” as it is “If you increase my taxes, I promise not to b*tch too loudly.”
I like Buffett a lot, but if he really feels this way about taxes, why doesn’t he just pay them? The IRS allows you to make additional payments to pay down the national debt. He could just write a check for a few billion.
Trickle down has proven itself to be a joke. If you want to put money back into the economy, give it to the working class. In general, they like to spend and don’t like to save as much.
He’s absolutely right. The rich are hoarding the money, not spending. Just look at the Walmart owners. They are filthy rich, but pay their employees peanuts, and balk at having to provide any benefits. Perfect example.
It’s why each year the list of millionaires goes up, but the middle class continues to decline.
Hey! I’m a WalMart owner. It’s a publically traded company. I’ve got bits and pieces of them in my 401(k). Just because I won’t shop there doesn’t mean that I don’t want them to succeed.
They could succeed with a lower profit margin, they just don’t want to.
Who gets to decide what an appropriate profit margin is?
Hey I didn’t say appropriate, I just said lower. When your company is advocating that your employees go on food stamps and Medicaid but still have huge profits and huge stocks, it seems a little one sided since they are working to make the companies money.
Oh yeah, that 3.5% profit margin is just obscene. There’s no way they should keep 3.5 cents on ever dollar, it should be like 0 am I right?
When the companies are making billions of dollars, I’m sure they can get by with 2% and then pay their employees better so they don’t need social assistance. Or the top level people could take a pay cut. Also, walmart employees tend to spend as least some of their money at walmart so that’s more money back to the company.
Sure, after you pay your executives absurd salaries and the rest peanuts. This is the same argument the health care companies tried, “oh we hardly make any profit.” However, when you looked at the salaries for the highest 10% (see a pattern yet), it was huge compared to the public sector.
If you want a meaningful comparison, take profits + salaries of excutives.
Wal Mart would be a name in the past, like Bradleys and Woolworths, if they didn’t know what it takes to operate at a level investors demand.
Besides. how do we know how generous the Waltons are?
But his net worth is already wealth accumulated isn’t it? He doesn’t have a huge income persay. So is he advocating a wealth tax?
For those who think Keynesian economics is good, as Milton Friedman said, There are four ways money is spent:
1. You can spend your own money on yourself. When you do that, why then you really watch out what you’re doing, and you try to get the most for your money.
2. You spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost.
3. You spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch!
4. You spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government.
So where does that fit greedy corporate execs who spend money away from home, don’t want to pay their employees a living wage or health benefits and throw a temper tantrum every time someone suggests that the poor have a right to a decent standard of living?
Another note: Every dollar taxed is a dollar that’s taken out of the economy. No matter if it’s from Warren Buffet or a poor person.
Sure, part of that money might make it back to the economy, and part of it might go towards pro-economy projects like road maintenance, but most of it is wasted.
And how does this relate to the post?
Can the rich afford to pay more taxes sure. Is it fair? I don’t believe it is.
My problem is with the definiation if rich. Obama cut off is 250,000, which I think is too low.
Unless I win the lottery I dont think I will ever make 250,000 but employer does. If the governemt takes another 10, 20, or 30K in taxes from him thats not going to hurt him. He will still make his money, and he will still take care of his family and grand kids. How is that going to hurt me. he is generous with pay raises and bonuses. If there is 30K less for bonuses, and pay raises, because he is still going to make his money, that leaves less for the little people like me. I’ve seen it happen before.
Your employer doesn’t pay your bonuses out of his personal income, just FYI.
no kidding of course he doesent but if he makes less income becuase of higher taxes then he will take more salary from business which means less salary for employees.
This. All you guys who say “personal taxes will not have an effect on business income” don’t understand what my Dad would call “sausage theory.” If you squeeze one end of the sausage, the other end will just inflate more. If a small business owner has to pay more personal income taxes, then he or she will take more money out of the business and give less money to the employees. In this way, he or she “passes on” the tax to their staff in the form of less raises.
Your father sounds like a very intelligent and entertaining person.
disagree. There is a logical limit that your dad can pull out of the business or reduce salaries before becoming uncompetitive or bankrupting himself.
And yet people seem to think there is no logical limit that the governement can take without squeezing small business.
They do that even with lower taxes so the difference is?
oops I got a bit carried away
You can not continue to short change the work force your dependent on. Not only do businesses need customer but they need labor that can perform the work with the highest efficiency possible. This requires that you pay labor a competitive wage, else they quit and find someone who will. Turnover for business can be very costly.
no but when it comes to shortchanging family over shorthing employees as much as people dont want to admit it the employees comes after family.
I know i’ve been there before. In a small business where you know everyone personally and you can say “we are all one big family”. That is not true, at the end of the day your employee is still your employee, and famiily will always come out on top.
Your missing the point. Part of being in business is keeping your employees happy. By not compensating your employees competitively your risk losing them.
If, as a business owner, your OK with losing employees and having to constantly hire and train new ones and eating the costs associated with that? Then more power to you.
So the extra money you get now to make up for having to pay for more taxes is going to loss in production due to turnover.
Actually your missing the point. As someone else said using the sausage theory. There is only so much you squeeze a small business owner before something has to give. You can talk all you want about a happy work force and happy employees, but bottom line is people will always think of their own family before they think of their work family.
And FYI I do get the point. I have been a small business owner. I know what its like to have to cut everyones salary 10% so I can avoid letting everyone go. I also know what its like to not recieve a pay check because legally and morally I am obligated to pay my employees before I pay my self. Lucky for me I did not have children I had to feed or clothe or had to risk being homeless because I had to be late on a rent payment. Had I had a wife and childrent to support, that would have forced me to make different choices. Meaning family first.
I also know what its like to eventually have to pick and chose among my “work family” who I can keep and who I will still have to lay off.
So when you say I’m missing the point I know a lot more about what the point is that most people.
FYI no kidding. But if he less cash at the end of the day because of higher taxes, then he is going to get that cash from someplace. That place he is going to get that extra cash is in the form of a Higher Salary. Higher salary for him means less available money for everyone else.
“but employer does” Facepalm
Individual tax =/= business tax
Business only pays tax on profit, not income. Let alone their entire write offs and such.
net income != gross income
So Walmart employees should be rolling in money because their employers are rich? Fat chance. Even if they are taxed less, the very rich still are not going to pay their employees better if they can pay worse. Trickle down does not work.
There is a big difference between Walmart, and small business. But I still believe 250,000 income is not necessarily Rich.
Say the average annual salary is $60k. That’s a very comfortable wage for nearly anywhere in the country (huge mechas the obvious exception). Then consider a married couple with both the average. That’s VERY comfortable.
Now multiply that by 4.
And that’s not rich?
Heh I think you meant “mecca” but I did just picture someone riding inside a huge Mecha and I agree, those things probably cost a TON to maintain
If your employer doesn’t step up and cut his own income a little for the betterment of his employees, why would you think he would improve your pay at the same percentage his increases? Taxes cut on your boss 3% doesn’t mean he raises yours 3% (even if that math worked). Chances are he would put braces on his kids teeth, make an extra payment on his SUV, take the wife to a musical, replace that microwave that sparks past 2 minutes, get the HBO package for U-Verse, and upgrade his iPhone, THEN maybe give you some of what is left over. Fighting for his 3% break might get you an extra $50 at the end of the year.
I agree that the cut-off for paying “wealthy people” taxes should be much higher than $250K. Making that amount still leaves a family a LONG way from any resemblence to being wealthy.
Depending on what part of the country they live. In Texas and most of the midwest 250,000 is quite wealthy. However in Manhattan that’s just squeaking by considering cost of living.
You DO understand that if tax cuts expire for those who make over $250k, that the increase will only affect your income above $250k, right?
That’s how our tax system works. So someone making $250,001 isn’t taxed to oblivion while someone making $249,999 skates by.
The tax bill for both of those individuals would be nearly identical. The tax bill for someone making $260k would be almost the same as someone making $249,999.
Can’t we all agree to not open our fat mouths if we don’t know what we’re talking about?
I’m pretty sure most people don’t realize that.
I’m not sure what your thinking. Just on the Federal level taxpayers pay $35,000 on each $100,000 earned at the top level. Did you want to double that? If so, the system tends to compensate for these events meaning more pay for senior people and inflation for food staples and the like for all of us
Medicare and social security is something different. I don’t agree w the
Of course it’s fair. Think about it on a smaller scale. You make $100, and pay $30 in taxes. I make $1,000 but I only have to pay $200 in taxes because…why exactly?
He can pay my taxes than.
The biggest problem with our tax system is all the loopholes that allow the very wealthiest to avoid paying as great a percentage of their income as the less wealthy. Unless the tax code is simplified and the loopholes closed, all the talk about raising taxes on the wealthy is meaningless rhetoric designed to appeal (politically) to those who pay few or no taxes.
Exactly my point. Thank you for making it so much clearer than myself.
Clearer? Name one loophole. I want a code section also.
Its not even about Rich vs Poor. Warren Buffet pays 17% in taxes. His secretary pays 28%. He suspects most CEOs end up paying less than their secretaries, at least as a percentage.
The easy fix for that would be to raise the capital gains tax.
That would “fix” it. But it is lower for a reason. Buffet is a professional investor, and a case may be made that the cap gain tax on them could be higher. An average person risking his money on investments should not have taxes take a big cut of his gains.
Why? Would there suddenly be a lack of people willing to buy stock if the taxes were higher? I’m guessing not.
The problem is with the definition of “rich”. $250k/year is hardly “rich” in the San Francisco Bay Area.
truth. as someone who lives in san jose and pulls $32k (of which the gov’t takes a whopping $11k) the idea of ANY current level of taxation being ‘fair’ is absurd. in a city where studio appts in shitty neighborhoods go for $1k/month, well, existing here is like a very liberal form of slavery.
houses around here are cheaper than they’ve been in a long time, which translates to “it is possible to find a house for under $500k”. whoopee.
i’ve been making the same money for 5 years – can the gov’t really tell me that i’ve gotten $55k worth of services from them, and that the money could not have been better spent. please.
Simple solution – leave the Bush tax cuts for ordinary income as they are (i.e. don’t change the tax brackets) but tax capital gains and dividend income as ordinary income instead of capping it at 15% (which is the second lowest tax bracket for income earned less than $34k if single or $68k if married). So right now, if you earned one million dollars from dividends, you’d pay the same tax on that money as a married couple earning less than $68k.
Solution: don’t tax funds that the rich actually use for capital investment. Anything that goes into savings, the stock market, oddball exotic instruments that don’t produce anything but money, and offshore tax shelters? Tax it. Make them put their money where their mouth is.
Then why would they invest in the market? They would be better off not investing. Yeah, the rich would lose, but our society would lose much more. Think of the jobs created by these investments, and the many companies that would not have been started. Your idea is a prescription for stagnation and failure.
Another poster in another thread already mentioned this, unless you’re buying stock from an IPO or new shares you’re not increasing their capital.
You are increasing the capital out there. Any policy would also affect the IPO’s and initial investments. People need to sell for many reasons having a liquid market is very important. This argument doesn’t hold water at all.
If ever there was a more glaring argument for a repel of the income tax system and replacing it with some form of consumption tax, here it is right here.
Why, because Warren Buffet is famous for spending so little? With a consumption tax he would be paying about the same as you–not the same percentage, but the same dollar amount. Which means that you and everyone else would have to chip in with your 30% VAT on bread to make up the difference.
Trickle down economics…yeah keep wishful thinking and voting against your best interests.
Flat tax should be a reality.
No.
Yes.
The imbalance and inequity in earnings has been an increasing gap for more than the last decade. With inflation becoming a near definite in the next few years, there is no prudent choice but to raise taxes on the wealthiest Americans. The poorest Americans will no longer be able to afford the cost of food or shelter and as a result, will further burden the welfare systems to the point where taxes must be increased even more than if the wealthy took the hit right now. The wealthy who think that by keeping their taxes low, they are saving money will actually be paying more in taxes in the not so distant future. What I don’t understand is how people get so caught up on how the “poor rich folks” are taxed at a higher percent. Hello, if you take 20% to the guy making $50k he’s got $40k left to live and support his fanily on (very difficult to do where I live) but if you tax the guy who makes $500k %40(an overexageration of what truly ends up happening) he’s got $300k left. I refuse to cry for this man or woman. Unless you are a business owner who creates jobs locally to benefit society I am fine with this model. I do think that business owners should receive a reasonable break for their contributions to society according to a wage/employee basis.
Generally speaking any small business owner clearing 500k is a damned fool for not incorporating his business and having taxes with held from a paycheck. I know many farmers making far less than that that have incorporated their farming operation for that very reason. (Also to avoid the self-employment tax).
I currently pay enough in taxes per year that, if I were allowed to keep the money, I could hire someone for $8.75 an hour, 40 hours a week, to keep my house clean. Because of how tax brackets currently work, even though I got a $4.00 per hour raise, I’m taking home the same amount of cash I did pre-raise. My responsibility and workload increased, but the compensation I was allowed to keep from that remained the same. How is that fair or just?
I thought only the portion of your income in the new bracket was taxed at a higher rate
You are correct. If you make $34,000, that is taxed at one rate (two technically, but I’m trying to KISS), if you make $34,001, only that last dollar is taxed at the higher rate. If you got a raise and are taking home the same amount, either your witholding or some other deduction (health insurance, retirement, etc) changed to reduce it that far.
It was just federal tax and FICA that increased on me. Other witholdings remained the same. Either way, it’s both irrecoverably going to Uncle Sam.
I hope the Republicans get their desired return to the glorious ideals of mid-century America. The top tier tax rate was in the NINETIES, then. We’d be out of debt in no time!
Agree. If they want to go back to the “simplier times” like the 50′s, then I’m happy to have 50′s tax rates. How about the 80′s? I’ll take the Reagan tax rates too.
“somewhat shocking” ???? He has been saying this for a long time. This is nothing new.
If you are making 100K+, you are already taxed at 48%.
In Canada.
I don’t know about the USA.
Who’s this “we”?
Don’t lump in a couple with 2 kids making $250K in NYC with Buffett, please.
Thankfully, he’s not an elected official anyway.
It always takes more government dollars to defend a millionaire than a pauper…
This Buffet guy is pointing out the obvious…
I like how because I am successful and work really hard to earn a good salary, that I get punished for that success. Yay! So what’s the incentive to do well in school and in my career if the government keeps taking away the results of my hard work?
As long as you still take home more than less rich you have an incentive.
If we all paid the SAME % in taxes, how does that take away your incentive to work hard and earn more?
Why doesn’t he put his money where is mouth is and pay what he thinks he should. The government does accept gifts
All these rich people who moan about their “unfair” tax burden really, really need to check their privilege.
all those hollywood celelbs and california is still broke
same with almighty wall street, and NYS is a disgrace also
buying another ferrari doesn’t stimulate the economy
Pay more? Maybe. I’d be more for them paying what they actually owe without all the loopholes.
What loopholes? I really think these are exaggerated? Can you come up with any? How about all the deductions that get phased out for higher incomes? No one EVER talks about the phase outs.
The lower tax gain rate is for everyone and it is to spur investment. Yes, the rich benefit more, but I think we benefit from it too.
Exactly, I am a tax accountant. There are not many “loopholes” on your 1040 if you are making a lot of money on W-2. Corp (S & C) and Partnership there are things that you can do. Nothing illegal.
A lot of times a business owner with a K-1 pays more than they took in because they pay tax on the profit that flows through not the actual cash. Money kept inside the business may never be recouped even though se tax was paid on it. Distributions not in excess of basis will (generally) be not taxed (again!!)
Thank you! I really think this need to be restated and looked at. It is stated as fact that the rich don’t pay nearly anything because of the loopholes. It is stated here often and goes unchallenged. There are some, but they are generally for a real good reason. The phase outs are not talked about at all.
/begin rant
I have no problem with the ‘flat tax’ approach, but I think a VAT tax makes the most sense, or a combination of the two. Tie this together with a bill that states no fed/state budget can exceed the past years intake in taxes, NO EXCEPTIONS, and we can start paying down our national debt and get this economy (and our once great country) back on track towards success. The answers really are that simple, and we do NOT need all the fuh-king lawyers in D.C. trying to make this seem all complicated and dangerous and bs bs bs – it’s simple over spending that’s gotten us here, and it’s simple proper budgeting that will fix this problem. We need 4 years with a government modeled on a ‘benevolent dictorship’ with someone smart (and benevolent :^) to get this country back on track. As long as we have Pelosis and nObamas and dumb ass Texas daddy boys in office we will continue to slide down a slippery slope into anarchy – it is coming, and although the answers ARE simple, y’all won’t insist this happens, so we’ll continue our slide and we’ll ultimately be forced to eat the weak just to fill our bellies. At THAT point will we grow up and learn? Oh hell no. Cuz that would be too sensible and easy for our human brains to comprehend.
/end rant
I think Warren Buffett should pay 10 times what he pays now because he can afford it. So should Berkshire Hathaway. I think he should pay my taxes, too.
This is only “shocking” if you haven’t been listening. Warren Buffett has been making this argument for years, and he’s right. Progressivity of income taxes is the fairest way of raising taxes once you acknowledge that the millionth dollar you earn is worth a lot less, in terms of happiness/quality of life, than the first dollar. Unfortunately, the very wealthy tend to derive more and more of their income from investments rather than wages. So, they pay the 15% capital gains tax, rather than the 35% income tax bracket their wages would fall in.
Say what you want about most of the very wealthy, but those at the very top- Warren Buffett and Bill Gates- both have their heads on straight.
EVERYONE should be paying lower taxes.
So says another dickhead with access to hundreds of tax shelters. Who cares what this idiot says? Obviously he’s intelligent enough to predict how idiotic meddling can enrich private citizens, and has maximized benefit from that.
In many cases, the rich will pay a smaller percentage of their incomes as taxes than the middle class do. The first cause of this is that payroll taxes not apply beyond the first 100k or so of income. Those payroll taxes never show up in income tax statistics, leading to misunderstandings about the tax burden. If you make $500k a year, you pay the same payroll tax in absolute dollars as someone who makes $120K, and less as a percentage of your income than those who make less than you.
The second issue is tax planning. At a certain income, tax avoidance becomes a profitable game to play. These options are either not available to people with lower incomes because they lack the money to get that advice or they are not practical because they lack the necessary income to make the scheme worth it.
The third is privileged forms of income. We give preferential tax treatment to capital gains, even if cap. gains represent the majority or entirety of your income. This is how it can be true that the hedge fund manager gets taxed at 15% while his secretary gets taxed at 25%, because we treat their sources of income differently. In essence, this privileges wealth over labor, the “haves” over the “working to have.”
Warren: You have the ability to donate as much as you want to the government, since you feel that they are doing such a great job with our money.
Why do you want to pull others into the hole with you?