NEW YORK (
wrote an op-ed piece on Monday that
called for an increase in taxes on the "super-rich."
Buffett wrote in
The New York Times
that he would raise rates on taxable income of more than $1 million, with an added rate increase for those who made more than $10 million.
"Americans are rapidly losing faith in the ability of Congress to deal with our country's fiscal problems," Buffett wrote.
In that vein,
read your comments and re-posted some of them to catalyze more thoughtful discussion on the topic.
All comments were edited by TheStreet for style
From a practical standpoint, as someone in that top bracket I'd much rather be paying the higher rate if it means that my company has more people who can afford my products. From a "fairness" standpoint, I get a hell of a lot more out of the federal government than any welfare recipient - a pool of well-educated potential employees, telephone and internet (subsidized by the government) to help run my business, roads on which to ship my goods and which my employees can use to get to work, a military to help protect my wealth, and a legal system to protect my company in the way of contracts, etc.
Headline is incorrect. Buffett says tax the "super-rich". Head line reads "Tax the Rich." Big difference! Obama says tax everyone above $250,000. Everyone over $250,000 is already paying taxes. Just most people cannot afford the tens of millions that Buffett can afford to invest in order to get his effective tax rate down to 17.4%. If someone making $500,000 were to spend 1% on tax advice they would have $5,000 to pay consultants. On $1 billion Buffett has $10,000,000 to spend towards tax advice. What "I hope" Buffett said was to close the loop holes so that the people that are supposed to be paying 35% are in fact paying 35%. Raising the tax rate will only get more funds from the tax payers making a few million and less. Reducing the working capital of these tax payers, who are likely already paying the full 35%, will only reduce their ability to create jobs due to lack of after tax capital and lack of after tax cash
Even Buffet is saying flat tax is not a solution -- read what he said increase taxes in people making 1 million or more and then again on people making 10 million or more. He is saying if you make more you pay more -- not to be mean but to be fair. We live in a society that allows people to accumulate great wealth which is great; the part that is not normal is that those that accumulate great wealth pay a lower percentage of their income in taxes.
I don't know about you people, but if I have a taxable income of $1 million dollars, and my tax rate is 17%, or $170,000, and my neighbor who makes $35,000 pays a tax rate of 15%, or $5250, how am I not paying my fair share? The answer for most is, "Well you can afford to pay more?" Yes that is true, I can, but should I? Should I be taxed more because I have the means or ability to generate more income? How is that fair? My contribution is far greater than most, and I guarantee you that many people in the $35,000 range pay nothing.
The reason why most of Buffet's wealth is held in the form of unrealized capital gains is NOT because he wants to avoid taxes -- it is actually due to his investment strategy of investing long-term in stocks (started when he was young) and also the fact that he doesn't receive a high salary and bonuses from Berkshire Hathaway. His annual salary is only $100,000!
He has also pledged 99% of his wealth for philanthropic purposes, so I don't think he is able to send $100 million to the Fed every year.
In addition, it is clear in the article that he asks the top 0.3% of income earners to accept "shared sacrifice." I think the top 0.3% earnings much, much more than $250,000 a year. Actually the top 1% of earners account for 24% of all income.
The way I see it -- every dollar held requires a cost ... as Buffet says ... protection ... by the military, by the Treasury, the Fed, the executive office (SEC).
So, if we only tax income and asset changes, we never really address the cost of people holding dollars.
In my view, a person who earns $100,000 and spends $100,000 should pay no taxes.
But a person who has $100,000,000 and no income should pay a tax for each of those dollars he holds.
I don't understand why Mr. Obama can't make it very clear when he says the rich need to pay more taxes , that he is referring to 0.3% of Americans. And also, why can't he take Mr. Buffet's example and use the numbers when he talks about the specifics of his proposal, such as Mr. Buffet paying 17% taxes while a plumber pays up to 28% of his income. Why is it so hard for very rich people to pay the same taxes they paid during Regan administration? Why is he holding back?
If you only taxed at a higher rate those making over $1,000,000 it would not even make a dent in our yearly debt. If they were taxed at 100%, it wouldn't even pay 1/3 for our yearly debt. That is why Obama starts his plan at $250,000, most of the "millionaires and billionaires" in his plan make under $500,000.
A sergeant, married to a deputy (say 10 year vet) in LA, working the mandated amount of overtime, gets real close to that $250,000 without even trying, just sayin'. Even today you can't find a home in a good area near LA for under $400,000 and that would have been $600,000 three years back. I'm quite sure for people living in New York among other areas in the country, $250,000 is just getting by.
On average people in the highest tax bracket, pay 29.5% after deductions. $250,000 becomes $176,000 after federal taxes; drop another 17 for state taxes in California. Now your income is $160,000. This is the "rich" or not, maybe it's the upper middle, far from the millionaire/billionaire as described by our president.
Ya, taxes for the rich are low and have been low, where is the job creation since the Bush tax cuts were enacted? The GOP campaigned on job creation, and they have done nothing to create jobs. The only thing they are doing is being obstructionist to the president, and even those efforts are failing to a certain extent. Slash taxes on the middle class. That will cause spending, and spending is what creates jobs, and middle class entrepreneurs starting new businesses that create new jobs.
I am not in the top tax bracket nor will I ever be, but clearly the government is spending more than they take in. Bottom line is they are a failed corporation that spent more than they earned, created jobs they didn't need and created new laws to justify those jobs -- the demise of any business. We shouldn't pay a single cent more in taxes until they clean up their own backyard and restructure themselves. We don't need 86 layers of government for every little thing we do! Now excuse me while I go pay my $125 to register my car for another 2 years -- like that fee makes any sense! Yeah and I have to go during work so these GOVERNMENT (taxpayer employees) workers can go home at 4:00pm!
Many in the middle class use their disposable income to pay debt. And for those who are responsible with debt (which is the greatest percentage of Americans according to Consumer Affairs) they don't have significant enough amounts left for lucrative wealth-building investments. Retirement is still a stressful thing to plan for.
The super-rich, on the other hand, have a ton of growing resources at their disposal to maintain, or increase, their income levels with much more ease than the average American.
In retrospect, taxing is always seen as a negative thing because of the "taking people's hard earned cash" sentiment. The question I'd like to see some deep thought allocated towards is: What are the sources that generate such massive income for the super-rich? Is it mostly investments? If so, and if taxation is not a great way to go, then how do we incentivize investment in American infrastructure?
The question that needs to be answered before taxation related issues is what, as a nation, we want from the government. Does the answer lie in Washington? Does Washington solve problems? Is the government the best arbiter of "fairness"? If the answer to these questions is yes, then we need much higher taxes, to enable a larger role for government. If not, then the aggregate tax bill should not be increased. The voters will have an opportunity in the 2012 election to decide what they want from Washington.
Americans are truly confused about the entire tax issue as well as our debt issue and for good reason. There has been so much misinformation spewed by politicians. Without careful research to find the truth, it is understandable. Sadly it is so political that the American public will suffer. There is no debate that we have spent too much. The question is how we balance the budget. Do we make draconian cuts that will hurt the average American, or do we ask the most fortunate to pay a little more? Corporations are not job creators, American consumers are job creators. How do we create new livable wage jobs? Consumer confidence! That has been hurt by the housing market. I believe if Americans can feel comfortable with home ownership and not fear they will lose their homes or their investments, we can create an atmosphere for growth. The American dream was crushed by greed and once burned twice shy.
This all depends (to me) on what the definition of rich is. Some camps say that $200,000 per year is rich. Some say that $500,000 per year is rich. The problem with defining rich is that it really does depend on where you live.
What is really needed is a complete tax system overhaul to get rid of the loop holes, without creating new loop holes. The system Steve Forbes described in 2005 sure makes a lot of sense to me in his book Flat Tax Revolution: Using a Postcard to Abolish the IRS by Steve Forbes (Jul 18, 2005). Maybe this would also encourage a reinvention of our business management system, which is sorely needed; e.g., the integrated enterprise excellence approach. An enhanced management system could lead to the creation of policies that result in jobs that benefit the country as a whole. Cutting expenses and taxing the super wealthy is what we need to get out of this mess.
Buffet casually proclaims that he only paid 17% tax on his income, so it begs the question as to why he does not just pay more himself by giving more to the IRS, which as a commenter points out is a perfectly acceptable policy. His crocodile tears seem a bit shallow when it comes to all the years Buffet took advantage of the tax breaks for the wealthy. Change the tax code and make all companies and individuals pay with no deductions for anything! Fair Tax or Flat Tax, something has to change.
Let's not lose focus on the topic, which is that the rich not paying their fair share ... For me, I have a small business and my business depends on the economy. And if the small percentage of the population that is insanely rich owns more than 3/4 of the wealth, well then they better pay their fair share. Our economy depends on people doing well, and when the rich paid their fair share, the economy did well. You have seen this country develop and it wasn't because the rich were allowed to not pay taxes.
-- Written by Joe Deaux in New York.
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