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Stop Coddling the Super-Rich


Published: August 14, 2011


OUR leaders have asked for “shared sacrifice.†But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.


While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,†thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.


These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.


Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.


If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.


To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.


Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.


I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.


Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.


The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)


I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.


Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.


Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.


But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.


My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.


Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.



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The Rpublican's super plan will be a super plan.


The biggest problem is Social Security which was created over 75 years ago apparently was created and operated as a scam. The country needed money and the people would not accept another tax so it looks like Social Security was created to bring in needed revenues.


Being there was never any money in Social Security's coffers, I find it amazing that the country's main woe will be resolved by paying back Social Security and passing the appropiate laws so money can't be borrowed in the future from Social Security and that the money will go to the Social Security coffers instead if the Treasury Department.


So how are they going to do that?

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I'll coment on the folowing excerpt from HH's link (thanks btw) in my new persona as left wing liberal "the super-rich will avoid or evade much of the surcharge, significantly lowering its yield.


Focusing on the super-rich also fosters a counterproductive attitude toward material success. The way to promote a hard-working, entrepreneurial and innovative society is to celebrate great wealth so long as it has been earned by legitimate means. When this is not the case, policy should target the wrongdoing directly, not demonize everyone who hits it big."


The article is saying even if you tax the rich they'll find a way around it or evade it. Its banted around they pay the vast majority of the taxes. Heard that for years. But they also own damn near all the country as well.


Its been said taxing them stifles entrepreneurialism and the like. Complete and utter BS. If you have a good idea you pursue it right now and the state of the economy is secondary, even tertiary. I've had my share of the 'next big thing' idea (usually turns out to be crap...lol) and the last thing on my mind was the economy. Many of us have had ideas we thought would make money and if you're honest you didn't say 'hmmm...its a bad economy right now, I'll wait till things get better'. No, you looked at right here and now. Companies don't stop being innovative in bad economies or higher taxes. Drug companies don't stop spending on R&D. Neither does any other companies. Apple came out with a new product in one of the worse economies. They weren't gonna wait till more people were working. Hollywood and music labels still make movies and sign artists even in this bad economy and they spend big on them.


I'm all for cutting spending. There are a ton of areas that need cutting and the amount of spending that needs cutting is one thing I disagree strongly with the Dems about. I know traditionally the Republicans don't like cuts in spending but I do think there is plenty of room for cutting. I do have some areas that are sacrosanct though llike the VA. Not that there isn't waste there, there is waste everywhere but its one area where any cuts can NOT affect how the vets are treated. Just to give an example.


There should be cuts...but I also think there is room for closing loopholes for the super rich which amounts to increasing taxes in some sense. The rich can take care of themselves. Payroll tax cuts for the working and middle classes are where any tax cuts should go.

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Perry getting shots for saying Bernacke is treasonous for printing money. I'm no fan of Perry and wouldnt' vote for him (he's a fundy for one) but I read the excerpt and its in the heat of the moment typical campaign rhetoric.

Its not a big deal to me. Part of the process of learning when speaking off the cuff in the biggest campaign of your life.


I am not comfortable with the Tea Party people's exchange with Obama. Part of me is old school and you always have a certain amount of respect for the office if not the man in the office. However, ther eis a part of me that says that this is America and I don't like the 'first among equals' thingy with Presidents, it reminds of Caesar.

They didn't even ask questions regarding the country but about how they were depicted allegedly by Joe Biden. Give me a break. Whatever was said was said in private and yes, over the top but no one buys that they mean it. I didn't like Carter making comments about Bush as well. I thought it was unpresidential of him and it showed he had a lack of respect for the unwritten rule of ex Presidents not making comments on sitting presidents. I admire Carter's works but I don't like him as a person. A professed Christian who acts a bit unchristian at times.


Anyway, like or love Obama, I am uncomfortable to see any President talked to a bit too genericly. Maybe its how I was raised. Even when I disagreed with my teachers in school I was taught to address them respectfully. I would start a disagreement with 'With all due respect ma'am or sir'. Maybe I'm too old and too old school. I just sense a lack of respect for the office via the person.


Off topic but I heard a report where there is a proposal to change the retirement packages for military to be more like everyone else and have it be a 401(k) type. Also, if you serve 20 years, you get retirement pay immediately. They now want to propose that you don't start getting retirement till age 65 like everyone else. So, you join the military at 18, serve 20 years and in that time you're likely involved in a conflict or two. You're out at 38 if my math is right (and its often wrong) and you have to wait till 65 to get retirement? Complete and utter BS and a travesty. A guy gives 20 years of riksing his life and they are possibly proposing this? Not only will it end morale and kill what we have of the military I guarantee you its proposd by people who never served. Its a f&cking disgrace just to propose it.

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Your reaction was the same of mine. Like the guy and his policies or not, this is the PRESIDENT. Show some respect ... at least to his face.


p.s. Back in the early 1990s, military retirement pay was already cut back. New enlistees who pulled the plug at 20 years would only get 40% of their highest grade's pay, not 50%. They'd have to do 25 years to get 50%. I wonder if they have changed that back. Another big stink was that when you turned 60 (or maybe it was 65), your military medical coverage was automatically switched over to MEDICARE. The GIs sign a contract stating what they will get, but then Congress in effect tears up the contract.

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