Warren Buffet's Opinion Taxes.

[manasia]

Stop Coddling the Super-Rich
By WARREN E. BUFFETT
Omaha

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 â€" the income tax I paid, as well as payroll taxes paid by me and on my behalf â€" was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income â€" 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 â€" 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 â€" not even when capital gains rates were 39.9 percent in 1976-77 â€" 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 â€" a staggering $227.4 million on average â€" 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 â€" there were 236,883 such households in 2009 â€" 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 â€" there were 8,274 in 2009 â€" 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/opinion/stop-coddling-the-super-rich.html?_r=1&src=tp&smid=fb-share

An Item to note, is that even this super rich dude, says Jobs are not created based upon Tax Cuts.

[JeffreyS]

I printed this and left it on the break room table.

[NotNow]

I'm good with it, as long as you guys read the entire piece:

"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."

He means entitlements.

I would also add not only a balanced budget amendment (with emergency waivers, of course), but also shunning the "presumed growth" of the Federal budget.  Budgets should start at last years amount and ANY increases must be justified. 

I would also negotiate many more cuts in the Federal budget.

[manasia]

I'm good with it, as long as you guys read the entire piece:

"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."

He means entitlements.

I would also add not only a balanced budget amendment (with emergency waivers, of course), but also shunning the "presumed growth" of the Federal budget.  Budgets should start at last years amount and ANY increases must be justified. 

I would also negotiate many more cuts in the Federal budget.

I read the entire article, I was not arguing against entitlement cuts, their are some that need to be addressed, but the over tone of the message is that the rich including himself can afford to pay taxes.

[Non-RedNeck Westsider]

I'm good with it, as long as you guys read the entire piece:

"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."

He means entitlements.

I would also add not only a balanced budget amendment (with emergency waivers, of course), but also shunning the "presumed growth" of the Federal budget.  Budgets should start at last years amount and ANY increases must be justified. 

I would also negotiate many more cuts in the Federal budget.

Or possibly 'corporate' entitlements

[NotNow]

See, we just solved the budget problem.  It is now just a matter of amounts. 

Mr. Buffett said that the "rich" had made $90.9 Billion and only paid 21.5% in taxes in 2008.  He said they paid 29.2% in 1992.  Let's see, in 2008 they paid $19.1 Billion but we will raise that to say...35%!!! Now on that (heck, let's round up) $91 Billion they will pay...$31.85 Billion dollars!  Now we are getting somewhere!  That's $12.75 Billion MORE tax dollars we got from the RICH! 

Now, in 2010 our budget deficit was $1.17 Trillion.  But we just got (almost) $13 Billion out of the RICH.  So now we only need to get $1.157 Trillion out of entitlements.

I like Ryan's Medicare plan.  Of course, it's the ONLY published plan that I know of.  What do ya'll think? 

(I am joking of course.  Mr. Buffett's note calls for many more than just the 400 largest taxpayers.  I believe he calls for raising taxes on more than 200,000 taxpayers that make more than $1 Million annum.  I DON'T believe that the numbers will change significantly though.)

[Garden guy]

I don't get how anyone who looks at the situation and does'nt understand that its all about the same ole story...nothing has or ever will change...the rich get richer and the poor get poorer...the wealthy spend so much time and cash on skewing life and it's rules towards things that benifit themselves more than others...creating rules and regulations that only help them and those like themselves...nothing has changed or ever will...that's why i find the republican party is about ...."ME...and the democratic party as best can be about "WE"....a rich man gave tax breaks for his own kind..and his own kind has kept it that way....i can guaranty you that there are no poor people in congress and a poor man would have never let those fucking breaks for people who never needed them and don't need them now....

[NotNow]

GG,

You have had three years of a Democrat President.  For the last two years of the Bush Administration and the first two years of the Obama Administration you had a completely Democrat controlled Congress.  For the last two years we have had a split Congress.  For the last five years the Democrats have had either half of the power or ALL of the power in Washington DC. 

My advice, if you really want change in DC, don't count on the "regular" candidates from either party.  Thus...The Tea Party. 

[buckethead]

"Tastes Great!"... "Less Filling!"

Cut spending/raise revenues.

Job ONE1 is to dismantle banking cartels (including dismantling or seriously restructuring the Fed). Who among Rs, Ds or Ts is going to take on that challenge?

Ron Paul and/or Bernie Sanders.

Any talk of cutting spending or raising taxes is just talk.

You guys do know that Ron Paul won the Iowa Carcass if you discount the bus-ins Bachmann brought along, right?

BTW, Buffet is now a bankster shill. The Oracle is now the farcical. Part of the Goldman Sachs machine. (doing God's work) Do not look for him to be forwarding the feds any additional revenue despite his pleas for higher taxes on the uber rich.

[Garden guy]

What i think is hilarious is that Al Gore predicted we would be exactly where we are oh those many years ago. Should we have listened? The list of millionairs has gone through the roof and all at the failure of the poor. American taxes are the lowest in its history or something like that and we see where we are today...our country is on attack by the wealthy connected....its sickening.

[FayeforCure]

"Tastes Great!"... "Less Filling!"

Cut spending/raise revenues.

Job ONE1 is to dismantle banking cartels (including dismantling or seriously restructuring the Fed). Who among Rs, Ds or Ts is going to take on that challenge?

Ron Paul and/or Bernie Sanders.

buckethead, you are onto something here!!

Can right and left coming together on the issues, to work for a common platform? It seemed so when this event took place in 2008:

United in agreement and support of a four-point platform on foreign policy, privacy, the national debt, and the Federal Reserve.

RON PAUL CALLS ON VOTERS TO SUPPORT THIRD PARTY CANDIDATES



Posted 1:00 AM Eastern
by Sarah Foster
September 11, 2008
© 2008 NewsWithViews.com

Rep. Ron Paul, the libertarian-leaning congressman from Texas and recent candidate for the GOP presidential nomination, on Wednesday gave a boost to third parties and their candidates, providing them with a podium and a platform from which they could present their views which are generally ignored by the mainstream media.

At a crowded news conference at the National Press Club in D.C., -- a week after his stunning address at the Rally for the Republic in Minneapolis -- Paul called upon voters to reject Democrat Barak Obama and Republican John McCain and cast their ballots in November for one of the four third-party candidates instead.

"This (election) system is driven by the conviction that only a major party candidate can win," said Paul. "Voters become convinced that any other vote is a wasted vote. It's time for that conclusion to be challenged and to recognize that the only way not to waste one's vote is to reject the two establishment candidates and join the majority (of Americans), once called silent, and allow the voices of the people to be heard."

Paul reported that the day before, Tuesday, the McCain campaign had contacted him and asked if he would endorse McCain, now that the primaries and the conventions were over.

"The argument was that he [McCain] would do a little less harm than the other candidate," Paul said, adding, "We just don't need to do that any more."

With Paul were three of the four third party/independent candidates -- Constitution Party Chuck Baldwin, a Baptist minister; Green Party nominee Cynthia McKinney, a former Congresswoman from Georgia; and Independent Ralph Nader -- united in agreement and support of a four-point platform on foreign policy, privacy, the national debt, and the Federal Reserve.

Specifically, the platform calls for an end to the Iraq War, an end to "war propaganda, threats of a blockade and plans for attacks on Iran," and a refusal to "re-ignite the cold war with Russia over Georgia."

Regarding privacy matters: "we must protect the privacy and civil liberties of all persons under US jurisdiction." Also, the PATRIOT ACT, FISA legislation, and the Military Commissions Act must be repealed or "radically" changed -- and there must be an end the practice of torture, secret tribunals and secret prisons -- and a restoration of habeas corpus.

There should be no increase in the national debt (some would argue it should be eliminated), and the Federal Reserve should be subject to "thorough investigation, evaluation, and an audit" -- with no further taxpayer bailouts of corporations and no further corporate subsidies.

In his remarks Paul quoted historian Carroll Quigley, author of "Tragedy and Hope: A History of the World in Our Time" (and Bill Clinton's mentor), who wrote: The argument that the two parties should represent opposed ideals and policies, on, perhaps of the Right and the other of the Left, is a foolish idea acceptable only to the doctrinaire and academic thinkers. Instead the two parties should be almost identical, so that the American people can ?throw the rascals out" at any election without leading to any profound or extensive shifts in policy.

"That is a profound statement," said Paul. "It tells us what's going on and why things don't change."

"We here today are trying to say that we represent the majority, they [the third-party candidates] deserve to be heard; they deserve to be in the debates."

Each of the three candidates presented the views of their parties -- ranging from left to right on the political spectrum, and each brought different pieces of information.

Chuck Baldwin, standard bearer for the Constitution Party, said the election is not between Democrats and Republicans or between liberals and conservatives, but between constitutionalists and globalists -- with John McCain being a globalist.

He drew attention to McCain's proposal for a League of Democracies, which he plans to put in motion once he becomes president, "which is nothing but the United Nations on steroids."

McCain's essay -- "An Enduring Peace Built on Freedom" -- a pitch for his pitch for the proposed league, was published by the Council on Foreign Relations, in the Nov/Dec. 2007 issue of its journal Foreign Affairs.

Baldwin pointed out that both major parties are "helping construct" the New World Order -- but promised that if he becomes president "the New World Order will come crashing down."

Cynthia McKinney discussed the four pillars of the Green Party: peace, social justice, ecological wisdom and grass roots democracy. She raised the issue of what some have dubbed "votescam" -- the manipulation of election results by tampering with the vote-counting machines.

Independent Ralph Nader said the agreement of the candidates on the four-points represented a "beginning of a realignment of American politics." He said the issues raised indicated a "crisis in constitutional government" -- and that the U.S. Constitution has been degraded, violated, nullified, and twisted out of any semblance of its real meaning.

Not all third-party candidates took the opportunity of Paul's invitation to attend the press club. Noticeably absent was Libertarian Party candidate Bob Barr -- a former CIA agent, who morphed into a Drug War prosecutor before winning a seat in Congress in 1994. He was voted out in 2003.

Barr had accepted Paul's invitation to appear, but changed his mind at the last minute -- though Paul was not informed of this and during his speech mentioned that Barr would be arriving.

That didn't happen. Instead, Barr booked the Press Club for a news conference that would follow Paul's. He said that like the other candidates he agreed with the four points of the platform, but that it would be a 'waste of time" to attend since Paul was not going to endorse anyone for president.

The Internet has been buzzing with commentary about this with Barr being called a mole and a "neocon diversion."

Don Rasmussen, Events Coordinator with the Campaign for Liberty, wrote a blistering statement slamming Barr's action -- noting that this was his [Rasmussen's] personal view and it had not been endorsed by Paul or the Campaign for Liberty.

http://www.newswithviews.com/BreakingNews/breaking158.htm

[Garden guy]

I'm so amazed at how many poor folks vote against thier own selves due to brainwashing by the republicans and tpeople....the republicans actually have them believing that lower taxes for the wealthy is good....there is no proof and the only proof there is is that the opposite is better for everyone.

[BridgeTroll]

http://www.cato.org/pub_display.php?pub_id=13582

Why Warren Buffett Is Wrong

by Jeffrey A. Miron

Jeffrey Miron is senior lecturer and director of undergraduate studies at Harvard University and Senior Fellow at the Cato Institute. He is the author of Libertarianism, from A to Z.
Added to cato.org on August 16, 2011

This article appeared on CNN.com on August 16, 2011.

In a recent New York Times op-ed article, Warren Buffett asserts that the super-rich do not pay enough taxes. He suggests that any new budget deal should raise rates on the super-rich, especially on their "unearned" income from interest, dividends and capital gains.

Buffett is wrong. Bad government policies play a major role in generating inappropriately high incomes, but singling out the super-rich is misguided. And the policy Buffett criticizes most â€" low tax rates on capital income â€" should be expanded, not eliminated.

The first problem with Buffett's view is that the number of super-rich is too small for higher rates to make much difference to our budget problems.

In 2009, the income earned by the 236,833 taxpayers with more than $1 million in adjusted gross income was about $727 billion. Imposing a 10% surcharge on this income would generate at most $73 billion in new revenue â€" only about 2% of federal spending. And $73 billion is optimistic; the super-rich will avoid or evade much of the surcharge, significantly lowering its yield.

Focusing on the super-rich also fosters a counterproductive attitude toward material success. The way to promote a hard-working, entrepreneurial and innovative society is to celebrate great wealth so long as it has been earned by legitimate means. When this is not the case, policy should target the wrongdoing directly, not demonize everyone who hits it big.

Most importantly, singling out the super-rich distracts from the real problem: the myriad policies that make no sense in the first place because they inhibit economic growth and that simultaneously redistribute from low-income households to the middle and upper classes.

The deductibility of home mortgage interest encourages excess investment in housing. High-income taxpayers get the benefits, since low-income taxpayers own little or no housing and do not itemize deductions in any case.

The favorable tax treatment of employer-paid health insurance generates overconsumption of health care and contributes to rising health care costs. The benefits go mainly to middle- and upper-income households, since those without jobs get no employer-provided benefits.

Numerous loopholes for favored industries in the corporate tax code distort the market's investment decisions and reward the well-funded and politically connected.

And it is not just the tax code that harms the economy while favoring the better off.

Excessive licensing requirements, permitting fees, restrictive examinations and other barriers to entry into medicine, law, plumbing, hair styling and many other professions are bad for economic productivity because they artificially restrict the supply of these services. And these barriers redistribute income perversely by raising incomes for those protected and raising prices for everyone.

Crony capitalism â€" the special treatment of favored industries like autos â€" runs counter to economic efficiency because it protects businesses that would otherwise fail, and it maintains high incomes for executives and shareholders.

The too-big-to-fail doctrine, exhibited most recently in the TARP bailout of Wall Street banks, distorts efficiency by encouraging excess risk-taking. Meanwhile, bailouts generate huge incomes for the lucky few who keep gains in good times and pass losses to taxpayers in bad times.

In contrast to these and other policies, the one Buffett criticizes â€" low tax rates on capital income â€" is beneficial for the economy, including lower-income households.

Jeffrey Miron is senior lecturer and director of undergraduate studies at Harvard University and Senior Fellow at the Cato Institute. He is the author of Libertarianism, from A to Z.

More by Jeffrey A. MironEconomists agree broadly that an efficient tax system should avoid taxing income, dividends and capital gains to promote savings, investment and growth. Tax rates on capital income should therefore be low or even zero. The U.S. is far from this ideal, especially given the high tax rate on corporate income and the additional taxation at the personal level.

Buffet asserts that taxing capital income has never deterred anyone from investing. Well, then he has never discussed the issue with me or many of my friends.

More importantly, taxing investment returns plays a huge role in what kinds of investments occur, and where, even if it has minor effects on the amounts. These tax-induced distortions in investment choices then reduce economic growth. High U.S. taxation on capital income drives investment overseas.

So raising capital tax rates will not make the super-rich pay their "fair" share; it will encourage capital flight, driving factories and innovation abroad. The rich will still get their high returns, but U.S. workers will have fewer jobs and lower wages.

Buffett errs, most fundamentally, by focusing on outcomes rather than policies. The right question is which policies promote differences in incomes that reflect hard work, energy, innovation and creativity, rather than reward the unethical, the politically connected and the tax-savvy.

In economics, as in sports, we should adopt good rules and insist that everyone play by them. Then we should stand back and applaud the winners.