Warren Buffett: Stop coddling the super rich

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=1&smid=tw-nytimesbusiness&seid=auto

by asanwal • 15 years ago

605 335 15 years ago

cromulent3• 15 years ago

It looks like Joe Nocera got his wish from a week ago.

"I keep waiting for one wealthy, well-known figure to stand up and say publicly that he or she is willing to pay more in taxes as part of the shared sacrifice necessary to gain control of the country’s deficit."

http://www.nytimes.com/2011/08/09/opinion/nocera-while-the-m...

chc2• 15 years ago

Buffet has been making noise about this for a long time now. Maybe now people will listen? I'm kind of skeptical.

dwolfson2011• 15 years ago

Buffett has been saying this for years. I don't expect anyone to start listening now.

dublinclontarf• 15 years ago

We'll let them voluntarily pay more taxes then, or donate to charity, or start a charity or whatever.

By their very nature taxes are not voluntary, they're taken by force of law. Don't pay them then go to jail.

This is a stupid (but very easy) argument to make, one (of the richest)rich person says he'd be happy to pay more tax, therefor all rich people should pay more.

If he really wants to make a difference he'd be way better off spending his money on charirty, then it's not going to be entirely eaten up paying for beurocracy. THe government is not efficient AT ANYTHING.

When you pay taxes you're funding all that crap you don't agree with. Wars, funding for lobbies, paying politicians fat saleries, all those police raids on pot smokers etc. Why the hell would you want to give more to that?

dwolfson2011• 15 years ago

Maybe take a look at Buffett's charitable record sometime.

bluedanieru2• 15 years ago

The US government is apparently better at spending money on health care than private industry, if Medicaid and Medicare are anything to go by.

andrewflnr6• 15 years ago

I'm pretty sure this has happened lots of times. Matt Damon said something along those lines recently.

streptomycin• 15 years ago

Matt Damon is rich, not wealthy.

http://www.youtube.com/watch?v=4m37JkkGjAY#t=44s

robryan• 15 years ago

I suspect that the kind of people working behind the scenes to keep things as they are aren't anywhere near the super rich but the well off for who a high tax rate would impact their standard of living. Once you get up to the super rich they really aren't putting all earnings into the standard of living they keep.

(Don't have anything to back this up, just the impression I get from reading bits and pieces on the issue)

sliverstorm• 15 years ago

The more I hear about this guy, the more I like him. He is so frank, it seems like he'd be a very interesting person to meet.

dwolfson2011• 15 years ago

He really is amazing. I live in Omaha. You can drive by Buffett's house, and you'd have no idea who lives there if you didn't already know. I know people who have interacted with him on a regular basis, and he is just as personable and down-to-earth as his public image suggests.

zzeroparticle• 15 years ago

I've always enjoyed reading Buffett's remarks in Berkshire's shareholders reports because of those very reasons. There's no BS; he just tells it the way it is, covering both successes and failures. And when he talks about the overall economy, he puts it in terms that people can readily grasp the concept without being swamped by gobbledegook.

http://www.berkshirehathaway.com/reports.html

dwolfson2011• 15 years ago

He also puts on a great shareholder's meeting every year, where he and his #2 Charlie Munger spend a lot of time just answering questions. And of course, there are the discounts at Dairy Queen and Nebraska Furniture Mart. He even supports local independent businesses like The Bookworm.

http://www.berkshirehathaway.com/meet01/VisGuide2011.pdf

MikeCapone9• 15 years ago

I suggest you check out The Snowball, his most recent and authoritative biography.

ecounysis• 15 years ago

I wish Buffett would run for president. He could probably get a few things done.

Jach• 15 years ago

Alternatively buy the President + Congress.

wpietri14• 15 years ago

Definitely. He might not be able to buy the whole thing, but as long as he substantially drives up the cost of a Congressman, that's a step forward. A couple hundred grand (and 10 million in lobbying money) gets you billions of benefits, which is way too cheap.

kenjackson2• 15 years ago

People always say stuff like this, but I think quite the opposite.

Buffet, and people like him (Gates, Jobs, Welch, etc...), while great businesspeople are used to being able to say something and everyone jumps. In business, everyone is working together to make the company more money. With some exceptions, you can create an incentive structure that rewards that.

Government, in the US at least, is very different. Buffet would be dealing with people, congress, who will certainly not jump when he says something. In fact they'll often make themselves completely unavailable. He'll be in a situation where people will actually do things that harm the country if they could remove Buffet from office (to get someone from their party in office). In government, you don't negotiate in good faith.

And Buffet wouldn't be able to fire anyone in congress. I suspect one of the first things Buffet would say after working with congress is, "I'd fire half of these bozos if they worked for me!" Unfortunately, these are the people who will decide what legislation lands on his desk.

I feel like gang leaders are the people who best understand what it would be like to be President.

a5seo3• 15 years ago

What's missing is an estimate of the revenue impact of doing what Buffet suggests.

I've always heard that this kind of policy would add little to revenue, because there is simply far more tax money available by taxing earned income.

dwolfson2011• 15 years ago

I'd have liked to see that, too, but one can run the numbers if one wants.

Also, isn't getting more money better than not getting more money? (NOTE: We certainly need to slow our spending, as well, but I fail to see how an increase in revenue is a bad thing.)

dmayle2• 15 years ago

If you just count the top 400 income earners in the US that he mentions in the article, and they restore the the 1992 rate of 29.2% (as opposed to the 21.5% of 2008), then we're talking about 7 billion dollars

systemtrigger2• 15 years ago

Check your math. $16.9 billion * (29.2% - 21.5%) = $1.30 billion.

As to the additional revenues Buffett wants from the 236,883 richest households, if we assume the average of those households had taxable income of $5 million and if we raise their rates by 10% we get $118 billion.

a5seo3• 15 years ago

So here's a question- if you follow Buffett's logic, then a guy who builds a company for 40 years, most likely goes with barely any income in some years, and sells it for $10M when he retires, that guy gets slapped with a 100% tax increase.

Buffett doesn't differentiate the Walton kids who inherited billions and assuredly live off capital gains their entire lives from the entrepreneur who makes $10M that ONE year of his life that he sells his company.

Buffett claims that the tax rate in fact was of no consequence to his behavior. Well, I guess if you're in the business of speculation, that's true... you must invest/speculate because that IS your job.

But the same is not true for entrepreneurs who build stuff. What's the entrepreneur's incentive to build his company and to wait to reap his gain if his gain is taxed like ordinary income? Why not just pull income out of his company instead of reinvesting it? On the margin (that's the key), this tax policy will affect entrepreneurs decisions.

I've read Snowball, Buffett's biography, and it's pretty clear Warren has never built a company that serves customers. He's always been a speculator.

Bottom line, Buffett's proposal would have punishing consequences on entrepreneurs who earn big windfalls a handful of few times in their lives. That absolutely WILL have consequences on entrepreneurs decisions and risk/reward tradeoff.

Unless a policy to tax the super rich is proposed that doesn't somehow have that pernicious side effect of treating entrepreneurs' gains as earned income who see precious few windfall gains in their lives, I'd never support it.

There's a reason why society created lower tax rates for capital gains. Perhaps we should go back and study them.

drblast2• 15 years ago

Voluntary gifts of money can be sent to the U.S. Treasury at this address:

http://www.fms.treas.gov/faq/moretopics_gifts.html

One has to ask, if any super rich person really considered the U.S. Government a worthwhile investment, why are they donating to various charities instead of to the Treasury?

netmau5• 15 years ago

Most decent charities deliver far more per unit donated than the US government could ever wish to achieve. If you're interested in pure charity, you're not going to get much bang for your buck at the federal level.

drblast2• 15 years ago

My point exactly. It's easy to consider who's paying what taxes and thinking about if that's fair, but the right question to ask is, "Is this a worthwhile investment?"

Who pays what in taxes is really a diversion.

hans002• 15 years ago

[citation needed]

entangld• 15 years ago

Since when is the US government a charity? Taxes are not optional.

Most major donors contribute to things they can put their name on like buildings (see Stanford campus). It's difficult for even most charities to cover operating costs (i.e. labor) with only donations. Most have to apply for grants or do lots of funny numbers to keep their administration costs (i.e. labor) low.

lsc• 15 years ago

really? I thought that there was something of a problem with some charities spending the bulk of their budget on marketing and CEO salaries.

as greenspun says: "The federal government funds roads and airports that we all enjoy using. The feds pay for health care for the poor and the old. Our tax dollars pay for intrepid military personnel who go out and kill angry foreigners (in most cases) before they can arrive on U.S. soil and kill Americans here at home. For a non-profit organization of its size, the federal government is surprisingly efficient. Most federal employees work in big box-like office buildings, not in $300 million monuments to an architect's ego. George W. Bush gets paid only $400,000 per year, less than half of what a lot of university presidents earn."[1]

I personally have a somewhat less charitable view of effects of military action, at least the military action during my lifetime, but I do think that most of the personnel involved do believe that they are doing the right thing, and those other things, roads and healthcare and stuff; those are pretty great to have.

Now, I'm too lazy to dig up non-greenspun references, but it seems that many non-profits serve up rather nice salaries, for rather inefficient work[2]

[1]http://web.archive.org/web/20090217002255/http://philip.gree...

[2]http://blogs.law.harvard.edu/philg/2010/07/27/where-your-cha...

dredmorbius2• 15 years ago

Got any facts to back that up?

The American Red Cross, a large, established, and reputable charity, has about 9% general and administrative costs: http://en.wikipedia.org/wiki/American_Red_Cross

Medicare, a large, inefficient government fiasco (note: irony) has 3% overhead: http://healthcarereform.procon.org/view.resource.php?resourc...

Many charities do far worse than the ARC.

geebee2• 15 years ago

The problem is that gifts to charity aren't coercive. I know, it's strange to say that it's a problem if it isn't coercive, and I'd agree that many of the inefficiencies of government stem from the coercive nature of taxes (no need to convince people to give you money if you can just take it by force). But I'm really a moderate in all of this - I personally don't think a modern state can survive on donations, or a "pay only if you think the government will do a good job with the money" tax code. We're gonna have to collect some taxes, rich people (in my opinion) should pay more than poor people, and there's no way people, rich or poor, are just going to pony up out of a deep affection and fondness for the federal government.

If tax rates are going to be paid and progressive (they actually aren't), then they'll have to be coercive. I think what Mr. Buffet is arguing here is that the rich need to be coerced into paying more in taxes than they currently do. I'm inclined to agree with him, even if I have to hold my nose as I do.

ginsweater• 15 years ago

It's not just that - even when we're talking Warren Buffett here, the scale of the US govt is totally different. Buffett's entire fortune ($50B according to Wikipedia) would only cover a few weeks' worth of borrowing and then we're right back where we started only Warren Buffett has no more fortune. It's silly to say we should expect him to do that.

What he's saying by advocating tax raises is "I will pay more if I know that everyone else will also pay more." He's not interested in paying $XM to reduce the debt by $XM, but he would happily pay a personal cost of $XM if it meant reducing the debt by $XB.

(This is called "collective action," and it's also Groupon's business model.)

tomjen36• 15 years ago

Even at the current tax rates, Buffet properly pays more than you do. And he certainly pay more than those who are on the various forms of government relief.

yaks_hairbrush• 15 years ago

The U.S. Government could be a worthwhile investment (as a charity), but it's not doing so right now. We could raise taxes to invest in infrastructure, which would increase future GDP. A charity cannot do this owing to eminent domain issues.

That's the real rub about this deficit/debt limit drama: it wouldn't be so bad if the government spent in areas to increase future GDP. However, the government is basically an old-age insurance program with a large army. I don't see these expenditures contributing greatly to future GDP.

Locke16895• 15 years ago

It is a logical fallacy to equate the statement "I believe the rich should be obligated to pay more in taxes" to "I believe I alone should pay more in taxes."

cop359• 15 years ago

How is it a logical fallacy?

If believe A should B I am A Therefore I believe I should B.

A = rich people B = pay more taxes

BrainScraps2• 15 years ago

Reading this just makes me think of all of the lobbying dollars and campaign contributions that must have been paid by the super-rich to get these tax breaks.

Am I the only one that feels some populist rage welling up when he hears how much money is wasted on campaigning for office and influencing people in office? Aren't there more worthy uses of wealth and scarce resources?

And it just pains me that so many people think that they "have to play the game" to get things done by politicians. Non-profit organizations that use large percentages of their spend on "wining and dining" elected or appointed officials to try to make things beneficial things happen. Ugh.

dantheman5• 15 years ago

They only do that because it pays off. If the government was more decentralized and controlled significantly less dollars the incentives wouldn't be there and it wouldn't happen. It's a structural problem that happens in any system. Where power is concentrated it becomes beneficial to influence it - the more concentrated the more that can be spent.

rdtsc2• 15 years ago

I bet it wouldn't phase them a bit. They would create a watchdog professional organization (see US Chamber of Commerce) that makes sure local elections and appointments are influenced just as effectively as federal ones.

This already happens in judge elections in many states. Certain "business-friendly" candidates are showered in campaign money, with the expectations that when certain cases are appealed those judges will end up making "the right choice".

bandushrew4• 15 years ago

Because that is true, it becomes worthwhile for lobbyists to invest money in encouraging the government to centralise control.

If lobbyist money can affect government policy - and it can - then it is always a worthwhile investment for those who have money to invest.

Basically, decentralizing government is, surprisingly enough, not a magic bullet.

BrainScraps2• 15 years ago

I'm sure that it pays off for a percentage of organizations, but for many, that game represents a lot of time, money and effort that create no value.

And with campaign contributions? Come on. For the federal elections of 2008, we used $5.3 Billion dollars. What did we get for it? The exact same number of elected officials we would have if we spent $0.

What value was created? Better representatives? Quality entertainment?

What else could that money have been used for? As I said earlier: Ugh.

jeffreymcmanus5• 15 years ago

It's not necessary (or even wise) to decentralize government in order to remove the influence of money on politics.

One relatively easy change that would almost completely remove the quid pro quo bribery effect of campaign contributions is to anonymize contributions so that candidates never know who their contributions are coming from. That way there would be no payback possible, and influence peddling through campaign contributions would become a thing of the past.

InclinedPlane• 15 years ago

I'm not overly put-out by the amount of money "wasted" on campaigns and elections. I understand that there are many different ideas on the nature and function of government and I believe debates on such subjects (and campaigns and elections, which are effectively the same thing) to be extremely important. Personally I think we should do much better and have higher quality campaigns and higher quality candidates, but I think it is fully justified that such enormously important processes require significant amounts of resources. Though also I could imagine, and might prefer, a scenario where the process was not nearly so expensive.

ordinary• 15 years ago

The problem is not how much money is being 'donated'. The amount is fairly insignificant. The problem is the influence it buys and how that influence impacts the bigger picture.

So yes, I agree with you that this kind of corruption is a big problem. But how much money goes around in that circuit is not what concerns me, personally.

yummyfajitas8• 15 years ago

If we want shared sacrifice, maybe we should ask people at the bottom to share as well. Anecdotes of Warren Buffet's office aside, in general the richest people pay the largest proportion of taxes.

We already lean quite heavily on the top 1% - the top 1% actually pays more in taxes than the bottom 90%.

http://www.taxfoundation.org/news/show/22652.html

A graph of the data in that article:

http://i.imgur.com/wa8uu.png

In terms of taxation of the top 10%, the US is the most progressive country in the OECD.

http://www.taxfoundation.org/blog/show/27134.html

Maybe the tax code needs tweaking at the level of the top 400, but it's very progressive up to the level of the top 1%.

dwolfson2011• 15 years ago

>Maybe the tax code needs tweaking at the level of the top 400, but it's very progressive up to the level of the top 1%.

If you read the whole piece, that's exactly what he says.

ikirill• 15 years ago

The richest pay the largest proportion of taxes because they earn so much. In the article, 400 hundred people make $90 billion, and it takes 3 million people working at $30,000 a year to collectively earn as much.

wpietri14• 15 years ago

> If we want shared sacrifice, maybe we should ask people at the bottom to share as well.

Do you actually know anybody at the bottom? I would be fascinated to hear what you'd suggest someone cut when they're earning ~10-15k/year.

For those likewise unfamiliar, I recommend sci-fi author John Scalzi's "Being Poor": http://whatever.scalzi.com/2005/09/03/being-poor/

Both the article and the comments are worth reading.

lotharbot3• 15 years ago

> Do you actually know anybody at the bottom?

yummyfajitas lives in Pune, India. Read through his comment history for comparisons of the rich in India to the poor in the US; it's eye-opening.

yummyfajitas8• 15 years ago

Scalzi's article about "Being Poor" is definitely not a description of poverty in the United States.

http://news.ycombinator.com/item?id=1713461

Umofomia3• 15 years ago

It's interesting that all of these links talk about federal income taxes, but you talk about them as if they're talking about all taxes that people pay. Once you take into account payroll, sales, and sundry other taxes that people pay (many of which are pretty regressive), the system becomes much less progressive (it's still slightly progressive as a whole, but much less so than conservatives like to cast it).

jeffreymcmanus5• 15 years ago

This is one reason why Buffett suggests that we keep the 2% deduction in the payroll tax that President Obama proposed (and Congress passed) last year.

kenjackson2• 15 years ago

I love the lies with statistics.

"We already lean quite heavily on the top 1% - the top 1% actually pays more in taxes than the bottom 90%."

The chart of course only shows federal income tax.

What about federal payroll? What about excise taxes? And at the state and local levels, what about sales taxes?

Here's a much better link:

http://www.wweek.com/portland/article-17350-9_things_the_ric...

From this article you'll note:

This year the first $9,350 of income is exempt from taxes for singles and $18,700 for married couples, just slightly more than in 2008. That means millions of the poor do not make enough to owe income taxes.

But they still pay plenty of other taxes, including federal payroll taxes. Between gas taxes, sales taxes, utility taxes and other taxes, no one lives tax-free in America.

When it comes to state and local taxes, the poor bear a heavier burden than the rich in every state except Vermont, the Institute on Taxation and Economic Policy calculated from official data. In Alabama, for example, the burden on the poor is more than twice that of the top 1 percent. The one-fifth of Alabama families making less than $13,000 pay almost 11 percent of their income in state and local taxes, compared with less than 4 percent for those who make $229,000 or more.

and

It’s true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008 (the most recent year for which data is available). But people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government.

Social Security, Medicare and unemployment insurance taxes (known as payroll taxes) are paid mostly by the bottom 90 percent of wage earners. That’s because, once you reach $106,800 of income, you pay no more for Social Security, though the much smaller Medicare tax applies to all wages. Warren Buffett pays the exact same amount of Social Security taxes as someone who earns $106,800.

Don't let some fool you into believing that the poor don't pay their share of taxes. They do.

yummyfajitas8• 15 years ago

If you have data showing that including payroll or state taxes change this picture, feel free to post it.

I gave the best data I have access to.

gftrhfg3• 15 years ago

Warren Buffet is specifically talking about federal income taxes, not payroll taxes such as Social Security and Medicare, which can be considered benefits because people contributing will get a return when they retire (it's actually a progressive system, in which the poor get more than what they contribute).

http://www.cbo.gov/doc.cfm?index=3213&type=0&sequenc...

These federal income taxes aren't lies.

http://ntu.org/tax-basics/who-pays-income-taxes.html

makecheck• 15 years ago

Ask yourself how much you need to make in order to live comfortably, and feel "rich enough". Maybe $100,000/year would do it in most parts of the country? And probably a lot less.

Now suppose you had a million dollars (and just a million, ignoring these billionaires for the moment). That mean you could risk, without really blinking an eye, $900,000 on any investment; even if you lost every penny, you'd still be left with enough to live "well" and feel pretty "rich". At no point would you fear missing your next meal or losing the roof over your head, and you probably wouldn't care if you had a job. Of course, the odds of losing all $900,000 are slim; you'd probably see some payoff, and never really approach that unfortunate low.

Rich people will always have opportunities to make money that the poor will never have. Even if you tax a millionaire or billionaire at a very high rate, they'll have enough money left over to take many risks and very likely end up richer anyway. At the very least, they won't miss the money that went to taxes.

Now suppose you only make $15,000/year. Not only would it take years to reach the above "rich" $100,000 level, but you'd be insane to risk much of that low income on any investment: failure means you come out with zero and miss your next meal and lose your house. If they're lucky, these people may have a handful of investment opportunities and ways to become richer; if they screw up, most of those opportunities go away forever. Taxes at the bottom won't fix anything at all.

kahawe3• 15 years ago

What I have always wondered: there has got to be a certain amount of money that by all normal standards HAS to be enough for a human being. If you are so rich, you can only have so many houses and cars and all sorts of other toys that you don't even need half of... then you want to leave something for your kids and their kids and generations to come, your relatives and family but still, that is considerably little. A few million go a LOOONG way.

So, after all the toys, investments and securing your offsprings, you are still left with a HUGE amount of money and assets which you will likely never make any use of anyway.

I know this goes against our ideals and system of capitalism but: if such a limit exists why not cut billionaires off above it and give the exceeding money directly to the government or charity?

reader20003• 15 years ago

Stop spreading lies - it's incomplete data! Do you work at FOX News or something?

It’s true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008. But people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government.

bgentry• 15 years ago

Do you work at FOX News or something?

Unnecessarily inflammatory remark.

ebiester• 15 years ago

A family of 4 starts paying tax at around $27,000. They're already paying 6.2% in Social Security and 1.45% in Medicare. (This is also matched by the employer.) That's $2,066.

I want to know how many dollars they should pay in taxes. So, we've said social security and medicare is $2,066. How much should a family of 4 making $27,000 be taxed?

ck23• 15 years ago

The problem is getting low to middle income people to stop voting against themselves. Good luck with that, they all seem to think they are going to be billionaires someday so better keep those billionaire taxes low.

Either that or by bribing the wealthy with low taxes they might only ship out half the jobs overseas instead of all of them.

It's just dumbfounding. Election after election, over and over.

breck• 15 years ago

"The great bulk of the legal voters of the South were men who owned no slaves; their homes were generally in the hills and poor country; their facilities for educating their children, even up to the point of reading and writing, were very limited; their interest in the contest was very meagre—what there was, if they had been capable of seeing it, was with the North; they too needed emancipation.

-Ulysses S. Grant

People fighting or voting against their own self interest has gone on for a long time, sadly.

ck23• 15 years ago

I've come to the conclusion that the logic becomes "well if I can't have it, no-one will". People basically trying to take away assistance/help to others by trying to vote it away from everyone, since they somehow perceive themselves as better than others suffering on the lower rungs on society.

This also explains why people try to vote away unions and benefits for teachers/schools, the very foundation of society, while they are okay with CEOs having multi-million annual stock bonuses while getting paid $1 to dodge taxes.

webXL4• 15 years ago

This assumes low to middle income people are single issue voters and that issue happens to be the effective tax rate of billionaires. What's dumbfounding is that there are people who believe that wealth is zero-sum, and that by taking from the rich and giving to the poor, "justice" would be done, never taking into account what produces wealth or the fact that living standards have improved despite the rich getting richer. 99.9% of us will never become billionaires, but so what? If my neighbor has a nicer car than me, should I try to get the government to raise his taxes and decrease mine? Why not? Here's a possible reason: The conditions that permit my neighbor to drive a nice car are the same conditions that produce billionaires.

Just because I want Warren Buffet to be able to keep most of what he produces doesn't mean I believe I will be in his shoes one day, it just means that I don't trust people who are trying to take more of his money in order to improve my life. Warren may trust those people, but his life really doesn't need much improvement now, does it?

dreww3• 15 years ago

living standards have improved despite the rich getting richer.

Citation needed. Please explain how the living standard in the US can have improved if real wages have fallen. Oh wait, the answer is an incredible increase in consumer debt. That seems to be working out.

Keep calm and carry on.

Andrew_Quentin6• 15 years ago

I think there is a point about fairness as well. Taxes are progressive for a reason. Those with the broadest shoulders should bear the greater burden.

Warrent Buffet is perhaps giving away a lot of what he maybe would have given in taxes but plenty of billionaires or super rich just spend it on their spoiled sons and daughters, some who end up in rehab, spent a tremendous amount of resources to create a parallel society where meritocracy applies only to some people and/or just waste it in obscene luxuries such as a 10k bottle of champaign, etc and to boot it all, at the end of the day, they are rich only because they are in many ways not paying the working people the proper wages so that they can pay themselves obscene amounts. I mean, how much more smart are the bank CEOs who got us in this mess to start with to justify a salary 100 times more than others working there.

But even on a practical rather that political level, for most of these supper rich, the difference between 1 million or 2 million does not mater but in some silly psychological keeping up with the jones nonsense and for many even the keeping up with the jones does not apply because they are the jones. But for a lot of "working poor" lowering the taxes from 25% to 17% makes a real difference, a difference of a kind which may mean that their children will properly be looked after and have all the support to say study and do well in school.

Finally, you say you want Warrent Buffet to keep the money and you don't want people to take it away from him. Well, I don't want people to take my money away through taxes either. No one does. Its not about want, or even opinion, its about fairness. Some of the deficit was built up because the rich pay so little and to ask the non rich to bear all the burden is a double wammy. No wonder you have 250k people protesting in Israel and kids burning chain stores in London.

chrismealy• 15 years ago

They don't. Google 'rich state poor state red state blue state'

tsotha3• 15 years ago

Amen to that. Why is it so hard for leftists to understand people voting for small government are voting in their own interest?

niels_olson2• 15 years ago

The top result being a study by Gelman? I skimmed it, I don't see how it supports your point. Care to elaborate?

forkandwait2• 15 years ago

I keep trying to formulate my take on this, and failing, but here goes anyway:

The democratic party and American leftists no longer understand non-college working people and, for the most part, no longer reach out to them. Working people think that the left today advocates either for weirdos or for the completely screwed up, and wants everybody to pay for its programs to help said weirdos and fuckups. There is some valid reason for this impression, with the Great Society programs and affirmative action in the sixties and seventies being partly funded by taxes on the middle classes, along with fiascos like school bussing and over-compensated hiring practices screwing over people who didn't feel like they deserved it. (And poor management of government agencies making them ineffective at cost effective delivery of services.)

However, working people don't see themselves as fuckups (because they're not), and they don't have a lot of patience with weirdos. So they aren't going to feel comfortable with the gay marriage/ social worker part of the left (the old union guys were socially very conservative for the most part).

Also, most of the left today seems to me to be made up of people who really have no connection to actual poor working class people, so there is automatically a divide that is mobilized by the Karl Roves of the world.

Furthermore, if you have ever been lower middle class or "working poor", you learn early that very traditional personal character values can make the difference between you and your family living in a truly shitty situation or rising out of the muck around you to actually have a decent marriage/ nice friends/ safe home. So when college educated lefties come around and tell them to have pity on fuckups and weirdos because its society's fault, or that personal character and traditional values don't matter, any working class person is likely to tell them to go to hell.

So today's Republicans mobilize personal character rhetoric, traditionalism rhetoric, and the cultural non-understanding between leftist leadership and working people, and -- voila, working people voting against their own interests.

Until the left figures out the working classes again -- which means taking the time to show up in the middle of the country, go to church, eat ribs, etc, etc -- Capital will continue to screw everyone. So quit whining about how stupid working class people are -- nobody represents their interests today, neither left nor right, but at least the Republicans pretend.

GHFigs• 15 years ago

I think you would get a big kick out of the work of Eric Hoffer.

Andrew_Quentin6• 15 years ago

So at what point are the "working poor" not stupid by voting for taxes against the rich instead of tax cuts for the "working poor".

All the stuff you said is media nonsense and frankly suggesting that the republicans in any way represent the working poor is, well, nonsense. What you seem to be wanting is some sort of friend who can tell you that gays or gay marriage is bad, church is good, though I bet you or the working poor never go, and that character matters, but that this friend of yours takes a lot of your money you desperately need in order to take less from filthy rich people that actually do not need it at all does not seem to matter to you at all or indeed this characteristic of this friend of yours does not seem to bother you at all.

Ohh well, each to their own.

officemonkey• 15 years ago

Ok, so the urban leftist elite don't get "Joe Six Pack". Then why don't the working people go left on their own?

Here's the thing: they did. They just don't know it. The rural populace gobble all sorts of government programs, from farm subsidies to electric power generation. Most of the solid Republican states receive more federal spending than they pay.

And the GOP knows it, so it keeps Farm Subsidies off the table while it takes pot-shots at NPR.

vacri2• 15 years ago

I'm not sure what you're on about, because there's no party representing the left either. The US Democrats are a fair way to the right of the conservative party here in Australia, yet in my discussions with americans there are a great many people who would be considered left-wing here in Aus. There appears to be no choice for the left in the US, so how "the left better understanding the working class" would change things, I'm not sure.

_delirium• 15 years ago

I think your analysis is close to home, but with one huge caveat: it really only applies solidly to the white working class, which is these days only about half the working class (though it depends on how you define "working class"). The black and hispanic working classes, which are a large portion of the country, are strongly organized within the Democratic Party, though the hispanic working class is a bit more split.

There are plenty of disconnects between them and the white middle-class wing of the party as well, especially around issues like gay marriage and separation of church/state, which tend to be seen as "rich white liberal" issues. But I think it's a bit more complicated than simple conservatism, and it's often more than balanced by significant left-leaning sentiment on economic issues. There is, for example, huge support for social safety nets, welfare systems, socialized healthcare, etc., among the non-white working class. If you put single-payer healthcare to a referendum in black working-class neighborhoods in Atlanta or Brooklyn, it'd pass by lopsided majorities. So I think the left wing of the Democratic party is fairly well in tune with that portion of their concerns, but most of the party is arguably out of touch by not being left enough on economics, promoting more of a middle-class, centrist liberalism that's roughly ok with the economic status quo and not very interested in major social-justice initiatives.

There's also no real cultural understanding between the GOP and this segment of the working class: a good showing for a Republican is 10% of the black vote, almost all of it coming from the wealthier portion (i.e., they only connect on class issues). But I agree that the Democratic connection is not great, either, especially if you take the national party; they're often seen as economic-centrist social liberals, less bad than the GOP but not really willing to fight for the working class on economics (or at least not succeeding at doing so).

JabavuAdams8• 15 years ago

Yes, this. I've asked the same question as the post you were replying to, but your response sheds new light on the issue.

Now that I think of it, it also matches my experiences living in lower income neighbourhoods.

ddw2• 15 years ago

> However, working people don't see themselves as fuckups (because they're not), and they don't have a lot of patience with weirdos. So they aren't going to feel comfortable with the gay marriage/ social worker part of the left (the old union guys were socially very conservative for the most part).

I'm not sure if this was always the case though. In the 60s and 70s it seemed that the weirdos and labor guys were able to work together because they had the same goals. And we have seen this recently with the labor protests in Wisconsin: they were started by university TA's but picked up by sanitation workers, cops, firefighters and the like.

I don't think it's fair for the working class folks to just write off everyone else just because they're "weirdos." Social issues can be just as important economic ones. Plus I think it's extremely shortsighted that someone will not be able to work with me on shared goals just because I don't go to church or eat ribs. I know these are just examples you brought up, but it's dangerous for people to never reach beyond "one of us."

The mistake of the Democratic Party was to abandon the unions and to embrace corporations as a source of funding. This continues to this day as Obama never supported the Wisconsin workers.

forkandwait2• 15 years ago

Forgive my reply to myself, but I have been thinking about this all day. Here are some random thoughts, partly for my own edification, but partly because the conversation seems to be lingering:

I actually think the "core" of the democratic part / left is the marginalized on one hand, and those that minister to them on the other. The white working class aren't really marginalized like they were in the depression and earlier, so don't fit in anymore -- but the super poor are marginalized, so they fit. Non-whites are interesting -- 40 years ago, blacks and latinos were marginalized as weirdos, except they were poor too (double whammy -- like being gay AND broke all the time). Now that we are actually becoming a less racist and homophobic society (slowly and imperfectly, but definitely) these folks lose their marginalization and drift away from the core since social conservativism and personal character ideologies become more appropriate, unless they go to college and become social workers and join the ministering class rather than the ministered-to class. The Republicans see this with latinos and keep trying to bring them in; they haven't succeeded yet, but they will, just like they did with Italians and Catholics.

The other, maybe dominant group now, in the democratic party are those folks who would have been "Rockefeller Republicans" back before Reagan and Goldwater redefined the party. My family is in this camp, and so are, I think, all the smart capitalists who run/ own businesses that require lots of infrastructure and educated employees -- the Hewletts and the Packards, Bill Gates, Hollywood, Google, the rest of the educated "blue" USA. These guys rightly understand that simplistic market bullshit and simplistic christian bullshit are not appropriate to a complex industrial economy. Remember, Carnegie ordered the slaughter of unionizing steelworkers, but he also understood his world was completely fucked without universities and libraries to make his engineers and managers. He could have been a Clinton democrat today.

A couple of replies to people:

Yeah, Eric Hoffer is great -- I only read the true believer, but it made a huge impression on me; I am sure I repeat him without knowing it.

To the guy who asks why the Joe Sixpack world doesn't evolve its own leaders (forgive me if I paraphrase too brutally): because they lack the training or they wouldn't be joe sixpacks in the first place... It is mostly the managerial class (myself) or the owning class (my friends at prep-school) who have the know-how to organize people into social systems like political parties, churches, businesses, and the like. The working class have great hand-eye coordination, but pretty crappy social and language skills (sorry for the gross generalization, but I think you understand what I am trying to say); those that do have these skills tend to drift upward into the managerial class. When there is no room for these smart organizers to promote, they get involved in union politics or communist cells (or avoid the question altogether by getting involved in the arts/ drugs/ weird religious things / whatever.)

So here is my parting thought: There is a vacuum organizing the working class today, and if someone put their finger on the cultural stuff like the Republicans do, but also fought for working people's actual interests, it could be a WILD ride. Just saying.

Egregore• 15 years ago

Do you think in the interest of those people is rich people going to another country and paying there their taxes?

pfedor• 15 years ago

I don't think I'm going to be a billionaire someday, and if I did I couldn't care less about tax rates.

I do think however that maybe I'll be able to retire some day before I die. But the likelihood of this is very much affected by LTCG rate, wouldn't you agree?

Now how is it even fair that long term capital gains taxes even exist? I make some money, I pay taxes on it. I buy whatever instrument I hope will be the best at preserving the value of it (since I know if I just stuff the money under the mattress, I won't be able to buy much with it in say 40 years). After 40 years, the nominal price of the thing I bought will have gone up, chiefly due to inflation. When I sell it, I pay taxes again. How is it not double taxation?

karmafeeder• 15 years ago

As a freshly minted middle-class American, I disagree with Mr. Buffet's argument here. Though his eagerness to share the tax-burden is laudable, I hope that tax rates stay low for him. I would pay higher taxes to keep it that way.

Simply put, I don't trust the government with that money.

revscat• 15 years ago

I don't trust capitalists with it.

olalonde2• 15 years ago

I can't help but wonder what the hell you are doing on a venture capital firm's website.

webXL4• 15 years ago

It's as if wealth is zero-sum, and Mr. Buffet believes he and his ilk have taken some of it from the rest of the population. But he's not going to go without his generous slice of the pie if his friends aren't forced to go without theirs. But he and some of his friends are voluntarily giving their pie to worthwhile causes... as we speak! no force necessary!

I would pay higher taxes to keep it that way.

The sad reality is that the government is going to have to raise revenue somehow, and if that's the case, I'd prefer to raise it on those with a lot of passive income, who are less likely to move their assets out of the country. How you achieve that objective is beyond me.

kahawe3• 15 years ago

> Simply put, I don't trust the government with that money.

The only logical conclusion there would be moving out to a different country that offers equal or better living standards because the longer you stay, the more money you give to that government you do not trust.

aneth• 15 years ago

Could everyone make sure every Republican and Tea Partier they know reads this? Republican concerns are critical to this country, but the current incarnation is deeply harmful.

reader20003• 15 years ago

It's pointless: for them their belief trumps facts.

TheSkeptic2• 15 years ago

Funny. Buffett certainly didn't mind a little coddling in 2008. He was arguably one of the largest individual beneficiaries of bailouts which shifted ungodly amounts of toxic debt from failed private institutions to taxpayers. See http://blogs.reuters.com/rolfe-winkler/2009/08/04/buffetts-b....

While it's now mighty generous of Buffett to invite the government to increase his taxes, he could spare us another (http://www.cnbc.com/id/40229527/Warren_Buffett_s_Letter_to_U...) nauseating and embarrassing New York Times op-ed and instead put his money where his mouth is. As another poster has noted, the Treasury will gladly cash Buffett's check (http://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm).

MikeCapone9• 15 years ago

The whole financial system and everybody that depends on it was a beneficiary of the bailouts. If everything collapsed, everybody would have suffered. Buffett just happens to own a bigger slice of the market than almost anyone, so of course he benefited significantly. But singling him out, especially since he's stayed away from wall street's games and made extraordinary efforts to keep things above board for decades, is totally unfair.

danenania6• 15 years ago

"The whole financial system and everybody that depends on it was a beneficiary of the bailouts. If everything collapsed, everybody would have suffered."

A narrative convenient for powerful banks that was created by powerful banks and allied politicians. People have suffered and continue to suffer because of the crimes these institutions have committed. Propping up their corpses only helps the criminals who created the situation. Clearing out bad businesses so that new ones can take their place is a central pillar of capitalism. If you really believe a bunch of billionaires who claim the world's going to end if they lose their billions, well, you're gullible at best. Far from forestalling suffering, the continued operation of these entities and their influence on legislation perpetuates it. Their collapse is the best thing we could hope for, even if it causes short term turbulence.

steins• 15 years ago

Prehaps they all benefited, but it seems as if the bailouts benefited the most irresponsible people far more than the rest of society.

The banks should have been allowed to fail. The only reason capitalism works is by providing a huge incentive to do things right. Bailouts like these will convince companies they can get away with the same thing in the future.

TheSkeptic2• 15 years ago

You should do your research before making statements like "especially since he's stayed away from wall street's games and made extraordinary efforts to keep things above board for decades."

Buffett didn't sit idly by while his holdings were threatened. He lobbied for, and supported, bailouts.

Not content with bailouts of companies he owned large stakes in, he made sweetheart deals to invest in Goldman Sachs and GE knowing what was going to happen. Have you ever explored those?

If his GS and GE investments aren't convincing enough, here are a few choice examples of the Oracle of Omaha's hypocrisy:

1. While he promotes higher tax rates for high-earning individuals, he lobbied against a tax that would have sought to recoup TARP losses from bailed-out banks (see http://abcnews.go.com/Business/buffett-bank-tax-higher-rich-...).

2. Buffett once famously warned that derivatives were deadly, but when it came time to put his money where his mouth was, he lobbied against proposed derivatives regulations that would have cost Berkshire billions (see http://www.independent.co.uk/news/business/news/buffett-lobb...).

3. In 2010, Buffett once defended the ratings agencies (see http://www.wnyc.org/articles/wnyc-news/2010/jun/03/buffett-d...), but apparently he's only willing to defend them so long as they agree with him (see http://www.foxbusiness.com/markets/2011/08/05/buffett-to-fbn...).

Bottom line: whatever one may have once thought about Warren Buffett, his actions over the past several years make it clear he is no investor, he is a corporatist. And quite a successful one at that.

rhizome2• 15 years ago

If everything collapsed, everybody would have suffered.

Citation needed.

There would still be demand that needed supplying, no? Some non-criminal companies would have happily stepped up to fill that void.

j_baker2• 15 years ago

Our deficit is $14.6 trillion. TARP, which cost ~$80 billion (with still more to be paid back), is a rounding error in that deficit. Changing tax rates would have a much bigger impact on the deficit.

http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program#P...

swaits• 15 years ago

You're confusing deficit and debt.

tapp• 15 years ago

> Our deficit is $14.6 trillion.

Just in the interest of precision: it's actually our national debt which is approximately 14.6 trillion. Our deficit this year will be closer to 1.5T.

http://www.cbo.gov/doc.cfm?index=12039

Not that they aren't both mind-boggling numbers

danenania6• 15 years ago

TARP is a rounding error all right--compared to the $16 trillion the Federal Reserve has provided to private banks behind the scenes. TARP was just political theater.

http://www.rawstory.com/rs/2011/07/21/audit-fed-gave-16-tril...

turar2• 15 years ago

Buffett is working for his shareholders to increase the value of their investment in Berkshire Hathaway in the best possible way.

Personally though, he already gave away most of his wealth to philanthropy via Gates Foundation.

MikeCapone9• 15 years ago

99%+ of his wealth is in Berkshire, though, so the better Berkshire does, the more billions will go to Gates and a few other foundations (mostly run by his kids).

andrewflnr6• 15 years ago

Warren buffet pays about 17%, and the people in his office pay an average of 36%. So the solution, the way to restore fairness, is to raise taxes on him? I don't really think so. Maybe I'm a bit of a wingnut, but I find tax rates of about 30% disgusting simply on moral grounds, and I don't see why the discussion should go much further. Surely one of a government's prime constraints should be not screwing its citizens?

dwolfson2011• 15 years ago

Without government to pay for the roads citizens drive to their businesses, and the infrastructure that gives them water and temperature moderation, and 1,000 other things that are essential to provide for functioning commerce, citizens wouldn't be making so much money as they do. And I'd wager that effect is worth a lot more than 30%.

andrewflnr6• 15 years ago

The question is, does it require more than 30%?

wpietri14• 15 years ago

I don't feel like I'm getting screwed. As a small business owner, I think I get fantastic value for the taxes I pay every year. It could be better, sure, but having lived on 4 continents, it's here that I've chosen to live and start my latest business.

andrewflnr6• 15 years ago

I'm pretty sure that's because America does a better job of this than most other countries. Out of curiosity, what kind of rate are you paying?

jeffreymcmanus5• 15 years ago

You know what I find "simply disgusting on moral grounds"? Shortening the school year by a week because we can't find enough money to pay teachers to teach a full school year. This is happening in our school district and in districts all over the country. The reason is because nobody can make a correlation between the taxes we pay and the benefits we receive.

Nicknameless• 15 years ago

I live in Australia, I'm in my late 20's, I've got a pretty good software dev job and I pay about 25% income tax (which includes 37% above $80k). I don't know what the real tax rate would be after factoring in all of the other taxes I pay.

For such a high amount of tax, I enjoy a very high standard of living. A four year software engineering degree cost me about $18k due to our sane education system, and I've never had to worry about whether I can afford decent healthcare or factored health insurance into career decisions.

Our high tax rate is offset by lower costs for universal services, and people generally have more freedom with their life decisions. As such, a substantially lower tax rate or major cut in social services would be disgusting on moral grounds to me, and I feel that your government is screwing its citizens by doing just that.

aj700• 15 years ago

Taxing the money that moves - as it is earned - will only produce so much revenue. The rich need to be taxed, not beccause it will allow lots of lovely spending, because the gov will inevitably do a bad job of spending it. Though you could put it towards debt reduction first.

You have to tax the money that doesn't move. The millions of unneeded unspent $ that the rich are sitting on, with a wealth tax. You may not even make the poor richer, but you will make the rich poorer. Good.

dwolfson2011• 15 years ago

It's a nice intention, but how do you devise that mechanism? If I keep $10,000 in my savings account for 30 years, are you going to tax it every year?

wpietri14• 15 years ago

Yes, that's how it works: http://en.wikipedia.org/wiki/Wealth_tax

felipemnoa• 15 years ago

The government does that already by printing more money. The more money printed the less valuable your $10K. Better to keep money on assets that do not devalue with inflation.

mmorett2• 15 years ago

> You may not even make the poor richer, but you will make the rich poorer. Good.

"Unneeded, unspent money" is none of your business. It's not your money.

hans002• 15 years ago

Right. It's all of our money, because we all share the same society. Sorry, "it's mine, all mine" doesn't cut it outside an Ayn Rand fantasy novel or a Ron Paul forum.

cperciva• 15 years ago

That might have worked in the 1910s when the vast majority of people worked up to the day that they died. In the 2010s we have a concept of "retirement"; and in order for people to practice it, they need to save money while they're working.

hugh4life3• 15 years ago

"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. "

If you really want to see something get passed, you're better off putting the cutoffs at $5mil and $25mil(maybe even slightly higher). The $1mil cutoff sounds nice in a soundbite and it polls well, but it's not hard to find sympathetic faces(small businesses and large family farms) who would get caught up in that. His cutoffs would end up hurting the the "upper middle class" and the "lower rich" more than the "super rich".

And if you want "shared sacrifice", you should be talking about a consumption tax.

What this country needs most is a firm federal spending cap at 20% of GDP. There would be less opposition to raising taxes and balancing the budget if the measuring stick for spending wasn't tax revenues but the GDP.

pmorici• 15 years ago

Buffet is talking about "Taxable Income" meaning a small business or family farm would have to be making 1 Million in profits for it's owners before they would actually be effected by such an increase in rates.

Consumption tax would likely put an undue burden on the poor because where as the rich invest and save a large portion of their income the poor spend close to 100% of what they make on things like food and housing.

hugh4life3• 15 years ago

"Buffet is talking about "Taxable Income" meaning a small business or family farm would have to be making 1 Million in profits for it's owners before they would actually be effected by such an increase in rates."

I understand perfectly... go ahead, put the cutoff at 1Mil and you're going to lose politically.

"Consumption tax would likely put an undue burden on the poor"

I don't care... I'm mocking the idea of "shared sacrifice"... the poor pay almost no taxes.

shangaslammi• 15 years ago

How on earth does consumption tax have anything to do with "shared sacrifice"? Consumption tax wrecks the purchasing power of the poor (who spend pretty much 100% of their income on taxed goods) and doesn't have any effect on the purchasing power of the super rich (who typically only spend a minor portion of their income on consumer goods).

hugh4life3• 15 years ago

"How on earth does consumption tax have anything to do with "shared sacrifice"? "

I'm mocking the idea of "shared sacrifice"... the poor pay little taxes, if they're not giving anything up then they're not sacrificing anything.

carsongross• 15 years ago

Thanks for the advice, Warren.

Can we have our Goldman bailout money back now?

Yours,

The U.S. Taxpayers

siglesias• 15 years ago

Most of it has been paid back or is on track to be paid back: http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program

jeffool• 15 years ago

A couple of recent quotes of his: "I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of Congress are ineligible for reelection."

http://www.ritholtz.com/blog/2011/07/warren-buffett-i-could-...

Also, he's against having a debt ceiling. "All it does is slow down a process and divert people’s energy, causes people to posture. It doesn’t really make any sense,"

http://www.politico.com/news/stories/0711/59335.html#ixzz1V4...

chailatte• 15 years ago

The combined wealth of American's billionaires is only $1.5 trillion. [1] If we taxed them 100%, it would only pay off our budget deficit for one year. We still have around 54 trillion total debt to pay down. Not to mention 115 trillion unfunded liabilities.

And which entrepreneurs would be stupid enough to work 14 hours a day and hire workers, knowing that the government will tax them 90%? They would all flee the country.

We have too much debt, period. From military, medicare, and social security spending. Problem is, if we reduce any one of these, either our soldiers returns home broke and angry, or the seniors die of starvation/disease. (35% of Americans already over the age of 65 rely almost entirely on Social Security payments alone. Median retirement savings of households over the age of 65 is less than $45,000).

Tough choice. But it looks like the current politicians aren't going to make a decision, but let Bernanke print dollars until hyperinflation arrives.

http://english.alarabiya.net/articles/2011/03/10/140943.html

reader20003• 15 years ago

Stop fabricating numbers. The US National debt is about $14.5 trillion, not anywhere close to 54 trillion.

Btw, the Bush tax cuts — costing $1.8 trillion from 2002 to 2009 — are a big reason we got into this deep hole.

Buffet: 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.

webXL4• 15 years ago

Buffet who should know better: correlation doesn't imply causation

_cbsz• 15 years ago

Had you checked the first google result for United States debt, you would have found where the confusion is coming from: the national debt is 14.5 trillion, and the total debt is 54 trillion (Source: http://www.usdebtclock.org/). I'm guessing "total debt" according to the debt clock includes things like state governments and private citizens, although Wikipedia claims that the 14.5 trillion figure is total debt (http://en.wikipedia.org/wiki/United_States_public_debt).

mnemonicsloth• 15 years ago

It's not a made-up number.

US debt to bondholders is around $14.5 trillion.

The US also promised Medicare and Social Security payments to retirees that are underfunded by $59 trillion:

http://www.usatoday.com/news/washington/2007-05-28-federal-b...

The numbers will vary here according to longevity and interest rates, but the bill is huge, and it will have to be paid with tax money.

orangecat3• 15 years ago

You know what’s happened since then: lower tax rates and far lower job creation.

By this logic, we should undo the large increases in government spending since 2000 as well. Works for me.

VT_Hokie• 15 years ago

If Warren feels so guilty, then he should write a check to the US Treasury for his entire net worth.

tomjen36• 15 years ago

If Buffet finds it so wrong that he pays so little tax, I am sure the IRS wouldn't mind if he paid more.

Personally I would adjust Social Security to the expected life time (and re-adjust it every year); get out of Iraq, Afghanistan and Libya; half the army (you got nukes, you don't need that big an Army to defend yourself) and stop the war on drugs.

scottjad7• 15 years ago

Warren is omitting very crucial information and knowingly deceiving most people. He's pretending he doesn't pay very many taxes, but he does, he just pays different taxes. In this article he mentions capital gains, income, and payroll taxes but does not mention corporate income taxes. Corporate income taxes are taxes on the owners of corporations. I don't know exactly how much he paid, but some quick math I'd guess he alone paid 1.6 billion last year in corporate income taxes. (Berkshire paid 5.6 billion, Warren's worth 53 billion, Berkshire 178 billion, giving Warren 29% ownership, if you have better numbers feel free to share). So he mentions 6 million dollars in taxes but omits 1.6 billion from the discussion.

hypersoar• 15 years ago

It's hardly fair to Berkshire Hathaway's income as part of Buffet's personal income. Unlike his own, its money is not his to spend however he likes.

scottjad7• 15 years ago

If Warren owned 100% of Berkshire would you still think it's unfair to consider what Berkshire pays in taxes a tax on Warren? Then why is it not fair to consider it on a percentage basis like I have?

The owners of corporations are the people being taxed by corporate income taxes, since without these taxes, that money would be theirs to spend as they wish, either by investing in their business or taking it out by paying dividends.

DenisM2• 15 years ago

Corporate income taxes are taxes on the owners of corporations.

Well, no.

scottjad7• 15 years ago

Well, thank you for your informative response.

Without a corporate income tax owners can withdraw the incomes minus dividend taxes. With corporate income tax they can withdraw income minus corporate income tax minus dividend taxes. How can you say they're not the ones paying the tax when the money could go directly in their pockets if not for the tax?

shmulkey182• 15 years ago

This guy kills me. He's more than welcome to write a big check to the US government. Until he does, you'll all forgive me when I consider him somewhat less than sincere in his desire to see more of his income go to the IRS.

nazgulnarsil• 15 years ago

Buffet isn't this economically illiterate. The super rich must wish to hose the only sort of rich.

orijing2• 15 years ago

All of the comments here attacking Warren Buffett's authenticity, suggesting that he should put his money where his mouth is and write the Treasury a big fat check, are missing the whole point.

Services provided by the government are public goods. It's blindingly obvious that a single person cannot pay for those public goods. Just Buffett's own contributions, no matter how much he donates, will not be enough to solve our budget issue. It's called shared sacrifice because it's meaningless unless everyone participates.

It's like the neighborhood park (i.e. medicare/social security): Everyone wants one, but nobody wants to pay for it. In steps the neighborhood's rich kid (Buffett), who suggests that all the rich kids pitch in to pay for the park. If that happened, everyone would be made better off, but one kid alone isn't enough.

This is a very canonical problem of public services provisioning and funding. It's completely naive to sit back and suggest Buffett tackle the issue himself, because we all know that's ridiculous.

Open your eyes. The problem is not Buffett's to solve. But he recognizes that there is a problem.

Apologies for the harsh tone, but it baffles me how members of Hacker News can think so naively. The attacks on Buffett are utterly unfair and unjustified. We should all have an open mind and try to understand the proposal.

cromulent3• 15 years ago

Agreed. He's not trying to "make a donation", he's saying that everyone should share the burden - including himself and people like him.

It's not just that the rich kids should pay for the park, it's that everyone but the rich kids are being asked to pay some extra.

gaius4• 15 years ago

Does Mr Buffett employ an accountant to do his taxes? Does said accountant employ any tax avoidance strategies?

shmulkey182• 15 years ago

"It's blindingly obvious that a single person cannot pay for those public goods." ... "It's called shared sacrifice because it's meaningless unless everyone participates."

Huh? By this logic, taxes are "meaningless" unless everyone pays taxes. However, many poor and lower-income people do not pay income taxes. Does that render the income tax "meaningless"?

Also, the claim that it's "like the neighborhood park... [e]veryone wants one, but no one wants to pay for it" is absurd. We see many examples of charitable contributions made by the rich and the middle class which are used to purchase public goods such as museums, nature preserves and the like.

When push comes to shove, what Buffet really wants -- and what you are advocating when you say that no matter how much money he donates, it "will not be enough to solve our budget issues" -- is an increase in the size of government fueled by higher taxes, rather than a diminution of its scope by reducing the funds made available to it.

A bigger government benefits crony capitalists like Buffet, because they have sufficient power and influence to ensure that the goodies that can be redistributed by the Leviathan are steered their way. I wish Buffet would be honest enough to say that, rather than bloviating about how terrible it is that he doesn't pay enough taxes when he is unwilling to take the obvious direct action necessary to rectify that unfortunate situation.

scottjad7• 15 years ago

> many poor and lower-income people do not pay income taxes.

And many middle-income people. ~45% of US households pay no federal income tax.

jmvoodoo• 15 years ago

You have so completely missed the point I'm not sure it's worth arguing with you, but imagine for a moment that the additional revenue from closing loopholes on the rich was used to lower payroll taxes on the average working man, lowering the cost of employment...

ryannielsen2• 15 years ago

  > Also, the claim that it's "like the neighborhood park... [e]veryone
  > wants one, but no one wants to pay for it" is absurd. We see many
  > examples of charitable contributions made by the rich and the middle
  > class which are used to purchase public goods such as museums, nature
  > preserves and the like.

We also see many cases of governments which have much higher tax rates than ours and provide fantastic public services.

  > When push comes to shove, what Buffet really wants -- and what you are
  > advocating when you say that no matter how much money he donates, it
  > "will not be enough to solve our budget issues" -- is an increase in the
  > size of government fueled by higher taxes, rather than a diminution of
  > its scope by reducing the funds made available to it.

Being blunt: How do you know what Buffett really wants, or what orijing is really advocating? You've just described how you perceive Buffett's motives and orijing's assertions.

And why present this as a "lower taxes vs. smaller government" issue? That seems incredibly disingenuous. What is truly being advocated by many is a combination of both. What's the best way to solve a debt issue? Increase income while also decreasing spending. Why cripple the process by ignoring half the solution?

  > A bigger government benefits crony capitalists like Buffet, because they
  > have sufficient power and influence to ensure that the goodies that can
  > be redistributed by the Leviathan are steered their way. I wish Buffet
  > would be honest enough to say that, rather than bloviating about how
  > terrible it is that he doesn't pay enough taxes when he is unwilling to
  > take the obvious direct action necessary to rectify that unfortunate
  > situation.

What evidence do you have of Buffett benefiting from government programs, or having taken advantage of cronyism? Honest question – he very well may have significantly increased his wealth from connections with other "crony capitalists". I have no evidence either way.

That said, do we need to look at past examples of when aggressive government spending has helped individuals or small companies? Once again, this doesn't need to be a black and white world – as the spender of last resort, the government can provide liquidity and resources to individuals, small companies, and large companies when no one else is willing to take the risk. Yes, some people may profit immensely as a result. Does that mean those programs were wrong? And a bigger government doesn't have to only benefit "crony capitalists"...

I don't understand why a holistic view is so rarely considered in these discussions. Rather than making this an "right vs. wrong", "rich vs. poor", "liberal vs. conservative", "communist vs. capitalist" argument, let's make it a discussion to find the best solution to our problems. Only then will we actually solve the problems our country faces.

tomjen36• 15 years ago

The attacks on him is just and fair because he demands the right to take by force other peoples money.

The rich already pay the most tax. Why should they pay more?

ryannielsen2• 15 years ago

I honestly don't understand your question. I don't mean that statement to be argumentative – I really don't understand.

Are you saying the top 1% should pay what I paid in taxes last year? I paid around $100k. I'm not sure why someone making millions to billions a year should only pay $100k. If you assert I should pay the same as high-income individuals, should someone making far less than I am also pay $100k?

To flip it around, if you assert someone making less than me should not pay the same dollar amount as me, then why should someone making many orders of magnitude more than me pay the same dollar amount?

Now then, if I assume you're asserting the mega-rich should pay the same percentage as me, then we both agree that Buffett should pay more. My tax rate was 23% while Buffett's was only 17%.

How ever you slice it, someone's going to have to pay more than someone else. Either the poor need to pay less since they can't afford the flat dollar rate that's established, or the rich need to pay more because the flat percentage rate means they owe more.

Thus, I don't understand your question – it seems logical that, given any taxation system, the rich should pay more. Am I missing something?

dredmorbius2• 15 years ago

I'll try to help you out a bit.

Taxation is Mutual Coercion, Mutually Agreed On.

The phrase was used by Dr. Garrett Hardin in his 1968 essay on global overpopulation, "The Tragedy of the Commons".

Oh, and the example Hardin explicitly cited as an example of mutual coercion? Taxes:

"Who enjoys taxes? We all grumble about them. But we accept compulsory taxes because we recognize that voluntary taxes would favor the conscienceless. We institute and (grumblingly) support taxes and other coercive devices to escape the horror of the commons."

http://www.garretthardinsociety.org/articles/art_tragedy_of_...

The "just pay voluntary taxes" has been very, very dead for well over 40 years.

jhgjhg• 15 years ago

Who pays income taxes? The rich mostly.

http://ntu.org/tax-basics/who-pays-income-taxes.html

genieyclo• 15 years ago

Politics is rearing its ugly head again on HN. Flagged.

jquery• 15 years ago

Notice that Warren Buffett is asking for tax increases on those who make more than $1M and $10M respectively. I'm fine with this. He seems to "get", unlike so many Democrats, that $250k/year is not rich.

Where I get nervous is all the Democrats who seem to think that there is no difference between $250k and $1M/year and up. I get kind of ill seeing obscenely wealthy Democrats in Congress, almost all making MUCH more $250k, trying to lump my household in with the rich. I'm willing to pay more, but not if these wealthy Democrats won't create a distinction between $250k/year, $1M/year, and $10+M/year.

eftpotrm2• 15 years ago

While I agree there's a big distinction between someone earning $250k/year and $10m/year, are you aware that if your family is earning that much then you're earning over eight times the median household income?

callmeed3• 15 years ago

You're wrong. First, the median income in the US is now at or slightly above $50K per year.

Second, assuming earned income (which is fair even for $250k earners), a median income household will be in either a 15% or 25% tax bracket (depending on if married). A $250k household will be in a 33% tax bracket.

callmeed3• 15 years ago

Agree completely. I think the problem is that $250K is around that "top 1%" mark. It's a convenient demarcation line and makes for a smooth soundbite.

What many don't get is that the bottom of the top 1% includes doctors, attorneys, and entrepreneurs.

stanleydrew2• 15 years ago

Why do the professions of those at the bottom of the top 1% matter?

davidw• 15 years ago

Off topic: most articles about politics.

pakitan2• 15 years ago

I'm a huge fan of Warren Buffet but in this case I think the math just doesn't seem right. I don't have the exact numbers, I took data from wikipedia and the NYT article, so, please, let me know if my math is way off.

From the article, there are about 200,000 people with income of $1M+. Let's make it $5M per person. That's 1 trillion USD combined income.

The rest of the taxpayers seem to be about 200,000,000 with an average income of about $25,000. Combined income = 5 trillion.

So, if they reduce the tax of the bottom group with 2%, as Mr. Buffet suggests, the tax of the upper bracket has to be hiked with 10% just to compensate. And if we add another 10%, just for the fun of it, that's 100 billion taken from the rich but it's still a measly part of the budget (around 3 trillion) not to mention the debt (15 trillion). And don't forget that people with 1M+ income have a vast number of legal and semi-legal tricks at their disposal to reduce their tax rate. The moment you increase the tax too much, you start seeing money flowing to offshore locations.

So, while "tax the rich more" and "let them share the burden" are great feel-good slogans, I don't think they offer any practical solution for the huge USA deficits.

benjoffe• 15 years ago

Your big assumption there that those 200,000 people with income of $1M+ have an average of $5M per person is where your logic fails. This source: http://www.google.com/publicdata/explore?ds=a7jenngfc4um7_&#... shows the US total personal income for 2010 being over 12.5 trillion, your two groups only add up to 6 trillion.

pakitan2• 15 years ago

Well, given some kind of power law distribution, I don't think the $5M are that far off. In fact, this suggests that my guess may have been on the higher end: http://motherjones.com/politics/2011/02/income-inequality-in...

It says average income for top 0.1% is $3M and those 200,000 are exactly the top 0.1%. I'm not sure where the huge discrepancy comes from, when it comes to the total personal income stats you posted and I hope someone can clear this up.

rdl• 15 years ago

The really low hanging fruit, IMO, to raise tax revenue without "raising taxes" (in the sense of raising tax rates) is to reclassify carried interest as ordinary income.

That, combined with a few other similar changes (mortgage interest deduction, maybe funding ssi and medicaid separately from old age and medicare) and huge cuts in defense (due to ending 1-4 of the wars), seems like it would be fairly effective.

What I'd like to see is a flat income tax for ordinary and dividend/capital gains at 25-35% for all income, huge cuts in spending, combined with a single refundable tax credit set at ~subsistence income, universally applied. However, that's a much bigger change and pretty unlikely to happen.

scottjad7• 15 years ago

Warren's real federal tax rate on 99% of his income: 59%

A portfolio company makes $1 in income. Without any taxes, Warren could put $1 in his pocket if he wished. Instead the portfolio company (Wells Fargo) pays 33% taxes, then the holding company (Berkshire) pays 29% taxes, then Warren pays 15% dividend taxes. In the end it's 59%, all of which is really truly a tax on Warren once the smoke and mirrors go away. (- 1 (* 1 0.67 0.71 0.85)) => 0.595655

So right now 7 out of 12 months of his income is taken by the federal government, and he thinks they should take more! Maybe 9 out of 12 months, where ideally (in his mind) the state government would then come in and take the rest.

DanielBMarkham3• 15 years ago

Once I realized that you could take all the money from the rich, stop all defense spending, and still have a massive budget problem? These sorts of things stopped being an issue for me.

Seriously folks, it's a red herring, an issue created to make sure that one party has something to fight the other party over. If you want to sack the rich, have at it. Just don't pretend that by taking that position you are doing anything at all for the national treasury. Or poor folks, for that matter.

In the larger picture, many technologists view the state as something of the past. Tens of thousands of people make their money simply because computers are hooked to each other over wires. It has very little to do with national budgets or policy (yes, you can throw out a bunch of silly nonsense about national broadband policies and such, but let's get real: this economic activity takes place in all sorts of various scenarios.)

So if you are the type to sit around pining away your day, thinking about all those super-rich folks and how good they have it, I'm sure this will be a fun article for you. If, however, you are concerned with public policy -- and the fact that in the US, at least, the majority of people do not even pay an income tax, yet vote on the rates for the rich minorities (gee, wonder how that will turn out?) then this is all so much posturing.

I don't feel a need to slam Buffett. He's a patriotic citizen who means well. Smarter guy than me in a lot of areas. I'm just not sure that this article has anywhere near enough merit to have 500+ points on HN. It offers no solutions, only rehashed populist tripe. If you want to set the income tax at 95% of all money made over a million bucks? Have at it. It's not important.

ender7• 15 years ago

Please supply a source for your claim in your first sentence.

travisp• 15 years ago

The entire net worth (not income) of all billionaires in the United States may be about $1.3 trillion[1]. Therefore, if you took all of the money currently held from all U.S. billionaires, you would decrease the national debt by about 10%, or cover the deficit for just one year. A high (say, 90%) income tax rate would presumably bring in even less.

1 - http://www.moneycontrol.com/news/business/interesting-number...

DanielBMarkham3• 15 years ago

I would appeal to simple reasoning: everybody has known that the U.S. is on an unsustainable spending curve due to entitlements for the last decade or more. The only thing that changes is how politicians choose to spin it from year to year. If you create a system where politicians get elected promising to spend money that doesn't exist, then such a system will outgrow any amount of revenue you can throw at it. If you somehow changed the rates right now and squeezed enough out of the economy to make it all balance? Ten years from now some new bunch of guys will be running on a platform to provide SUVs in every driveway or something equivalently intellectually sexy and emotionally attractive. It's simply too enticing not to.

But you asked for something solid, so here's the result of some random Googling. Note that it's a little unfair for this author to use the current year's deficit in this calculation, but then again with growth rates where they are it's only a decade or so until such spending will be commonplace even in a frugal environment.

http://billwhittle.net/?p=562

There are about 400 billionaires with a total net worth of around $1.3 Trillion.

Seriously, this entire discussion all boils down to how honest you can be about how the system is broken, not which party is to blame, how much the rich should pay, whether or not we need more or less government, or any of that. All of that nonsense is just bullshit to keep you coming out to vote.

I'd also point you to a graph of total debt as a percentage of GDP. http://www.usgovernmentspending.com/federal_debt_chart.html Even if you argue that the last year or two is somehow "special" (A common theme when its your guys spending the money) It's plainly clear that the trajectory leads to default in a very short amount of time.

muhfuhkuh2• 15 years ago

Ah, the poor little rich minorities. We've simply got to protect them from everything. They "create jobs" or something, after all.

Though, that's actually wrong, too. 98% of small business tax filers earn less than US$250,000 a year, yet account for 64% of the job creation (or "net new jobs") in the last 15 years and employ over half of the working US population [1].

I'm sorry, but the rich are not bothering with a <$250k a year business if they're already rich, unless they're serial entrepreneur, hyper-multitaskers juggling multitudes of them at once. And, aside from Elon Musk, how many do you know that are willing to do that?

This whole mess is the placation of the rich because they'll "move" if we don't give them everything. The question is, what country would they move to? I mean, I'm sure Singapore is nice and all; but it's hot as hell there, and don't they have Universal Healthcare with government-mandated price controls, which is supposedly every rich man's nightmare according to Fox News?

Russia is nice, too, I suppose. If and only if you're former politburo or an officer, or just a jackbooted mafioso thug (or willing to take any or all of those on without Uncle Sam backing you up).

Hong Kong is part of a communist country that only recently has conveniently added capitalism to their repertoire. If that doesn't work out for them, how soon would they "nationalize" all of that island and it's hard-won successes contained therein?

Of course, others have noted Somalia, Mexico, and various developing countries. Take your pick.

"If you want to set the income tax at 95% of all money made over a million bucks? Have at it. It's not important."

If it's not important, why all the falsities about "taking everything from the rich" and stopping all defense spending and it not mattering? It would matter a shitload, no offense. DoD + discretionary spending (which the military swallows almost all of) is almost 40% of the entire budget.

What's left is Medicare and SS, which in 2000 was well-funded and flush with +2 Trillion in the kitty. The tax breaks of 2001 and 2003 and the wars of roughly the same time erased nearly all that and left IOUs. Now, you're blaming those programs for our downfall.

So, yeah, you're right, it's not about taxes, it's about those "poor people" who "do not even pay an income tax".

[1] http://www.sba.gov/advocacy/7495/8420

camiller4• 15 years ago

By 2000 SS and Medicare trust funds were already held in IOU's (i.e. US treasuries).

cfontes• 15 years ago

Very well pointed, it takes a lot of altruism to say that when you are the potential target. I read Snowball and like this man actions and thoughts. He is really a very unique kind of person, some might argue that he did some things to benefit himself in the past, But I disagree and think that the world would be a better place if more man like this were in charge of the power over civilization.

bmahmood• 15 years ago

Majority of the comments seem to be discussing the merits / morality of taxation, rather than Buffet's central points.

Entertaining the discussion on the merits of taxation, I've found John Rawls' Justice as Fairness to be especially enlightening. (http://en.wikipedia.org/wiki/Justice_as_Fairness) Essentially, a just society is one in which decisions are made to benefit the worst-off in society. Given a majority of the factors that contribute to individual success are outside our control (what family you were born into, what neighborhood you lived in, what school you went to, etc), a just society would in turn be one which compensates for such naturally-occurring inequalities. He provides a well-thought out argument for how progressive taxation is a necessary (but certainly not sufficient) lever to do so.

Now in practice, it is true that our government has been terribly inefficient in managing tax revenue and creating public goods. But that shouldn't discount the role government can play. Realizing the potential reach and role of government, the goal shouldn't be to neuter it, but to make it more efficient.

On Buffet's central points, I find them hard to argue with. 1) Lower taxes on the rich in the last 10 years have been neither necessary nor sufficient for economic growth or job creation, especially in light of the 20 years before that. 2) The front-end drivers for entrepreneurs, VCs, and angels have more to do with product creation, addressing a market need, and simply playing the game. Money is of course a big part in too, but tax cuts only play a back-end behavioral incentive- they affect the NPV of behavior that was already in play. 3) Just because the actual tax revenue on the rich may not put a huge dent on the deficit (as some comments seem to imply), the point is that the billions in tax revenue it would raise could still stave of cuts to programs that the poor and middle class depend on.

(And larger food for thought on the role of tax cuts, and how they've contributed to the deficit http://www.theatlantic.com/politics/archive/2011/05/the-char...)

zackattack• 15 years ago

Taxation is subject to marketplace effects.

I've learned something from Mr. Buffet.

Warren Buffett: Stop coddling the super rich

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