Warren Buffett doesn’t pay enough tax
Warren Buffett, the second richest man in the world, has been an outspoken critic of the Bush tax cuts since back in 2001 or 2002. He is one of the few billionaires who are honest enough to admit that they aren’t paying as much in taxes (proportionately) as you or I. This is the problem in America. We have been sold a bill of goods and the goods are terrible.
Let’s start with the Death Tax. This is dumbest argument but the Republicans sold it to the American people. The story goes like this - So poor family farmer would lose his farm if we continued the Estate Tax. The second part of the argument was that folks that make a lot of money should be able to keep their money. If we tax it again, it will be double taxed and that’s not fair. (I’m getting nauseated while I type this. I think that I’ll need some Pepto Bismol.) We get “double taxed” all of the time. When we buy gas with our money that has been taxed, we pay gasoline tax. When we pay sales tax on a shirt, it is double taxed. The purpose of the estate tax was to prevent the formation of entitlement or royal class. The thought was that everyone should have to work for a living. The R’s have turned that idea on it ear and they pushed to repeal the Death Tax. Let’s go back to that poor family farmer. No one has been able to show one incident where a family farmer has lost his farm secondary to the Estate Tax. All of the Republicans arguments were bogus.
Tax cuts have never worked to boost an economy. They have worked to pad the pockets of rich Americans but they have never put money in the pockets of the average Joe and Joan. Here’s what Lee Price from the Economic Policy Institute has said about the tax cuts back in 2005.
“Since 2001 President Bush and congressional leaders have promised that enacting each of a series of tax cuts would strengthen the economy by bringing faster growth, more jobs, and greater investment. With Congress again debating whether to extend past tax cuts and enact new ones, it’s time to review how much the last four years of tax cuts have affected the U.S. economy and budget outlook. Unfortunately for most Americans, the tax cuts since 2001 have not made today’s economy stronger. Over the last five fiscal years, the tax cuts have had a direct cost of $860 billion and (with interest costs) a total effect on the deficit of $929 billion. By creating excessive permanent deficits, they have lowered our future standard of living.”
So, that brings us back to Warren Buffett. Maybe he understands that the average Joe or Joan needs a break. They are the ones that need tax relief. How about a tax but for the everyone who makes between $30,000 - $100,000? How about that? And then to offset this we need to increase taxes on the top 1% of households. This isn’t a call for class warfare as some Republicans have stated. Instead, it is equality.
Update: A.L. has written about a Wall Street Journal op-ed which sang the praises of Bush’s tax cut. A.L. took a different route but came to the same conclusion as I did above, tax cuts do not pay for themselves. They never have and never will.
Bravo, Errington! Every progressive candidate and every social activist should take as their mantra your succinct statement of what is wrong with America after years of tax breaks for corporations and the wealthy. In fact, let’s read it again, out loud, together:
Tax cuts have never worked to boost an economy. They have worked to pad the pockets of rich Americans but they have never put money in the pockets of the average Joe and Joan.
Now go tell every average American you know!
I’m with the sentiment of this website completely. I think something is clearly out of whack when we have policies that tax work more than wealth and capital gains. but, citing a Mid-session REview, as is done (not here, but in another link where the comments are closed but on this site) is wrong. the gov’t report does not, as far as I can read, state that the Bush tax-cuts aren’t paying for themselves. I’m not disputing whether they are or not, I’m saying that report doesn’t support that conclusion. I’m baffled as to why anyone would think such a report would, it is clearly political and not in any way objective. It even uses the ridiculous rhetoric of the Bush whitehouse and conservative, don’t tax wealth and property zealots.
Fine. He can pay mine. I don’t refuse to pay taxes for economic reasons. I refuse to pay taxes for moral reasons. The State (I can be argued any State, but definitely the current one) is evil. To give it money is to support that evil.
I think Buffet is full of ****. The big difference between Buffet and his secretaries is that most of his income is not taxable and won’t be with the changes that he suggest. If the federal tax income tax rate increases that only applies to salaried individual and those running S-corps. The rates don’t apply to capital gain. Even if the capital gain rate is increased, the only income that is taxed is the income taken from a capital gain. Most of Buffet’s wealth comes from increases in his investments, most of which are none taxable since he has no need to take the income. However, consider a family that needs to sell their home. They would take a big hit if the capital gains tax were doubled.
Another dodge that guys like Buffet use is that they never talk about municipal bonds. Many wealthy individuals invest in municipal bonds because the income from dividends are not taxed. I haven’t of anyone proposing to eliminate the tax breaks on municipal bonds.
“If we tax it again, it will be double taxed and that’s not fair. (I’m getting nauseated while I type this. I think that I’ll need some Pepto Bismol.) We get “double taxed” all of the time. When we buy gas with our money that has been taxed, we pay gasoline tax. When we pay sales tax on a shirt, it is double taxed.”
The point is that the estate tax is like a double income tax and a double sales tax. Imagine if you had to pay a 50% sales tax on the books your grandpa left you. People are at least getting something with a gasoline tax and sales tax. What do families get in return for the government raiding their deceased relatives estates like vultures.
JL -
I’m not sure that moral grounds are a reason not to pay taxes. Evil. Interesting.
TCB -
No matter how he (Buffett) makes his money, his income should be taxed at or above the tax rate of his employees. Isn’t that a no brainer?
As far as the Estate Tax which was instituted nearly 100 years ago, I have a hard time feeling sorry for the ultra rich. I’m sorry. I don’t. If this tax was so burdensome it would have been repealed during the great depression but it wasn’t. If it was such a problem surely there would have been a ground swell during the good time of the 50’s and 60’s. No. Nothing. No major challenge. Only when a government that caters to the top 1% of the population was there any discussion of repealing the Estate Tax.
Bill Gates, Sr. said this on the Bill Moyers Show several years ago - “It’s just such a fair tax. I mean, it’s just such an opportune, appropriate time to have repaid from the people who have benefited more than anyone else from the circumstances that this country makes available, from the conditions that make it possible to become….
There’s nowhere else in the world, nowhere else in the world, that people can accrue the kind of fortunes that happen here. And that’s because of the kind of country we have.
And the kind of country we have is a function of the taxes that we pay to provide security, we have a stable market, you can predict next week will be pretty much like the week before.
We have the most immense investment being made by our government in advancing businesses by supporting the enormous research industry that’s going on in this country. And it’s that piece of government expenditure that which has everything to do with the health and robustness of our economy.”
Anne -
Thanks for your comments. I appreciate them.
My view of the estate tax is that somehow, someway, we need to recover the $8T national debt that was loaned out to special interest groups over the last two decades. It’s a relatively painless method - only the children of the rich are penalized, but they should be able to manage on 50% of the take. Remember - that $8T disappeared into corporate and investor’s coffers - it’s ours, so let’s recover it when they die…
I would like to revise the capital gains tax with regards to the estate - right now, any capital gain items, such as stocks, are not taxed at their original value, but come over to the estate at a net zero value. So, if a stock buy made a $100M with the original owner, then the kids who inherited this stock would pay $0 tax, unless the stock increased in value. (This is Warren Buffet’s situation - good thing he’s giving half his fortune to charity, so we think he’s a great guy.)
Shotsie -
You are exactly right. The whole tax structure needs to be overhauled. We need to tax corporations at a higher rate so that we can lower the tax rate for average Joe’s and Joan’s.
thanks for your comments.
Gee shotsie, that’s a pretty generous proposal. Just wandering, if all the money of the wealthy is “ours” as you say, then why wait to take it back when they are dead?
Also, why stop at 50%? This seems like a pretty arbitrary number. Why not 100%?
ECT: No matter how he (Buffett) makes his money, his income should be taxed at or above the tax rate of his employees. Isn’t that a no brainer?
Obviously it is for some. His wage income is taxed at or above the level of his employees. Other unearened income isn’t. Of course if you consider taxing munis then most cities bond rating would sink to D or an F because they would have to perform at the same level of other bonds.
Soaking the rich does have it’s consequences.
TCB said: Just wandering, if all the money of the wealthy is “ours” as you say, then why wait to take it back when they are dead?
Also, why stop at 50%? This seems like a pretty arbitrary number. Why not 100%?
ET: I’m looking and looking thru what I typed. I can’t find the “ours” anywhere. Here’s the question - Shouldn’t those who have benefitted from the rules of our society be asked to give some back when they die. If your answer is no then we need to cut some spending. The 2 largest portions of the budget are defense spending and social security. We have to do something. Bush has not proposed a balanced budget, ever.
ET: I’m looking and looking thru what I typed. I can’t find the “ours” anywhere. Here’s the question –
The “ours” that I referred to was from Shotsie, who wrote:
“Remember - that $8T disappeared into corporate and investor’s coffers - it’s ours, so let’s recover it when they die…”
Don’t know how shotsie came up with this but you did agree,
ET: “You are exactly right.”
I assumed that the 50% was derived more from sentiment than any calculation of what was owed.
ET: Shouldn’t those who have benefitted from the rules of our society be asked to give some back when they die.
Sounds like asking a football player to give back some of his Superbowl bonus. Then again, asking is only a euphemism for taking.
Anyway, dead man can no longer give. Your assumption seems to be that:
1. The rules are not fair. Is the fact that some people are more economically successful evidence of unfairness?
2. They haven’t given anything. Yet, most people do give throughout a life time.
From NRO:
“…the wealthiest 1 percent of Americans earned 21.2 percent of all incomes in 2005, they now pay nearly 40 percent of all taxes.”
Your other justification seems more pragmatic.
ET: If your answer is no then we need to cut some spending.
Sure. We need to limit the growth of spending. From what I’ve read, no actual reductions from current levels need to be made. However, I think Medicare will be biggest liability in years to come.
“More than one fifth of the total value of the tax cuts will go to the 0.3 percent of households with incomes of more than $1 million per year. In contrast, only one eighth of the total value of the tax cuts will go to the bottom 60 percent of households.”
“They conclude that “the progressivity of the U.S. federal tax system at the top of the income distribution has declined dramatically since the 1960s.” That is, the very highest-income households have seen the sharpest drops in the percentage of income that they pay in federal taxes.”
ref - http://www.cbpp.org/4-10-07tax.htm
Well then I assume he will be writing a big check to the Treasury, since he feels so bad about not being taxed enough. Look up the percent of total taxes paid by the top 1% of incomes for the last 10 years. Poor Warren, so undertaxed. But not doing anything about it is he?
Connie -
Thanks for your comments.
What do you think that he should do? He is lobbying Congress to have the tax laws changed. He testified just last week.