Buffet Says: Tax the Mega Rich

[Riceball]

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

Quick summary: Warren Buffet, rich guy and nerd-glasses-aficionado says "tax me, bitches, I want to help out the economy". OK, there's a bit more to it than that, but he argues that he and his cohort of mega millionares and billionares should pay a heap more in taxes than they do now in order to spare lower and middle income earners from any increases resulting from the 'deficit reduction' process.

I like the sentiment, but I don't know whether its that simple. Any thoughts?

[MasterShakezula]

I think little wrong could come from that.  My history teacher last year said that during the Great Depression, the super rich gave their fair share to improve things for the rest, why shouldn't it happen now?

[Adami]

I think little wrong could come from that.  My history teacher last year said that during the Great Depression, the super rich gave their fair share to improve things for the rest, why shouldn't it happen now?

Yes, but giving is different than being taxed. If he wants to give money, he could just donate it.

[Jamesman42]

I'm not pretending to know anything about politics, but why would this be a bad idea?

In fact, why doesn't the government do it? I ask from complete ignorance on the subject

[MasterShakezula]

I'm pretty sure the reason the gov doesn't tax the rich people is because they get paid by said rich people not to tax them, unfortunately.

[emindead]

Warren Buffett should feel free to donate all the money he wants to the government, but his plan to have the government forcibly extract more wealth from the so-called wealthy amounts to advocating robbery from a sector that is a major contributor to economic growth. In general, he is getting worse and worse, and he is living proof that investor billionaires wouldn't make good political leaders.

I'm not pretending to know anything about politics, but why would this be a bad idea?

In fact, why doesn't the government do it? I ask from complete ignorance on the subject

Taxation is theft, purely and simply, even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match. It is a compulsory seizure of the property of the State's inhabitants, or subjects.

[millahh]

Warren Buffett should feel free to donate all the money he wants to the government, but his plan to have the government forcibly extract more wealth from the so-called wealthy amounts to advocating robbery from a sector that is a major contributor to economic growth. In general, he is getting worse and worse, and he is living proof that investor billionaires wouldn't make good political leaders.

Seriously?  The mega-rich pay ~20%, the miuddle-class and poor pay ~40%.  The idea that closing some of the loopholes is "robbery" is laughable.

[Adami]

Warren Buffett should feel free to donate all the money he wants to the government, but his plan to have the government forcibly extract more wealth from the so-called wealthy amounts to advocating robbery from a sector that is a major contributor to economic growth. In general, he is getting worse and worse, and he is living proof that investor billionaires wouldn't make good political leaders.

Seriously?  The mega-rich pay ~20%, the miuddle-class and poor pay ~40%.  The idea that closing some of the loopholes is "robbery" is laughable.

Haven't you read the libertarians posts here? 51% of the population (the poor) don't pay any taxes, the rich pay everything!

[emindead]

Please consider that Tucker is basing himself on the last quote I posted. So it's not laughable by any margin. Paying more taxes will never benefit the economy.

[Riceball]

Wow there are some real right wing nutcases in the world; why does taxation of the rich amount to theft but taxing the poor not?

Further, the only reason rich people "drove" economic growth is because they control the money. Arguing that real economic growth is created by investment in financial assets is like saying I'll build a fire out of hay and then cry when the flames burn it all to ashes. Wow, that was melodramatic of me...

EDIT: millahh has hit the nail on the head, although I'm pretty sure this point has been laboured in countless other threads. My aim was to discuss the relative merits of what he is proposing, not creating another Government vs anti-Government clusterfuck. This is getting old...

EDIT2: I just realise I said investment in assets doesn't drive growth (which, ummm, yeah); I meant financial assets.

[orcus116]

Warren Buffett should feel free to donate all the money he wants to the government, but his plan to have the government forcibly extract more wealth from the so-called wealthy amounts to advocating robbery from a sector that is a major contributor to economic growth. In general, he is getting worse and worse, and he is living proof that investor billionaires wouldn't make good political leaders.

Seriously?  The mega-rich pay ~20%, the miuddle-class and poor pay ~40%.  The idea that closing some of the loopholes is "robbery" is laughable.

The mega-rich 20% >> the middle class/poor 40% money wise.

[Riceball]

I think he meant tax rate not the percentage of total taxation paid by the particular group.

I've always been an advocate for a progressive tax scale, so you pay more at the margin the more income that you earn so that your effective tax rate continuously increases. The way the US system is set up at the moment, from what I've read and from that article, its seems its a mildly regressive system.

To me, this doesn't make a lot of sense, as the US has the highest concentration of megarich people in the world (thats a totally unsubstantiated statement btw). If you are the Government, why wouldn't you leverage that? Like Buffet says in the article, he paid ~6m in taxes last year, which equates to only 17 per cent of his taxable income. Right now, although I acknowledge I'm in Australia, I pay about 28 per cent of my taxable income in taxes. It just doesn't make sense to me.

If the tax scales were set appropriately, and exemptions and loopholes were fixed or tightened, I would expect that richer people would pay at least the same level of effective tax, not less.

[PraXis]

The top 1% pay 40%. If Buffet wants to lead an example, he can cut a huge check to the IRS any time he wants.

[orcus116]

That itself wouldn't really solve anything.

[Riceball]

The top 1% pay 40%. If Buffet wants to lead an example, he can cut a huge check to the IRS any time he wants.

Yes, thats the what the headline rate is, but I think hes talking about investment earnings also. There's also a shit-tonne of loopholes and exemptions that benefit those with large asset pools (depreciation tax shields, for one) which also bring down the effective rate. Keep in mind, Buffet is the world's third richest person, so he would be in this "top 1 per cent" bracket.

I don't think Buffet was even talking about the top 1 per cent, he makes mention in his article about the top 0.3 per cent paying more. And ofcourse he could, but as Orcus said what would that solve? Legislating a tax change would help the budget into the future, not just right now.

Also, when you say 40 per cent, do you mean of total taxation or their effective marginal tax rate?

[PraXis]

I'm only talking federal income taxes:

Top 1% pay 40%
Top 49% pay 100%
Bottom 51% pay 0%.

There are many loopholes (i.e. deductions) and these must be closed, but the rates need to be lowered after that... the tax base has to be broadened.

Each state has its own thing (as it should be)..i.e. people flocking to a state like TX (no state income tax and lower regulations) in droves.

As for capital gains, the rate is 15% and that's how most of the top 10% make their money (rather than through a salary) but if you raise capital gains taxes, the gov't ciphers more investment capital... either a flat tax or the FairTax are needed.

[senecadawg2]

Tax the mega rich. In our capitalist system the large multi-billion dollar companies are extremely powerful, hindering the very Democratic process. Tax the  out of them.

[PraXis]

Tax the mega rich. In our capitalist system the large multi-billion dollar companies are extremely powerful, hindering the very Democratic process. Tax the  out of them.

We already have the highest corporate tax rate in the world. If you raise it, there will be more utilization of loopholes, outsourcing, automation, etc. Gov't needs to get out of the way.

[Riceball]

Where do you get those stats from? I'd be really interested to check them out. The top 1 per cent paying 40 per cent of total income taxation seems a little farfetched to me, but I've been proven wrong before.

Yeah that's what I thought, thats very low CGT by world standards, and considering all of the tricks you can pull with assets and gains, no wonder they pay less as a percentage of their income than the average joe.

I've been quite interested in the US system of federalism of late (I'm writing a paper for work and my thesis for uni on untied grant equalisation in Australia) and I like the competition model employed in the US.

[PraXis]

Where do you get those stats from? I'd be really interested to check them out. The top 1 per cent paying 40 per cent of total income taxation seems a little farfetched to me, but I've been proven wrong before.

Yeah that's what I thought, thats very low CGT by world standards, and considering all of the tricks you can pull with assets and gains, no wonder they pay less as a percentage of their income than the average joe.

I've been quite interested in the US system of federalism of late (I'm writing a paper for work and my thesis for uni on untied grant equalisation in Australia) and I like the competition model employed in the US.

Bureau of Labor Statistics (BLS).

In 2008, it was 53% paying 100% and 47% paying 0%.
In 2009, it was 49% paying 100% and 51% paying 0%.

The 2009 figures are the latest from the BLS... I fear the 2010 and 2011 numbers, but I won't be shocked.

Poke around their site to view stats:

https://www.bls.gov/

[William Wallace]

Buffett is just flat wrong.

https://danieljmitchell.wordpress.com/2011/08/15/warren-buffetts-fiscal-innumeracy/

His numbers are flawed in two important ways.

1. When Buffett receives dividends and capital gains, it is true that he pays “only” 15 percent of that money on his tax return. But dividends and capital gains are both forms of double taxation. So if he wants honest effective tax rate numbers, he needs to show the 35 percent corporate tax rate.

Moreover, as I noted in a previous post, Buffett completely ignores the impact of the death tax, which will result in the federal government seizing 45 percent of his assets. To be sure, Buffett may be engaging in clever tax planning, so it is hard to know the impact on his effective tax rate, but it will be signficant.

2. Buffett also mischaracterizes the impact of the Social Security payroll tax, which is dedicated for a specific purpose. The law only imposes that tax on income up to about $107,000 per year because the tax is designed so that people “earn” a corresponding  retirement benefit (which actually is tilted in favor of low-income workers).

Imposing the tax on multi-millionaire income, however, would mean sending rich people giant checks from Social Security when they retire. But nobody thinks that’s a good idea. Or you could apply the payroll tax to all income and not pay any additional benefits. But this would turn Social Security from an “earned benefit” to a redistribution program, which also is widely rejected (though the left has been warming to the idea in recent years because their hunger for more tax revenue is greater than their support for Social Security).

If we consider these two factors, Buffett’s effective tax rate almost surely is much higher than the burden on any of the people who work for him.

[Scheavo]

Where do you get those stats from? I'd be really interested to check them out. The top 1 per cent paying 40 per cent of total income taxation seems a little farfetched to me, but I've been proven wrong before.

The problem is they just ignore the reasons for why this is so. They pay so much of the income tax becuase they make so much of the income.

[Riceball]

Yeah it would be interesting to look at that in the context of the Gini curve; although they are probably out of fashion these days.

[William Wallace]

Where do you get those stats from? I'd be really interested to check them out. The top 1 per cent paying 40 per cent of total income taxation seems a little farfetched to me, but I've been proven wrong before.

The problem is they just ignore the reasons for why this is so. They pay so much of the income tax becuase they make so much of the income.

But that argument is usually used in the context of a debate over raising rich people's taxes even more.

[Nigerius Rex]

more buffett smashing:

As most of the media goes gaga over Billionaire Obama fundraiser Warren Buffett calling for tax hikes, (like he did in 2001, and 2004, and plenty of times in between), let’s remember a few things.

 

Buffett Profits from Taxes He Supports

Buffett regularly lobbies for higher estate taxes. He also has repeatedly bought up family businesses forced to sell because the heirs’ death-tax bill exceeded the business’s liquid assets. He owns life insurance companies that rely on the death tax in order to sell their estate-planning businesses.

Buffett Profits from Government Spending

Buffett made about a billion dollars off of the Wall Street bailout by investing in Goldman Sachs on the assumption Uncle Sam would bail it out. He also is planning investments in ethanol giant ADM and government-contracting leviathan General Dynamics.

If your businesses’ revenue comes from the U.S. Treasury, of course you want more wealth.

Never will understand the prioritization of taxes. We could come up with the most glorious and efficient tax system the world has ever seen and it still wont matter because the spending is where the problem is. Seems like an excuse and delaying tactic to me.

[Scheavo]

Where do you get those stats from? I'd be really interested to check them out. The top 1 per cent paying 40 per cent of total income taxation seems a little farfetched to me, but I've been proven wrong before.

The problem is they just ignore the reasons for why this is so. They pay so much of the income tax becuase they make so much of the income.

But that argument is usually used in the context of a debate over raising rich people's taxes even more.

So? Because, as a rich person just attested to (I think trying to say that Warrant Buffet, a financial tycoon, isn't aware of how much he is paying in taxes is ludicrous), the percentage each rich person pays is primarily relevant. There's corruption in our tax code.

[Major Thirteenth]

So? Because, as a rich person just attested to (I think trying to say that Warrant Buffet, a financial tycoon, isn't aware of how much he is paying in taxes is ludicrous), the percentage each rich person pays is primarily relevant. There's corruption in our tax code.

Mr. Buffet is offering us additional statism, collectivism, and socialism with his recommendation of higher taxation on the rich. He has therefore disqualified himself from being a serious advisor on national economic policy. His pronouncements illustrate the old saw to the effect that there is no fool like an old fool.

[Chino]

The biggest problem is that most of the super rich have their money tied up in stocks. They bought off congress and had legislation passed that only taxes them 15% on money generated by stocks. That should at last be the same as other income tax rates.

[soundgarden]

Taxation is theft, purely and simply, even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match. It is a compulsory seizure of the property of the State's inhabitants, or subjects.

Where does the state get the funds to build and maintain roads, for example?  Or to maintain a viable national defense?  Or do private enterprises have the stability and safety of a nation as their prime interest...?

[slycordinator]

Wow there are some real right wing nutcases in the world; why does taxation of the rich amount to theft but taxing the poor not?

Because you like strawman arguments? I'm not sure.

People arguing that taxation is theft are arguing that it's theft for all, including the poor.

[Nigerius Rex]

Taxation is theft, purely and simply, even though it is theft on a grand and colossal scale which no acknowledged criminals could hope to match. It is a compulsory seizure of the property of the State's inhabitants, or subjects.

Where does the state get the funds to build and maintain roads, for example?  Or to maintain a viable national defense?  Or do private enterprises have the stability and safety of a nation as their prime interest...?

Not speaking for him but generally that position is not that taxes are all bad no matter what, but that taxes are necessary to a point, and if we were still at that point when our tax money went to only required services like fire fighting, roads, and national defense, I do not believe anyone would have a problem. But when you reach the level the United States is now with the number of social programs and fees and is still increasing, then it amounts of highway robbery because they can and will forcefully take things from you if you do not agree and are otherwise a model citizen.

[William Wallace]

Where do you get those stats from? I'd be really interested to check them out. The top 1 per cent paying 40 per cent of total income taxation seems a little farfetched to me, but I've been proven wrong before.

The problem is they just ignore the reasons for why this is so. They pay so much of the income tax becuase they make so much of the income.

But that argument is usually used in the context of a debate over raising rich people's taxes even more.

So? Because, as a rich person just attested to (I think trying to say that Warrant Buffet, a financial tycoon, isn't aware of how much he is paying in taxes is ludicrous), the percentage each rich person pays is primarily relevant. There's corruption in our tax code.

I'm sure he knows what he pays in taxes; that's not the point. He's framing the numbers to make a political point, as the article I linked to pointed out. His op-ed may make the advocates of "social justice" swoon, but don't doubt for a minute that he has something to gain from defending the tax code. That brings me to another observation. The rich are typically understood as a greedy class of people, coddled by the state thanks to their ability to buy influence. But as soon as one wealthy individual comes in favor of higher taxes, he's a sober minded citizen of the world.

[Scheavo]

You're switching your points and and avoiding the facts that Warren Buffet get's taxed at a lower rate than his Secretary, and he's calling out the blatant injustice of that. So far, all the libertarians have ignored this simple mathematical fact, and have brought up nothing but red herrings and straw mans about higher taxes and how it's "theft." Warren Buffet and his secretary should be pay the same percentage of tax on applicable income - anything else is corruption.

Estate tax? Ignore his positition on that, I thought we were talking about income tax anyways? That he invested in Goldman Sacchs? A horrible problem with our banking system that I think neither of us likes.

Also, you display how little you understand liberals thinking. Not all rich people are greedy, not all business men are greedy, hell, probably a majority of them aren't... but they are out there, and we need protection from them. Are all humans murderers? Nope, but that doesn't stop us from having laws against murder.

[chknptpie]

Taxes in the US right now are a joke. Also the fact that people believe we can go on without raises taxes (even on a general level, not just for one bracket) scares me. I can't comprehend how that thought process even works.

[pogoowner]

Taxes in the US right now are a joke. Also the fact that people believe we can go on without raises taxes (even on a general level, not just for one bracket) scares me. I can't comprehend how that thought process even works.

The people that don't advocate raises in taxes typically advocate reductions in spending. I don't think it's all that incomprehensible.