Stop coddling the super rich

[Skjellyfetti]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.

http://www.nytimes.com/2011/08/15/opini ... d=fb-share" onclick="window.open(this.href);return false;

[TheDancinMonarch]

So Congresses past and present have, without any urging or requests from the wealthy, placed benefits, exceptions, deductions, etc., etc., into the laws so that the wealthy, who never asked, could pay lower tax rates. Hmmm. For some reason, I am somewhat skeptical.

[Skjellyfetti]

So Congresses past and present have, without any urging or requests from the wealthy, placed benefits, exceptions, deductions, etc., etc., into the laws so that the wealthy, who never asked, could pay lower tax rates. Hmmm. For some reason, I am somewhat skeptical.

You're missing the point.

[danefan]

I can't wait to see the responses to this one.

[TheDancinMonarch]

So Congresses past and present have, without any urging or requests from the wealthy, placed benefits, exceptions, deductions, etc., etc., into the laws so that the wealthy, who never asked, could pay lower tax rates. Hmmm. For some reason, I am somewhat skeptical.

You're missing the point.

Please enlighten me.

[Skjellyfetti]

You're missing the point.

Please enlighten me.

So Congresses past and present have, without any urging or requests from the wealthy, placed benefits, exceptions, deductions, etc., etc., into the laws so that the wealthy, who never asked, could pay lower tax rates.

This is never argued in the article. I'm not sure where you got that from.

He's saying precisely the opposite. That Congress in TOO beholden to the wealthy. Not that Congress acts on their own with no input or advice from the megarich.

Actually, I have absolutely no idea where your post comes from... it is such a tangent to the article posted. Wouldn't be surprised if you didn't read it.

[Ivytalk]

Seems like deja vu all over again. Buffett says this about every 90 days.

I say we tax Buffett at 100% of his taxable income and leave the other billionaires alone!

[TheDancinMonarch]

Please enlighten me.

So Congresses past and present have, without any urging or requests from the wealthy, placed benefits, exceptions, deductions, etc., etc., into the laws so that the wealthy, who never asked, could pay lower tax rates.

This is never argued in the article. I'm not sure where you got that from.

He's saying precisely the opposite. That Congress in TOO beholden to the wealthy. Not that Congress acts on their own with no input or advice from the megarich.

Actually, I have absolutely no idea where your post comes from... it is such a tangent to the article posted. Wouldn't be surprised if you didn't read it.

Insulting me will not get you anywhere.

You are trying to tell me, or Mr. Buffett is, that Congressman X and Senator Y just, out of the goodness of their hearts, place items in legislation that benefit the rich causing the wealthy to pay less in taxes. Why do you think people pay those exorbitant amounts of money to attend campaign fund raisers? For gourmet food? Are those who pay food stamp recipients? No. They are the wealthy who place their money on a candidate in hopes that their candidate wins. And then because of their support for that candidate they will have access to the office holder to request perks. These people are not altruists.

[HI54UNI]

Pat Buchanan called him out on Morning Joe. Told him to send a $5 billion check to the treasury.

Buchanan is correct. Why does he have to wait for Congress to act? You can voluntarily send donations. Why did Buffett give $37 billion to several foundations a few years ago? Why didn't he just keep it and when he died the govt could have taxed it?

[danefan]

This is never argued in the article. I'm not sure where you got that from.

He's saying precisely the opposite. That Congress in TOO beholden to the wealthy. Not that Congress acts on their own with no input or advice from the megarich.

Actually, I have absolutely no idea where your post comes from... it is such a tangent to the article posted. Wouldn't be surprised if you didn't read it.

Insulting me will not get you anywhere.

You are trying to tell me, or Mr. Buffett is, that Congressman X and Senator Y just, out of the goodness of their hearts, place items in legislation that benefit the rich causing the wealthy to pay less in taxes. Why do you think people pay those exorbitant amounts of money to attend campaign fund raisers? For gourmet food? Are those who pay food stamp recipients? No. They are the wealthy who place their money on a candidate in hopes that their candidate wins. And then because of their support for that candidate they will have access to the office holder to request perks. These people are not altruists.

Buffet isn't saying that at all. Either is Skjelli.

Buffet is telling Congress to stop catering to the uber rich and instead start catering to the average joe. The super rich don't need to have more access.

[danefan]

Pat Buchanan called him out on Morning Joe. Told him to send a $5 billion check to the treasury.

Buchanan is correct. Why does he have to wait for Congress to act? You can voluntarily send donations. Why did Buffett give $37 billion to several foundations a few years ago? Why didn't he just keep it and when he died the govt could have taxed it?

Sorry but ridiculous questions like that are why we'll never get anywhere.

1. His income tax alone isn't going to do anything.
2. He shouldn't be forced to be subject to unequal taxation compared to others in his income tax bracket just to prove he's serious.
3. Him supporting these tax increases publicly means he's willing to pay it when Congress gets its act together and realizes it needs to close the BS tax loop-holes. What does writing a check do?

[danefan]

He's raising one simple question:

Why should certain types of income (capital gains, dividends and carried interest) be subject to preferential income tax rates?

Can you think of a reason? I can think of only one - to coddle the rich who are the only Americans who really benefit from such provisions.

[TheDancinMonarch]

He's raising one simple question:

Why should certain types of income (capital gains, dividends and carried interest) be subject to preferential income tax rates?

Can you think of a reason? I can think of only one - to coddle the rich who are the only Americans who really benefit from such provisions.

The politicians are not coddling the rich as such. They are coddling their campaign supporters who just happen to be rich.

[AZGrizFan]

He's raising one simple question:

Why should certain types of income (capital gains, dividends and carried interest) be subject to preferential income tax rates?

Can you think of a reason? I can think of only one - to coddle the rich who are the only Americans who really benefit from such provisions.

The politicians are not coddling the rich as such. They are coddling their campaign supporters who just happen to be rich.

\And they are coddling themselves, becuase most of THEM are rich as well.

[HI54UNI]

Pat Buchanan called him out on Morning Joe. Told him to send a $5 billion check to the treasury.

Buchanan is correct. Why does he have to wait for Congress to act? You can voluntarily send donations. Why did Buffett give $37 billion to several foundations a few years ago? Why didn't he just keep it and when he died the govt could have taxed it?

Sorry but ridiculous questions like that are why we'll never get anywhere.

1. His income tax alone isn't going to do anything.
2. He shouldn't be forced to be subject to unequal taxation compared to others in his income tax bracket just to prove he's serious.
3. Him supporting these tax increases publicly means he's willing to pay it when Congress gets its act together and realizes it needs to close the BS tax loop-holes. What does writing a check do?

They aren't ridiculous questions. If he is so concerned write the damn check. Maybe others will too. Maybe it will force Congress to say gee, maybe higher taxes aren't so bad and change the law. But it is easier to score points with cheap talk than to actually do anything.

Regarding your bullet points:

1. Neither is increasing the income tax on anybody else. We have a spending problem not a taxation problem.
2. He wouldn't be forced. Hence the VOLUNTARY donation.
3. Shows that he is serious. Actions speak louder than words.

The answer is real simple http://www.fairtax.org

[AZGrizFan]

Sorry but ridiculous questions like that are why we'll never get anywhere.

1. His income tax alone isn't going to do anything.
2. He shouldn't be forced to be subject to unequal taxation compared to others in his income tax bracket just to prove he's serious.
3. Him supporting these tax increases publicly means he's willing to pay it when Congress gets its act together and realizes it needs to close the BS tax loop-holes. What does writing a check do?

They aren't ridiculous questions. If he is so concerned write the damn check. Maybe others will too. Maybe it will force Congress to say gee, maybe higher taxes aren't so bad and change the law. But it is easier to score points with cheap talk than to actually do anything.

Regarding your bullet points:

1. Neither is increasing the income tax on anybody else. We have a spending problem not a taxation problem.
2. He wouldn't be forced. Hence the VOLUNTARY donation.
3. Shows that he is serious. Actions speak louder than words.

The answer is real simple http://www.fairtax.org

You know, for a union guy, you're alright.

[danefan]

He's raising one simple question:

Why should certain types of income (capital gains, dividends and carried interest) be subject to preferential income tax rates?

Can you think of a reason? I can think of only one - to coddle the rich who are the only Americans who really benefit from such provisions.

The politicians are not coddling the rich as such. They are coddling their campaign supporters who just happen to be rich.

What?

Material campaign donors = rich. Rich = material campaign donors.

Constituents =/ Campaign Donors

Seriously though - can you answer the question he's asking?

[danefan]

Sorry but ridiculous questions like that are why we'll never get anywhere.

1. His income tax alone isn't going to do anything.
2. He shouldn't be forced to be subject to unequal taxation compared to others in his income tax bracket just to prove he's serious.
3. Him supporting these tax increases publicly means he's willing to pay it when Congress gets its act together and realizes it needs to close the BS tax loop-holes. What does writing a check do?

They aren't ridiculous questions. If he is so concerned write the damn check. Maybe others will too. Maybe it will force Congress to say gee, maybe higher taxes aren't so bad and change the law. But it is easier to score points with cheap talk than to actually do anything.

Regarding your bullet points:

1. Neither is increasing the income tax on anybody else. We have a spending problem not a taxation problem.
2. He wouldn't be forced. Hence the VOLUNTARY donation.
3. Shows that he is serious. Actions speak louder than words.

The answer is real simple http://www.fairtax.org

I agree with you on the answer BTW, but I do disagree on your other points.

He is serious. If you conveniently chose to ignore that because he isn't willing to write a check to the government than I guess that's your prerogative.

We have both a spending problem and a taxation problem.

There is no one in their right mind that thinks our tax system is fine.

[AZGrizFan]

They aren't ridiculous questions. If he is so concerned write the damn check. Maybe others will too. Maybe it will force Congress to say gee, maybe higher taxes aren't so bad and change the law. But it is easier to score points with cheap talk than to actually do anything.

Regarding your bullet points:

1. Neither is increasing the income tax on anybody else. We have a spending problem not a taxation problem.
2. He wouldn't be forced. Hence the VOLUNTARY donation.
3. Shows that he is serious. Actions speak louder than words.

The answer is real simple http://www.fairtax.org

I agree with you on the answer BTW, but I do disagree on your other points.

He is serious. If you conveniently chose to ignore that because he isn't willing to write a check to the government than I guess that's your prerogative.

We have both a spending problem and a taxation problem.

There is no one in their right mind that thinks our tax system is fine.

Let me rephrase that for 54: We don't have a REVENUE problem. Now, how we go about COLLECTING that revenue and the formulas used is a joke...but they have ENOUGH revenue....

[danefan]

I agree with you on the answer BTW, but I do disagree on your other points.

He is serious. If you conveniently chose to ignore that because he isn't willing to write a check to the government than I guess that's your prerogative.

We have both a spending problem and a taxation problem.

There is no one in their right mind that thinks our tax system is fine.

Let me rephrase that for 54: We don't have a REVENUE problem. Now, how we go about COLLECTING that revenue and the formulas used is a joke...but they have ENOUGH revenue....

I understood that. I think we have both. We need to cut spending and increase revenue. We have been unable to do either over the last 12+ years. We've increased spending and decreased revenue.

But IMO, it needs to be a balancing act - meeting our reductions in spending with our increases in revenue which at some point will meet in the middle. That's how we get out of this mess.

[TheDancinMonarch]

The politicians are not coddling the rich as such. They are coddling their campaign supporters who just happen to be rich.

What?

Material campaign donors = rich. Rich = material campaign donors.

Constituents =/ Campaign Donors

Seriously though - can you answer the question he's asking?

There is no equivalence between my $5 contribution and some guy who pays for a $10,000 dinner. We are both constituents and both donors but that is where the similarity ends. The $10,000 guy get access. Me, not so much. And for the record I would not send any of these guys/gals a penny. Hell, they can steal all they want.

[danefan]

What?

Material campaign donors = rich. Rich = material campaign donors.

Constituents =/ Campaign Donors

Seriously though - can you answer the question he's asking?

There is no equivalence between my $5 contribution and some guy who pays for a $10,000 dinner. We are both constituents and both donors but that is where the similarity ends. The $10,000 guy get access. Me, not so much. And for the record I would not send any of these guys/gals a penny. Hell, they can steal all they want.

So you and I and Buffet are saying the same thing - stop coddling the guys that pay $10,000 for dinner and start paying attention to the rest of your constituents.

[TwinTownBisonFan]

What?

Material campaign donors = rich. Rich = material campaign donors.

Constituents =/ Campaign Donors

Seriously though - can you answer the question he's asking?

There is no equivalence between my $5 contribution and some guy who pays for a $10,000 dinner. We are both constituents and both donors but that is where the similarity ends. The $10,000 guy get access. Me, not so much. And for the record I would not send any of these guys/gals a penny. Hell, they can steal all they want.

cynicism has become a cheap form of pseudo-sophistication... but nothing here was particularly cleaver, nor insightful.

[TwinTownBisonFan]

Buffet's point is well made - to a point.

The super-wealthy aren't catered to in the tax code because they are donors, or because many pols are wealthy. Their tax burden is falling because of the GOP's desperate and undying devotion to "starve the beast" policies that they hope will someday force our nation in to a fiscal crisis and then they can use that moment to return us to the 1920's... where they can slash all spending to pre-new deal levels (except of course DoD which should for some reason still be funded at Cold War levels and never questioned)

The blame isn't solely on the Repubs for making their absurdest claims about taxes - Democrats have, for 20 years or more have bailed on fighting on the issue because it's not a good issue to run on. So what we end up with is what we have now...

We learned in MN that you can have electoral success arguing for taxing the top 2% - there is broad support for this (cue Z with his tired mantra of "well of course..." blah)

But the problem is two-fold... one - the Republican Party has become so completely obsessed with NEVER EVER raising revenues in any way, ever... that not one of their presidential candidates would accept a budget with $10 in cuts for every $1 in increases... and the Dems are still too gunshy to use this rampant extremism to bash their heads in...

[danefan]

Buffet's point is well made - to a point.

The super-wealthy aren't catered to in the tax code because they are donors, or because many pols are wealthy. Their tax burden is falling because of the GOP's desperate and undying devotion to "starve the beast" policies that they hope will someday force our nation in to a fiscal crisis and then they can use that moment to return us to the 1920's... (and hey - looks like they're getting their wish...)

The blame isn't solely on the Repubs for making their absurdest claims about taxes - Democrats have, for 20 years or more have bailed on fighting on the issue because it's not a good issue to run on. So what we end up with is what we have now...

We learned in MN that you can have electoral success arguing for taxing the top 2% - there is broad support for this (cue Z with his tired mantra of "well of course..." blah)

But the problem is two-fold... one - the Republican Party has become so completely obsessed with NEVER EVER raising revenues in any way, ever... that not one of their presidential candidates would accept a budget with $10 in cuts for every $1 in increases... and the Dems are still too gunshy to use this rampant extremism to bash their heads in...

The reduced capital gains and dividend rates and the carried interest exemption are 100% the result of big money influence. The lobbying to extend the carried interest exemption for hedge fund managers was despicable in 2010.