I was reading Fortune (yeah, I read Fortune) and I found these comments by Warren Buffett (aka the second richest man in America to his friend Bill Gates, the richest man in America) to be fascinating:
On the idea of a flat tax
I wouldn t support it. We have, in my view, a taxation system that s much too flat already. If you look at the payroll tax which is over 12% now, and that applies on the first $80,000 or $90,000 of income Bill and I pay practically none of that in relation to our income. For the people that work for us, their tax rate in many cases is the same or even higher than my own, since the rate on capital gains and dividends was cut to 15%. What has gone on in this country in recent years is a huge benefit to the very rich and not that much relief to people down below. Frankly, I think that Bill and I should have a higher tax rate on the income we get. We pay less than half the rate that I was paying 25 years ago when I was making a lot less money. They have really taken care of the rich.
(emphasis mine)
Again, I would like to note that Warren Buffett is the second richest man in America with a net worth estimated to be $40 billion and is a hell of a capitalist.
Then let him pay what he considers to be fair, nobody is stopping him.
Or we could return to the tax program that helped lead to unprecedented prosperity for the bottom, middle, and top.
So Warren Buffet is waging class warfare against his own economic class?
I’d support raising the ceiling on SS-taxable wages.
On the other hand, consider the miniscule benefit these people receive from SS in relation to their income and worth.
They both hit on a key issue. Payroll taxes has a cap at $90K.
30 years ago payroll taxes was approx 3%, now it’s 12. The goal of the tax reformers has been to shift the burden from the unearned income crowd, to the working stiffs.
well, if Warren Buffett, the most astute investor in America, says this, then according to wingnut logic, he must be:
a.) stupid
b.) unemployed
now I guess the resident ‘wingers will jump back to the ‘Martha Stewart’ talking point…
According to cleo, Warren Buffet would be part of the “unearned income crowd”. It does not take much to see where the roots of the class warfare arguments derive their genesis.
Nope … that is for folks like cleo.
[...] 8217;t have The World s Greatest, Most Fearless Leader Ever! I came across this via Oliver Willis, who highlighted Buffett s comments on the [...]
What Buffet is saying doesn’t really appear to have much at all to do with the flat tax. He’s claiming that he gets most of his income from buying and selling securities. Since Bush reduced the capital gains tax, he’s paying far less tax than he was before. What I think he’s really advocating an increase in the capital gains tax back to pre-Bush tax cut levels.
That said, the flat tax is certainly regressive. While it’s clear that the federal income tax laws must be simplified, I think that a simple flat tax is a terrible idea. However, combine it with a federal sales tax, where food, rent and energy costs are excluded, and just might work.
[...] n America comes along and tells them that they re getting screwed, what do they do? Make fun of him and say he doesn t know what he s [...]
What Mr. Buffett is actually saying is that he makes so much money that the amount of money he makes that is beyond the reach of the FICA tax is huge. Now imagine that you make $100,000 or $120,000 a year — how would that feel?
Also, Mr. Buffett is not quite in touch with reality — the current FICA deduction is 7.65%, which means to us “ordinary folks”, you know, folks that make three times what I make, that if they make $100,000 this year, $6,885 goes to the FEDS. He sends the same $6,885 to the gummint, and has a bajillion leftover.
Yes, indeed, I’m taking advice from him, because he knows what I’m going through. Yuk, yuk.
Frank_D:
Also, Mr. Buffett is not quite in touch with reality the current FICA deduction is 7.65%
The employer matches the deduction…so the total tax paid is a little over 15%. I’m sure that Mr. Buffet had this number in mind, though I agree with you that it’s the wrong number to use for this particular point. An employer thinks in those terms out of habit, because that’s the number that impacts his payroll expenses.
David W:
I’m not sure how you define “wingnut,” but I don’t think you’ll find a single poster on this site who would call Mr. Buffet either stupid or unemployed. As for your second point, the one that furthered the discussion…oh wait, there was no such point.
scratch: You are ever so slightly incorrect. Either 15.30% is correct or 7.65% is correct, depending on what perspective you use. My point was that that figure was quite out 0f date, indicating, to me, any way, that Mr. Buffett can afford to be nonchalant about money - he’s a billionaire.
He couldn’t throw his money out the window fast enough to go broke, with all the dividend checks coming in the mailbox.
I m not sure how you define wingnut, but I don t think you ll find a single poster on this site who would call Mr. Buffet either stupid or unemployed.
That was directed at me because too many liberals are under the delusion that the tax cuts of 2001 went only to “rich” people. Buffet doesn’t say that. He only says that the benefit for lower income people was “not that much.”
Apparently for some, reading comprehension is also a problem.
David…
the largest amount of money went to the wealthy.
The response to that is so obvious that I’m not even going to write it.
Question: what’s your idea of the highest acceptable tax rate, and at what income level would it apply? For years the taxes on wealthy Americans were, in my opinion, way too high. I’m guessing that nobody was complaining when those rates were going up. Now they’re coming down…where do you think they should have stopped?
no, Jay, you’re just trying to parse things as narrowly as possible, in a feeble effort to be ‘right’ about something–this is your own misinterpretation:
too many liberals are under the delusion that the tax cuts of 2001 went only to rich people.
it’s obvious to the ‘reality-based community’ that anybody who paid income taxes in 2001 got a refund, but that the largest amount of money went to the wealthy. you’ve just dumbed that down into your own little talking point.
here’s what I actually said:
take a look at our country s budget deficit, and tell me that it s not a looming problem I hope you enjoyed the measly few dollars that Bush threw back at you to buy your vote, but I guess you guys are ok with that.
so, basically, Buffet said the same thing I did, with slightly more tact, but you missed that, because as you said, ‘apparently for some, reading comprehension is also a problem’
and how ’bout that deficit, or doesn’t that matter, as your boy Tricky Dick Cheney said?
Good job, scratch. That really is the right question.
Too many people like to oversimplify the debate with “giveaways to the rich” rhetoric or “class warfare” charges.
What we’re talking about is what is the optimal marginal rate of taxation. Yeah, it’s a little harder to make into slogans and bumpersticker logic, but that’s what it is.
I’d add a subpoint to your question, though: Should some forms of income be treated differently from others?
Frank_D…
He was also imprecise about the cap, saying, “$80,000 or $90,000.” I think he’s imprecise because he doesn’t deal with those details day in and day out. I was self employed until recently, doing my own books and all that, and even then I had to look at my little tax guide every single month to figure out how much FICA to take out.
One good thing about both Warren and Bill is that they’ve made a bunch of people millionaires on their rise to the top. I don’t begrudge either their success, their money, or their opinions. But I do disagree on some counts…most notably Windows.
scratch Says:
…
Question: what s your idea of the highest acceptable tax rate, and at what income level would it apply?
Why is that important? Or rather, why is that important in the abstract? Quaker is right that people keep on trying to simplify what they shouldn’t, at least. Is it fair to charge a higher tax rate to the rich, what “should” or “should not” really be deductible, if Tax Scheme A is “progressive” or not - boo fricking hoo. People who talk about taxes only in those terms reveal as much unrealistic, ideologically blinded idealism as you’d expect from a Communist or Randian.
Due to a combination of learning from historical experience, greatly improved standards for justice and individual welfare, and, yes, a sense of entitlement, we have decided that we want to do stuff. Now, doing stuff takes money. We can borrow that money from China and choke on the interest in ten years, or we can change our mind and decide we don’t want to do stuff after all, or money for stuff can come from taxes of some kind or another.
Putting aside the moment for the various groups’ motivations, the first is what the current administration is doing. The second is what the right wing would prefer, or a variation that passes the buck for “doing stuff” from the federal government to the states. (Whether or not the states that would have regressed halfway to feudalism by not teaching evolution in schools have a right to drag down the rich and prosperous coastal states 20 years from now, the right wing is suspiciously silent on.) The third, more or less, is what the left wing would like to do.
The left has been (relatively) clear and direct about all this - “stuff takes money.” Many on the right are equally clear and direct and say “we want less stuff.” But some of them are instead saying “Hey, forget the stuff, the government is getting more of its money from me than from that guy over there, that’s not faaaiiir, I’m telling!”
So, scratch, instead of your question about the highest acceptable tax rate in some Platonic ideal, here’s what I would center the debate around if I got my wish: what stuff do we want, and what’s the least harmful way to get the money for it?
My yearly income is around $60,000. My total Federal income tax, state tax, and Soc Sec tax is around $20,000. I think 33% is too much. The IRS sent me a bill for $134 in penalties because I do not have enough taken out of my paycheck even though I sent them all I owed on the 14th of April. I would like to see the flat tax or the fair tax, anything is better than the way we do it now. Getting rid of the IRS would save over 100 Billion dollars annually. The President’s tax reform committee has done nothing to improve the current system. They want to retain the power to set different tax breaks for certain people (rich) to keep their campaign money coming in. What a great system this is. It keeps getting more bloated and complicated all the time.
Cybishop…
Your last paragraph is interesting to me. My question was based in part on something Nacy Pelosi said several months ago. She was doing a press conference and discussing the budget and taxes. She said, “We need to work the budget just like a typical family does. They start by figuring out what the need, then they work a budget to know how much money it will cost.” That’s completely backwards! The typical family looks at how much money they have, then they decide how they’re going to divide it up to pay for the necessities and the not-so-necessary. If they did it Pelosi’s way, how are they going to make up the shortfall? Taking it from their neighbors? (Hey wait…)
Your comment that we should begin with what we want, then figure out the “least harmful” way to get it suggests that you would be willing to settle for tax rates up around 70,80,90%, whatever it takes (careful…if you think I’m wrong then you may have to answer the question,) on the “rich” people…and I’m going to guess that category doesn’t include either you or me, so it’s not very harmful to us. What’s the incentive to come up with a realistic list of wants and needs?
I, on the other hand, think that we have already budgeted for what we need. Sure, we can spend more in some areas and less in others. To pay for those things, I think it makes sense to have an idea of what a reasonable maximum is, from which you can determine approximately how much money to spend. I don’t think 70% is reasonable under any realistic circumstances. If we think we need to take away that much money, then we need to look again at waht we thing we “need.”
scratch,
[Pelosi] was doing a press conference and discussing the budget and taxes. She said, We need to work the budget just like a typical family does. They start by figuring out what the need, then they work a budget to know how much money it will cost. That s completely backwards! The typical family looks at how much money they have, then they decide how they re going to divide it up to pay for the necessities and the not-so-necessary.
You’re right that it’s backwards; that’s not how a family budgets. But you’re implicitly assuming that Pelosi is correct that the government should budget like a family, and I’m not so sure. (Bear with me, I’m half just thinking out loud here.) I don’t put much faith in argument by analogy, because it just glosses over all the ways the two similar things aren’t the same. In this case, do kids pay taxes? If you and your neighbor can’t agree on the property line, do you park a tank in the disputed area? Just because one type of institution, a family, budgets a certain way, doesn’t mean it’s the only way to do it.
…suggests that you would be willing to settle for tax rates up around 70,80,90%, whatever it takes (careful& if you think I m wrong then you may have to answer the question,) on the rich people& and I m going to guess that category doesn t include either you or me, so it s not very harmful to us.
I think I can say, honestly and without hyperbole, that this is the biggest example of someone putting words in my mouth that’s ever happened to me. And if I don’t immediately and completely deny it, you’ll assume the worst of me? Oookay… This could be a big part of why we get such bad choices for politicians: the system selects for people who actually think like this.
I, on the other hand, think that we have already budgeted for what we need.
You’re right - the emphasis should be on needs, not wants. Poor choice of words on my part, or just not thinking it through again. So, to rephrase myself: “here s what I would center the debate around if I got my wish: what stuff do we need, and what s the least harmful way to get the money for it?”
But “needs” are flexible too. It might sound weird to you, but it’s true. A person “needs” almost nothing for bare survival. A person “needs” a lot more than that to have what modern-day first-world nations consider to be a minimal standard of living. A person “needs” a little more than that to have a halfway decent standard of living, and “needs” quite a bit more than that to have the opportunity for advancement and self-improvement rather than just getting by from day to day.
That’s what we should have the debate about. What do we need - what level of “needs” should we try to provide for? You, for example, think we should provide for nothing but bare survival, while I disagree. (You’re right, putting words in someone else’s mouth is fun!) Seriously, you seem to think we’re already meeting the needs and are taking too much besides to spend on unnecessary stuff. Correct me if I’m wrong. I think that we aren’t meeting the needs for everyone. If that difference can be made up by cuts in other places, great. But if not, it should come from somewhere, and better that it come from Americans who can afford it than Americans who can’t. Talking about a “reasonable maximum” tax rate in “realistic circumstances” just seems irrelevant to me.
That’s what the debate should be about. Are we meeting the needs we should be meeting, and what’s the best way to meet them. Not “it’s unfair, immoral and unconstitutional to Bill Bennett that he pays 30% of his income in taxes and his maid only pays %25,” which is what some other pro-flat tax arguments have looked like to me in the past. And certainly not “OMG my opponent wants a 70% tax rate on the rich!!!”
cybishop…
I think I can say, honestly and without hyperbole, that this is the biggest example of someone putting words in my mouth that s ever happened to me.
Glad to be of service!
I didn’t put those words in your mouth, though. I asked a simple question: what do you think the highest acceptable rate is. Instead of answering, you wrote a thoughtful essay about how you have to start with the NEED, and then go to the COST. If that’s the case, it suggests that you would indeed accept whatever crazy-high rate we could put on the super-rich that nobody knows but other super-rich people. My original point to whoever it was is that there’s a practical limit to how much money we can collect in taxes. 100% is the highest possible rate, I guess. Nobody thinks that makes sense. But I bet I can find people who’d be willing to take 100% of everything over $500,000. I’ll bet I can find people who’d be willing to take 80% of total income, for a person who makes over $2 million. So there’s a practical, acceptable maximum rate. What’s yours?
Oh, and here’s more words in your mouth: since you reacted the way you did, I’m guessing that your max acceptable is less than 70%. Now you’re making me do your work for you.
I agree with a lot of your other points.
[...] « Is this cool or what? Tell em, Warren! Hey Oliver reads [...]