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Darrin, Mild Troll Bra?
August 14, 2011
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 — 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/op...ness&seid=auto
Darrin, Mild Troll Bra?
I would have included...By Warren Buffet...in the le...
Mebbe.....but its a nice unexpected twist once you click in.
Hey Mr. Buffett - no one is stopping you from sending more money to the Treasury. How about you put your money where your mouth is and send a few billion dollars - I'm sure Obama would be grateful!
All these mega-rich libs keep saying they should pay more in taxes - well, just send in more money and keep your big mouth shut!
so you think the mega rich paying a lower percentage income tax than the middle class isn't something that should change?
Why not? why should disgustingly rich people be exempt from paying their equal share like the rest of America?
He's giving more to charity than you'll ever make in your lifetime. That is indeed putting his money where his mouth is. You might not agree with his view, but that doesn't necessarily make him wrong.
Yes, you're correct - but we're not talking about his charitable donations. He's saying the mega rich should pay more in taxes - and I said nobody is stopping him from sending in more! If he is adament that he should be paying more in taxes, then he simply has to write a bigger check and, voila, he's paying more!
He's stating his opinion from the position he's in. I don't see you disputing his contention about rich people paying less in taxes than middle class, only whining because you don't like what he says.
Your argument is a strawman. He's in no obligation to pay more. The middle class doesn't have that option. THAT is his point.
that's one of the dumbest things I've ever read
Good piece.
Like that he distinguished "Mega Rich" from "Rich" - and certainly Mr. Buffet doesn't recognize an income of $250 K as either.
Everyone in this country is going to have to pay more; WB makes a good case for the wealthiest to pay ALOT more.
I can't see the problem with this. Not hitting Joe Small business owner AT ALL; and would actually raise significant revenue.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.
Yeah, dividends and capital gains being taxed at such a low rate indirectly leads to job loss. When a multi-millionaire can net a profit off dividends and pay next to nothing in taxes, why wouldn't he do that as oppose to invest in a business that helps create jobs? Dividends and capital gains should be the most heavily taxed type of income in this country.
Income ought to = Income.
Otherwise the govt. is selecting for one or the other - right now investment income is too cheap vs. earned income; there ought to be balance.
Him sending in more does nothing to address his concern of the inequitable distribution of tax responsibility onto the lower 99.7%.
People aren't going to voluntarily do something if they don't have to...that's just the way people are...
You guys need to stop being mean to the mega-rich or they're going to stop throwing a bone to us
Thank you.
The most cogent statement outside of Buffet's comments.
My favorite Buffett quote is: "Of course there is a class war. And my class is winning it!"
Reagan's entire economy philosophy is built on the belief that rich people will be some cool scros and help the poor out if they're given a tax break.
Which is undoubtedly why the gap between the richest and poorest in this country has become so small since the Reagan Presidency, right?
Exactly...you gonna let me keep my money...then that...I ain't giving you ...
can't tell if this is sarcastic or serious tbh
Correct! Unfortunately, spineless liberals refuse to acknowledge the FACT that Reagan's economic policies (when implented by a god-fearing white man) actually work to bridge the gap between economic classes. Obviously, rich people work harder for what they have BUT poor people should find dignity in their work too - that's if they have the DESIRE to work hard and elevate their quality of life. If not, they starve. Whatev.
Also, if there's one thing I hate almost as much as self-hating black people - it's self-hating rich people. If you don't want your billions, put some of that in my bank account. UKNOWHUTIMEAN? ya.
Kinda shows how bad things are when the richest people speak against their own economical interests and poor people like Crook defend those interests. Bizzare
I rather assumed that the sarcasm would be self-evident since the gap between the richest and poorest Americans has exponentially increased since the early days of the Reagan Presidency (and the adoption of supply side economics) to the highest ever point in American history.
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