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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