The newest member of the ‘budget tenthers’: Warren Buffett
OMG, OMG, OMG!!1!111!!!! Warren Buffett wants to raise taxes on the rich! The republic has been saved!!!1!
Not quite.
Suffice it to say, Buffett gets a lot more left-wing, touchy-feely mileage from his op-ed in Monday’s New York Times than the federal government would get in the way of cold, hard cash by taxing him and his “mega-rich friends” more heavily.
From Buffett’s op-ed:
Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.
At first glance, Buffett seems to have made the case for “millionaires and billionaires” not paying their “fair share.” But let’s look a bit further:
- In 1992, using Buffett’s figures, the top 400 would have paid $4.9 billion in taxes. That’s a little less than half a percentage point of all federal revenues at the time (which includes more than just personal income taxes).
- In 2008, the top 400 would have paid $19.5 billion in taxes. That’s about three-quarters of a percentage point of all federal revenues.
So, the top 400 in 2008 paid more in taxes than they earned in 1992. And their share of all tax revenues rose by one-half. But that’s not the way Buffett wants us to look at things. How much more would the “mega-rich” have paid on their 2008 earnings at 1992 effective rates?
Well, if the top 400 in 2008 had paid taxes at the same rate they did in 1992, 29.2 percent, the U.S. Treasury’s take would have increased by…
…drum roll, please…
…a whopping…
…staggering…
…soaring…
…$7 billion.
Which represents about four-tenths of a percentage point of this year’s $1.5 trillion deficit.
As I wrote once before: A tenth here, a tenth there — pretty soon, you’re talking about a whole percentage point! In fact, add it to President Obama’s hated tax break for corporate jet owners and you’re almost at 1 percent of the problem.
Now, Buffett also wrote that he supports creating two new tax brackets, at $1 million and $10 million. He didn’t suggest any rates for these brackets, so we can’t analyze what his proposal would mean in terms of revenue.
But we can apply the effective rates in 2000, the last full year of the Clinton-era rates, to the income reported in Buffett’s $1 million and $10 million brackets in 2009. There were 236,883 filers in those brackets that year, the top 1.7 percent of all filers.
Do that, and 2009 revenue would have increased by…
…wait for it…
…$14.4 billion.
That’s just under 1 percent of this year’s $1.5 trillion deficit. And naturally it includes any increases on the top 400, as discussed above.
F0lks, the problem with the federal budget deficit is not taxes on Buffett and his “mega-rich friends,” or even taxes on all “millionaires and billionaires.” I don’t say that because I hate the poor, worship the mega-rich, or am named in the will of a millionaire grandma or billionaire uncle somewhere.
I say it because as long as we’re not talking about the real problem — out-of-control spending — we are not talking about real solutions.
P.S. — Dan Mitchell and Timothy Carney offer other rebuttals of Buffett.
– By Kyle Wingfield
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202 comments Add your comment
MikeB
August 16th, 2011
10:24 am
The only way to get out of the situation we are in, is to get more Americans paying taxes…………. Not the Americans who already pay taxes, to pay more…
How do you accomplish this? Put people to work so they can earn, pay off debt, and purchase goods. Oh yea and generate payroll and excise taxes. This should be the mission this country is on, but politicians can’t convert from the tactic of throwing money at demographic groups for votes…… Such bs.
Voice of Reason
August 16th, 2011
10:29 am
The real question here is why are Dems pushing these tax increases so much if they are so little help? I agree that the Repubs are being hard headed about this, but all politicians are hard headed. I would rather them demand cuts in spending without revenue increases than demand revenue increases without meaningful cuts in spending.
Fletch
August 16th, 2011
10:31 am
Am I the only person who thinks that we are balancing on the line between the government working for us and us working for the government?
Joe the Plutocrat
August 16th, 2011
10:34 am
real john, with all due respect, I cannot buy into your “nobody is stopping him from paying more taxes” logic. seriously, that’s like playground level stuff. and this utopian concept that “the IRS accepts donations” is equally infantile. the bottom line is; the current tax code is riddled with loopholes and loopholes are created by and favor those whose income can be traced to ‘capital gains’ and ‘deferred interest’ as opposed to actually providing goods and services to be consumed by Americans and/or exported abroad. as far as “bribing” production companies to film in GA, or SC, or FL with tax breaks (also known as loopholes); these “incentives” do not prevent the films from being filmed, they simply determine the location. ergo, if you want to have a discussion about the merits/costs of encouraging filmmakers to shoot in GA (or encouragubg the Hawks, Falcons, and/or Braves to remain in GA) via subsidies, tax breaks, etc. (which I find to be “unfair” non-taxes), well, then, as I said, that’s another conversation. a few years ago I suggested that perhaps every pro athlete, rock star, or movie star who does not reside in GA should have to purchase an business license (annual or temporary) in order to “work” in GA, as I have to secure a business license/corporate registration to work in GA. again, the plan needs some tweaking, but I think it’s a step in the right direction.
MPercy
August 16th, 2011
10:36 am
For fun, let’s compare the effective rates and a few other values under Carter (1979) and G.W. Bush (2006). Recall that under Carter (1979) the marginal rate went all the way up to 70% paid on income over $215,400 (married filing jointly); under Bush (2006), the highest marginal rate was *only* 35% paid on income over $336,550 (married filing jointly). The CBO puts out a nice paper every year. It starts with data from 1979 and runs up to 2006 (the last year for which I have data, 2005 for the top 0.01%), making this comparison easy.
Would you believe that in 1979, when the highest marginal tax rate was 70%, the effective income tax rate paid by the top 1% was just 21.8% (compare to the marginal rate of 70%). In 2006, after massive tax rate cuts that were accompanied by elimination of a host of deductions, the effective income tax rate for the top 1% had dropped only a few points down to 19% (compared to marginal rate of 35%).
Would you believe that in 1979, when the highest marginal tax rate was 70%, the top 1% paid 15.4% of all federal taxes collected but that in 2006, when the highest marginal rate was a mere 35%, the top 1% paid 27.6% of all federal taxes collected?
Would you believe that the bottom 80% are *all* (statistically, not necessarily as individuals!) paying a smaller share of the both the total federal tax burden and income tax burden in 2006 than they were in 1979? Only the top 20% are paying more?
Would you believe that the bottom 40% went from paying about 4% of income taxes collected in 1979 to paying -3.6% in 2006 (negative share of taxes due to excess refundable tax credits, primarily EITC and child-related credits)?
Believe it!
Share of Total Federal Tax Liabilities
* the lowest quintile (20%) paid 2.1% of all taxes collected in 1979 and 0.8% in 2006
* the second quintile paid 7.2% of all taxes collected in 1979 and 4.1% in 2006
* the middle quintile paid 13.2% of all taxes collected in 1979 and 9.1% in 2006
* the fourth quintile paid 21.0% of all taxes collected in 1979 and 16.5% in 2006
* the highest quintile paid 56.4% of all taxes collected in 1979 and 69.3% in 2006
* top 1 percent paid 15.4% of all taxes collected in 1979 and 27.6% in 2006
* top 0.01% percentile paid 2.7% of all taxes collected in 1979 and 6.5% in 2005
Share of Federal Income Tax Liabilities
* the lowest quintile paid 0.0% of income taxes collected in 1979 and -2.8% in 2006
* the second quintile paid 4.1% of income taxes collected in 1979 and -0.8% in 2006
* the middle quintile paid 10.7% of income taxes collected in 1979 and 4.4% in 2006
* the fourth quintile paid 20.2% of income taxes collected in 1979 and 12.9% in 2006
* the highest quintile paid 64.9% of income taxes collected in 1979 and 86.3% in 2006
* top 1 percent paid 18.3% of income taxes collected in 1979 and 39.1% in 2006
* top 0.01% percentile paid 2.6% of income taxes collected in 1979 and 8.0% in 2005
Share of Pre-Tax Income
* the lowest quintile earned 5.8% in 1979 and 3.9% in 2006
* the second quintile earned 11.1% in 1979 and 8.4% in 2006
* the middle quintile earned 15.8% in 1979 and 13.2% in 2006
* the fourth quintile earned 22.0% in 1979 and 19.5% in 2006
* the highest quintile earned 45.5% in 1979 and 55.7% in 2006
* top 1 percentile earned 9.3% in 1979 and 18.8% in 2006
* top 0.01 percentile earned 1.4% in 1979 and 4.2% in 2005
Total Effective Federal Tax Rate (income+payroll+excise+corporate)
* the lowest quintile rate was 8.0% in 1979 and 4.3% in 2006
* the second quintile rate was 14.3% in 1979 and 10.2% in 2006
* the middle quintile rate was 18.6% in 1979 and 14.2% in 2006
* the fourth quintile rate was 21.2% in 1979 and 17.6% in 2006
* the highest quintile rate was 27.5% in 1979 and 25.8% in 2006
* top 1% percentile rate was 37.0% in 1979 and 31.2% in 2006
* top 0.01% percentile rate was 42.9% in 1979 and 31.5% in 2005
Effective Income Tax Rate
* the lowest quintile rate was 0.0% in 1979 and -6.6% (negative 6.6 percent) in 2006
* the second quintile rate was 4.1% in 1979 and -1.0% (negative 1.0 percent) in 2006
* the middle quintile rate was 7.5% in 1979 and 3.0% in 2006
* the fourth quintile rate was 10.1% in 1979 and 6.0% in 2006
* the highest quintile rate was 15.7% in 1979 and 14.1% in 2006
* top 1% rate was 21.8% in 1979 and 19.0% in 2006
* top 0.01% percentile rate was 21.0% in 1979 and 17.0% in 2005
MPercy
August 16th, 2011
10:40 am
Ah, the Warren Buffet canard. First of all, it’s important to note that Mr. Buffet isn’t raking in a huge income. Instead, he holds assets that represent unrealized capital gains in the several tens of billions (primarily shares of Berkshire-Hathaway). If BH were to go belly up tomorrow, his holdings become worthless. His company pays him a salary of $100,000 each year, and he “earns” a few million dollars every year in interest and dividends. This income, plus his salary, is what he pays taxes on, much of which is taxed at the lower capital gains rate rather than income tax rate. Quoting his tax rate, based on CG rates compared to his secretary’s, based on income tax rates (and not at his or her *effective* income tax rate, at that) is apples and oranges.
Second, and more important to my point, Mr Buffet takes full advantage of the tax system to minimize his taxes. He has accountants and tax lawyers. He has clearly structured his affairs to minimize his taxes, as, for example, when he established trusts for his children.
It is further worth noting that when Mr. Buffet and his friends Bill & Melinda Gates set out to figure out how to improve the world, they created the tax-exempt foundation and donated billions of dollars to the foundation, rather than simply letting the government have that money. We have to ask why? Didn’t they trust to government to do the “right thing” with that money?
Finally, note that both Gates and Buffet, when they donated to the foundation, did so by giving away appreciated shares of their respective companies, thus garnering for themselves the largest tax break possible–not only did they not have to pay GC taxes on the gains (substantial they were, too), but they get to claim the *appreciated* value as a deductible charitable contribution. So, if WB had been granted one share of BH when it sold for $1000, he would owe income taxes on on the $1000. But if he held that share until BH sold for $200,000 per share, he would owe income taxes on the $1000, and CG taxes on the $199,000 difference. But by donating the share to the foundation, he still owes income taxes on the $1000, pays no CG taxes, and gets to claim $200,000 charitable donation (which can go a long way to offsetting any other income he has).
Mr. Buffet is acting in a sort of “stop me before I kill again” manner here, isn’t he?
Lil' Barry Bailout (Revised Downward)
August 16th, 2011
10:41 am
Obozo could have increased taxes on the rich in 2010, a full year after the recession ended in June 2009. He had a filibuster-proof Congress. Why didn’t he do it?
JDW
August 16th, 2011
10:49 am
Well, Kyle lets break it down.
Kyle wrote,
“You make it sound like we went on a straight-line trajectory to 15% once Bush got in office. That’s not true, and you know it.”
I most certainly did not. I did not even mention the revered Duhbya. Nor did I at any point say it happened overnight. I compared a point in time when we balanced the budget to our current predicament and used that to point out, that contrary to your one-sided statement…”I say it because as long as we’re not talking about the real problem — out-of-control spending — we are not talking about real solutions.”…revenue is at least 50% of the problem.
Kyle wrote,
“Revenues are so depressed because there’s 9% unemployment. Spending was raised so high on the argument that it would keep unemployment below 9%.”
Certainly this is one of the reasons, but if in fact tax cuts lead to job growth, as you like to believe, how do you explain that phenomenon? Which leads me to this unadulterated piece of PONY PLOP…
Kyle wrote,
“Taxes were also lower than now during a good chunk of those two decades.”
Not ONCE NADA NEVER during those entire two decades did taxes even APPROACH todays level much less SNIFF lower. The LAST time taxes were lower as a % of GDP was 1943…68 YEARS ago.
http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205
Speaking sniff, do I smell PANTS ON FIRE?
And lastly these two gems,
Kyle wrote,”And the world economy was very different. And we were benefiting from the emergence of productivity-enhancing IT. And…”
Of course the world was different then Kyle, the problem is that under primarily Republican leadership we have done lousy job of adapting since 1980.
Now to your bit about productivity…oy vey! First off productivity increases tend to have a negative effect on unemployment…less people to do more work and all that. Second, our productivity gains since 2002 when Duhbya’s tax refund took place far exceed those of earlier years…
1980-1992 average increase in nonfarm productivity was 1.64%
1992 to 2002 the increase was 2.08%
2002 to now the increase has averaged 2.64%
So using your argument we should be benefiting more now than in the past….
Fact is Mr Buffett is right. The rich aren’t paying their share and the way out of this mess is to balance tax revenue and spending. Bowles Simpson is one blueprint and the 1997-2000 timeframe is another.
Trying to portray the problem as an exclusively “spending problem” is disingenuous, dishonest and down right disgusting.
joe
August 16th, 2011
10:49 am
Out govt problem is not a revenue problem, but a spending problem…simple as that. Stop the out of control spending and get rid of the loopholes that allow corporations and the other 50% of people who pay no taxes and these problems are solved.
Joe the Plutocrat
August 16th, 2011
10:51 am
MPercy, I think, perhaps Mr. Buffet is saying let’s compare apples to apples and oranges. again, the bottom line is the bottom line, he is not arguing that he has not benefited from the tax codes and the advice/counsel of the best tax attorneys/accountants he can buy (which is perhaps, why he used the word “coddled”?). he is simply saying, ‘close the loopholes’. let’s be honest, folks; where do you think “loopholes” originate? do you think they simply appeared in the tax codes as typos or printing errors? these “loopholes” are created by lobbyists? the Bush tax cuts are no different than the repeal of Steagal-Glass. to wit; they changed the law (made something previously illegal; leagal – and the change favored the “top two percent” at the expense of the the rest). I’d be interested to see Buffet’s relationship with K Street, but until I do, will take him at his word.
Jefferson
August 16th, 2011
10:53 am
The income increase by the top earners is not enjoyed by the working and middle classes, they pay more because the take more of the pie. You must worship their butts.
David Granger
August 16th, 2011
10:54 am
I would respect Mr. Buffet a lot more if he supported an increase in the capital gains tax rate, not just in the INCOME tax rate. He loves to tell that story about how his secretary pays tax at a higher rate then he does, and…though he certainly earns a large salary as a CEO…the great majority of his income does not consist of earned wages every year. But curiously, every time anyone suggests an increase (even a progressive increase) in the capital gains tax, Mr. Buffet (along with a couple of other prominent billionaires who have publicly called for higher tax rates) always vehemently oppose them.
A few years ago, a proposal was introduced in congress to tax all dividends and indexed capital gains over $1,000,000 for any individual taxpayer as ordinary income. And both Bill Gates and Warren Buffet opposed that, and made large donations to organizations that were against it.
Reminds me of Ted Kennedy, who always advocated very high estate tax rates…though his family only paid a little over a hundred thousand dollars on his father’s estate of almost $500 million.
Intown
August 16th, 2011
10:55 am
$7 billion would pay for Atlanta’s entire water and sewer overhaul and the rest of the Beltline. So, it ain’t chump change. Time to invest in America.
Joe the Plutocrat
August 16th, 2011
10:57 am
Li’l barry… because Obama is owned by Wall Street and Buffet is not. there are legions of “libtards” who have called him on this (as well as his playing footsie with the DoD in Libya, Afpak and Iraq). this is why many on the left refer to him as Bush v 2.0. in fact, one of the reasons Perry scares me is the fact that he is no different than either W or Obama; a few cosmetic distinctions, but nothing substantial. like W, Perry plays the tough talking, “bring it on” Texan, who wants to be the world’s policeman; while Obama, like Clinton, plays the “deal-brokering centrist” who is always looking to do the deal (even as the “deals” often favor his benefactors on Wall Street, as opposed to Main Street). but hey, this conversation belongs on Bookman’s blog; we’re talking about Buffet.
JDW
August 16th, 2011
10:59 am
@@LBB…”Obozo could have increased taxes on the rich in 2010, a full year after the recession ended in June 2009. He had a filibuster-proof Congress. Why didn’t he do it?”
Now that may be the best question you have ever asked. He should have. He should have told the Repugs to stuff it and let the Duhbya tax giveaway expire across the board.
Would have done the budget a world of good and contrary to popular opinion would not have had a major impact on growth.
As an added bonus next time he had to negotiate with the lunatic fringe he would have been in a position of power.
It was one of his biggest mistakes.
Joe the Plutocrat
August 16th, 2011
10:59 am
D Granger, if what you say is true (about Buffet and Gates), let’s see it.
Jimmy62
August 16th, 2011
11:01 am
Make one real cut. Just one real cut that has a significant and real effect on the deficit and debt. Just one cut. And then raise taxes if you must.
But the last 800 times the government has had a choice between cutting the size of government and expanding it, they have chosen expansion. So, just as a compromise, give us one significant real cut that happens now, not a decade from now, and then we can talk tax increases. But till you give us that one real cut, I don’t trust the government with one extra dollar beyond what they already have. But they won’t make that one cut. Obama talks a big game about compromise, but the one thing he is unwilling to do ever, is cut, shrink, de-enlarge government in any manner. That’s what he won’t compromise on no matter what, and the “cuts” he supposedly had on the table weren’t real cuts. They were decreases in the increase, and they weren’t even supposed to happen for years, till long after he would be reelected and have a chance to revoke such cuts.
Lil' Barry Bailout (Revised Downward)
August 16th, 2011
11:02 am
The revenue problem is temporary, due to high unemployment and slower than normal growth. The spending problem is mostly structural (parasite maintenance programs) but also due to Idiot Messiah spending increases. You can wet-dream all you want about getting even with the productive class, but it ain’t going to pass through a Republican House until the actual problem, spending, is properly addressed.
Kyle Wingfield
August 16th, 2011
11:08 am
JDW: I meant tax rates. Mea culpa.
Kyle Wingfield
August 16th, 2011
11:11 am
And another thing about the comparison between revenues in 2000 and today: In 2000 we were at the peak of a business cycle, and today we’re still clanging around near the bottom of one.
Jefferson
August 16th, 2011
11:12 am
How much more income did those top 400 make in 2008 vs 1992 ? Maybe that why they paid more taxes, pro rate it if you want a fair comparision.
Joe the Plutocrat
August 16th, 2011
11:12 am
Li’l Barry… I’ll concede, when you concede that there are “parasites” in the DoD. again, not the sole solution, but a step in the right direction. and either way, the tax codes have to be fixed. they are the result of the same influence peddling (lobbying) and corruption/cronyism that infects the miliatry industrial complex AND what you righties like to call “entitlements”. waste and fraud is waste and fraud. he fact that one appears as a motorizes wheelchair or EBT card used to purchase cigarettes; OR a $300 wrench to fix the $500 toilet seat on a C-5A (figurative reference) are essentially the same when the final accounting is done. Soothsayer posted an amazing fact yesterday; the DoD spends $20 billion a year on air conditioned tents in Afghanistan. $20 billion! forget the “support the troops” stuff (how much body armor or HUMVEE armor would $20 billion buy?), why are we still in Afghanistan 10 years after 9/11 and four months after we killed OBL? the Taliban did not attack us, we attacked/invaded their country. as I said, spending is spending, and frankly, Obama should have said, OK, no tax increases, but I am shutting down Iraq, AfPak, Libya, and pulling troops from Germany, Italym Japan, Korea, Bahrain, etc. again, this is why is has alientated many on the left.
Kyle Wingfield
August 16th, 2011
11:15 am
Jefferson: Have you ever actually read anything I’ve written? The earnings info is in the quote from Buffett’s article.
Defense analyst
August 16th, 2011
11:16 am
“the DoD spends $20 billion a year on air conditioned tents in Afghanistan. $20 billion!”
Joe the plutocrat,
I’m sorry but that is simply not believable or credible. Please cite your stat for that ridiculous stat.
MPercy
August 16th, 2011
11:16 am
JDW @10:49 am “Not ONCE NADA NEVER during those entire two decades did taxes even APPROACH todays level much less SNIFF lower. The LAST time taxes were lower as a % of GDP was 1943…68 YEARS ago.”
There’s not any significant difference between the tax code we have at this moment and the tax code we had in 2007. In 2007, revenues reached all-time highs in absolute (adjusted) dollars topping $2.5T and a strong 18.5% of GDP.
Actually, there are a few things different. Mr. Obama added the “Making Work Pay” tax credit, and has suspended a portion of SS taxes.
Typical Democrat voter
August 16th, 2011
11:17 am
The millionaires and billionaires got more money than the need. I want it. We should tax it and take it from them.
Kyle Wingfield
August 16th, 2011
11:26 am
JDW: Now, about whether revenue is “50% of the problem.”
First, I disagree with your ratio because revenues have hit 20% of GDP exactly three times in the past 60 years. In other words, saying we should expect revenues to be at 20% is unreasonable. The historical average for revenues — regardless of how rates, loopholes, etc. change, for the middle class, the rich, the mega-rich and the Buffett-rich — is closer to 18%. So it would be more accurate imo to say that revenues are about one-third of the problem, and spending the other two-thirds. Which is one reason I call spending the “real problem.”
Now, for the other reason: I agree that revenues are a problem, to the degree people are out of work and not paying taxes (or are working/earning less and thus paying less in taxes). The revenue problem is a cyclical one.
On the spending side, we supposedly have already spent the 2009 stimulus. Yet spending has not fallen to pre-stimulus levels — and will only grow because SS and Medicare expenses are set to explode in the decades to come. The spending problem is a structural one.
I’ve said before and will say again: I’m perfectly happy to reform the tax code to eliminate loopholes and other distortions, while lowering marginal rates. I’m even fine with looking at other revenue measures — *provided* that *first* we tackle the structural spending problem. Otherwise, we are simply shifting the structural budget deficit higher, not narrowing it. And the calls for more revenue will never stop.
Randy
August 16th, 2011
11:27 am
Over and over again, I read how the US doesn’t have a revenue issue, but a spending issue. How is this determined? Who has sat down, crunched the numbers, and said “our revenue should be xxx trillion dollars.” I have not seen one credible attempt to determine what the proper revenue level is – and definitely didn’t see an attempt at that in this article. So until that happens, please stop the “it’s a spending problem” rants, because frankly, you don’t know
I don’t think Buffet wrote his article with the intent that him and his rich friends would bail out the US. I think his point was that if the US is in a hard spot, and everybody needs to contribute their fair share, then the rich should as well. His point is he hasn’t been asked to sacrifice, but spending is being cut like their is no tomorrow. Oh and guess what? He and his friends are unlikely to be impacted by those cuts.
Joe the Plutocrat
August 16th, 2011
11:27 am
Defense analyst, I am sorry, I do not have the link. That said, I refer to to The American Conservative (a left wing, liberal rag if there ever was). Again, I don’t have the link, but there was a screed last week (by Phil Giraldi, I think), which said it costs something like $800 to transport one gallon of gasoline/diesel fuel to Afghanistan. How much fuel do we burn on a daily basis? Perhaps the bulk of the $20 billion is directly related to the ‘energy costs’ of operating these air conditioned tents. Closer to home, from 2000 – 2001, the officers’ clubhouse/golf course was rennovated at Fort MacPherson. I believe Army Officers should be allowed to play golf, but I want a battlefield leader and and someone with a good “short game” commanding my troops (and they are OUR troops). either way, I believe it was a $5 million contract, and at the end of the day, Fort Mac is closing. I realize that as a “Defense analyst” you are probably biased in your views of DoD spending, but as I said, waste is waste.
You did not understand the point
August 16th, 2011
11:28 am
It’s not about top 400 or top 4000 persons. But if you look at top 10 % of US tax payers and their income tax, it’s ridiculously low compared to any other civilized nations. To raise their tax percentage by 5 % would not cause any issues to them but would have a huge impact to US budget.
For me it is just unbelieveable that from year to year US takes more debt and just postpones issues to next generations. You guys need a revolution that something happens. Obama is the best thing that has happend to US since Kennedy and he tries to make people understand what is required, but will need to sacrifice his future for that.
If you want to get thins sorted out, it will hurt. And the longer you wait, the more it will hurt.
Should not be difficult to understand.
MPercy
August 16th, 2011
11:29 am
Joe the Plutocrat
As I said, “stop me before I kill again”. He is railing against a system that he has and continues to take advantage of. He could simply *stop* making these efforts to avoid paying taxes, but believes he needs the government to do it for him.
JDW,
By every number I can find, the rich are paying a larger and larger and larger share of the taxes that are (barely) running this country. Compared to 20 years ago, the bottom 80% are paying a smaller and smaller share. The rich pay a larger share of the taxes than their income represents. The top 0.01 percentile paid 6.5% of all federal taxes in 2005 while earning 4.2% of all pre-tax income. The average effective cumulative tax rate (not just income taxes) on the top 0.01 percentile was 31.5%–the government is taking nearly $1 for every $2 the ultra rich keep. This is twice as high as the average effective rate for the bottom 60%, who pay well under 15%.
The OECD has stated that the US has the “most progressive” tax system and shows that the US depends more heavily on the very rich among us than any other country (which is to say, the rich in the US pay a larger share than the rich do anywhere else).
Saying they need to pay more is *perhaps* a defensible position, but saying they’re not paying their share is simply bogus.
THE "REAL" TRUTH
August 16th, 2011
11:29 am
Why Kyle, I didn’t know you were THE MAN!! Going out on a limb here but didn’t Mr. Buffett create a company called Berskshire-Hathaway, is viewed as one of this nation’s most prolific investors and you, Kyle, question his savvy becuase he feels the rich should pay more in taxes?? Just a little partisan, ya think?? It’s one thing to hold the party line, Kyle, but to question Mr. Buffett’s grasp of economics, is indeed insane. That’s why folks look at the ReTHUGlicans with such astonishment. Comments from people who aren’t qualified to do more than make sound bites.
MPercy
August 16th, 2011
11:31 am
In the last year for which data is available, 2008, the highest marginal tax rate was 35%. This rate was paid on AGI above $357,700. Certainly someone with AGI over that value is in the well-to-do category, but may not be “millionaires and billionaires” (OTOH Mr. Obama seems to think income of $250,000 equates to “millionaire”, but this is immaterial to my point). According to the IRS, the number of returns that were in this highest marginal rate was 971,510. So there’s nearly a million households in this country that are, at least by the IRS bracket definition, “rich”. Not too shabby, it seems the USA is indeed the land of opportunity.
According to the IRS, the cumulative amount of AGI subjected to this highest rate was $622,765,389,000, so let’s round up to $622.8B. The taxes generate on this money is therefore $218B (the IRS reported $217,967,886,000). The overall effective rate for these returns (taxes paid / income) was 28.9%.
Let’s assume for a moment (no matter how unrealistic the assumption is) that no one affected would change a lick of their income-generating behavior as a result if we raised the top marginal rate to 100%. How much revenue would that generate? Why, all of $622.8B, if no one modified their behavior in any way that affected their income and tax impact. That is, it would generate an additional $404.8B in revenue relative to the current 35% bracket.
If you added that $404B to the revenue pot, our deficit this year would still be over $1T…
Kyle Wingfield
August 16th, 2011
11:33 am
Randy @ 11:27: And my point was that Buffett’s notion of “shared sacrifice” amounts to solving 1% of the problem. I find it hard to believe that those who think the rich should make their “fair share” of the sacrifice really think what Buffett’s proposing will do the trick.
His op-ed was PR, nothing more and nothing less. And apparently it’s working.
Now, for your line about spending being cut “like there’s no tomorrow”: In fact, the changes don’t take place until tomorrow — or, to be more precise, a few years after tomorrow — and even then spending is not actually being cut. Rather, it is being allowed to grow at a slower pace.
MPercy
August 16th, 2011
11:37 am
“Perhaps the bulk of the $20 billion is directly related to the ‘energy costs’ of operating these air conditioned tents. ”
This is, in fact, the case. There is a large cost in terms of fuel and transporting the fuel to the forward operating areas. It does a disservice to use the word “tent” here, too. If you’ve ever seen these structures, they are to a 2-man pup tent as Air Force 1 is to the Wright bros flyer. And many of them house the computers and electronics that are part of modern warfighting, rather than in providing a cool place for the troops to kick back and relax in.
Kyle Wingfield
August 16th, 2011
11:40 am
The “Real” (sic) Truth (sic) @ 11:29: Where did I question Buffett’s “savvy” or “grasp of economics”? All I did was point out that, in this case, his own numbers don’t add up in the way he would have you believe.
In fact, Buffett is being extremely savvy: He got the entire left to applaud him for making a proposal that, if you really believe the rich need to foot the bill, lets them off pretty darn easy. And he’s proved an extremely savvy manipulator of the tax code as it relates to estates. As Timothy Carney wrote in the article I linked in the OP:
“Buffett regularly lobbies for higher estate taxes. He also has repeatedly bought up family businesses forced to sell because the heirs’ death-tax bill exceeded the business’s liquid assets. He owns life insurance companies that rely on the death tax in order to sell their estate-planning businesses.”
Questioning his savvy? Nope, he’s savvy enough to fool pretty much everyone defending him on this blog today.
MPercy
August 16th, 2011
11:41 am
You did not understand the point @11:28 am “But if you look at top 10 % of US tax payers and their income tax, it’s ridiculously low compared to any other civilized nations.”
According to the OECD, you’re dead wrong.
http://www.dailymarkets.com/economy/2011/03/21/u-s-has-most-progressive-tax-system-for-oecd-24/
The OECD says that the USA gets 45.1% of all taxes from the top 10% (who have 33.5% of the income). This is the highest in the OECD-24, where the average is 31.6%.
Joe the Plutocrat
August 16th, 2011
11:42 am
MPercy, I simply do not see it as you do. He did not write the editoral to comment on the nature of his “job” but simply that people who do what he does are taxed at a different rate. and again, “murder” is ILLEGAL; so your ’stop me before I kill again’ analogy is somewhat weak. his point it; what I am doing (paying 17%) IS legal; I’m just not so sure it is “fair”. again, I would be interested to see his relationship with K Street (lobbyists), and maybe the Buffet/Bill and Melinda Gates Foundation should lobby Congress for a higher capital gains tax, but if you add the two, you get roughly $100 billion worth of “lobbying power” whereas Wall Street probably spends twice that much on lobbyists and political contributions. The price of gasoline has dropped about .40 since August 1. When you fill your tank, do you pay $4/gallon as you did in July, or $3.60 as charged on 8/13? There is no “ethical” responsibility here; he is saying, “we’ve enjoyed the Bush hand job, but we want to be buggered like the rest, if it’s all the same to you.”
Jefferson
August 16th, 2011
11:45 am
I read it. Pro rate it to be a fair comparison.
don
August 16th, 2011
11:53 am
You know, kyle, if there was a point there, I didn’t see it. Was it “the rich shouldn’t pay taxes, because I say that it wouldn’t matter”? For all the numbers you throw around, there’s one you missed: The Bush tax cuts are the biggest driver of the deficit. So how is it that ending them wouldn’t have any impact? It’s just another example of how conservatives aren’t really concerned about he debt.
Joe the Plutocrat
August 16th, 2011
12:04 pm
MPercy, thanks for the clarification. that said, your comment seems to support the “cut spending” argument. namely, perhaps we need to look at the way we “warfight” especially when you consider that we are bogged down in a “war” against an enemy who does not have a/c, computers, tanks/HUMVEEs, etc.). there is a reason Afghanistan is referred to as the graveyard of empires, and as I said, it’s been 10 years since 9/11 and bin Laden is dead; let the drones and the SpecOps guys fight the “war on terrorism” and let’s take a closer look at the cost/benefits of our boondoggles in AfPak, Iraq, and Libya. I have been very vocal in my criticism of BlackWater, but perhaps, as far as the war on terrorism goes, this is a situation where “outsourcing” certain DoD roles might reduce the national debt. would need to crunch some numbers, but spending is spending.
JDW
August 16th, 2011
12:06 pm
Kyle wrote,
“First, I disagree with your ratio because revenues have hit 20% of GDP exactly three times in the past 60 years. In other words, saying we should expect revenues to be at 20% is unreasonable.”
Of course those are the times when we have a balanced budget. If that is our objective it is not only reasonable but required.
But some of this is semantics. Lets look at on-budget vs off budget (Social Security). For a lot of reasons Social Security needs some tweaks to bring it in line. A few changes such as raising the retirement age to better reflect todays lifespans and properly calculating COLA increases fix that issue.
If you drill down into it you find that of the 14.9% of GDP we collected last year 4.4% came from SSI while the remaining 10.6% came from on-budget or general tax collections. By comparison in 2006 when overall collections were at 20.6%, an amount you claim is unreasonable, the numbers were 4.9% for SSI and 15.7% for general revenue.
I submit that the 15.7% general revenue number is the one we should focus on…is that unreasonable? The peak for general revenue collections was 20.9% in 1944. From the time the war ended in 1945 until the Reagan tax cuts kicked in in 1982 general revenue collections averaged 15.16% of GDP.
From 1982 until 1994 when the Clinton tax increases kicked in general revenue collections averaged 13.11% and deficit spending ruled the day.
Clinton raised rates and from 1994 until Duhbya’s folly in 2002 general tax collections averaged 14.64% and voilà no more deficits.
Then we hit Duhbya…from 2002 until now general tax collections have averaged 12.2% and guess what…worse deficits than before.
So what is reasonable…looks to me like general tax collections in the 15% range is well grounded in historical fact and to run this country this is what has ALWAYS been required.
Numbers from http://www.taxpolicycenter.org/taxfacts/displayafact.cfm?Docid=205 math is mine.
real john
August 16th, 2011
12:07 pm
Don:
The Bush/Obam tax cuts account for approximately $100 billion a year. We would still have a $1.4 trillion deficit each year. Explain to me how the Bush tax cuts are the “biggest driver of the deficit.”
Arguing with Libs is like arguing with 5 year olds. The just throw out blatant incorrect statements that they have no idea what they are talking about.
I would also remind libs that when Obama lowered the S.S. wages this year, that costs the government about $112 billion (there is an article on CNN money right now if you want to check the facts), yet I don’t hear any libs talking about Obama’s tax cuts destroying our economy.
Lets face it, we have too many voters who simply have no clue; they just listen to other uninformed people.
real john
August 16th, 2011
12:09 pm
I would also remind you Don that Obama EXTENDED the tax cuts this year. If they are such a bad idea, why did he EXTEND them..hmmmmm????
Also, our economy is doing sooo well right now…I’m sure raising taxes would just make everything muuccch better (i hope you noted my sarcasm).
Rob Woodall wants you to keep paying for his healthcare, while you pay for your own healthcare and your kids' healthcare, and help your elderly parents pay for their healthcare
August 16th, 2011
12:10 pm
Ok Kyle. I give up. You win.
We need to fix Entitlement spending because that is 2/3 of the problem.
Did the President not try to put this on the table during his conversations with Speaker Boehner? Much to the chagrin of Democrats in Congress?
As I recall he was looking for some revenue relief from Republicans and that was shot down. Certainly no more than the 1/3 that you say revenues are contributing to the problem.
You did not understand the point
August 16th, 2011
12:12 pm
MPercy – “The OECD says that the USA gets 45.1% of all taxes from the top 10% (who have 33.5% of the income). This is the highest in the OECD-24, where the average is 31.6%.”
You are talking about how many percentage of budget comes from them. I am talking about how many percengates they pay taxes of their income. In most of the Western European countries rich people pay 50-70 % taxes of their income. In US the tax % is max 35 %. By raising tax of rich people in US from 35 to 50 % you would no longer need to take debt.
Scooter
August 16th, 2011
12:12 pm
I see Warren Buffet as objective as the Koch brothers would be in writing a column to support a conservative policy position.
Phil's Tel-A-Gramm
August 16th, 2011
12:28 pm
Since Kyle doesn’t think that small changes in effective tax rates will make any significant difference, then he shouldn’t mind going back to the Clinton era tax rates, even if it is only those tax rates that apply to the wealthiest. They’re so small, they’ll never notice them, right Kyle. Especially if we were to do away with that carried interest rate of 15% and replace it with something closer to 30%. I mean, that would be so small and insignificant an amount when applied to the 25 billion that those 25 hedge fund managers “earned” in one year. Right Kyle. Right!
Moderate Line
August 16th, 2011
12:31 pm
I say it because as long as we’re not talking about the real problem — out-of-control spending — we are not talking about real solutions.
+++++
Over the past 30 years our spending in terms of GDP has average 21.1%. Spending under Obama in 2010 was at 23.8% which is a difference 2.6%.
Yet, when we look at revenues we have a 30 year average of 18.0. Currently we have revenues of 14.9%. which is a difference of 3.1% of GDP.
In the last 30 years we have had only 10 years where spending was below 20% of GDP. We only had 1 year where revenues exceed 20% which was the last year of the Clinton adminsitration before the Bush tax cuts.
Crazy Idea
August 16th, 2011
12:37 pm
Kyle, how about we curtail spending AND raise taxes on the mega-rich? The two are not mutually exclusive.