Posted on 08/18/2011 10:18:12 AM PDT by SeekAndFind
Investors might hang on Warren Buffett's every word when it comes to financial advice, but Republicans are less than enthusiastic about the Oracle of Omaha's opinions on taxation. After the billionaire chairman of investment firm Berkshire Hathaway wrote an op-ed in the New York Times complaining that the mega-rich are undertaxed in comparison to the middle class, conservatives urged him to voluntarily send more of his own money to the Internal Revenue Service and leave others alone. Not only are they willfully missing Buffett's point, they're seemingly oblivious to the fact that in many ways his tax ideas mirror those of Ronald Reagan.
Hard to believe as it may seem, it has been a quarter of a century since the last comprehensive overhaul of the U.S. tax code. Under the Tax Reform Act of 1986, which was signed by President Reagan, the number of tax brackets was reduced, loopholes were closed, the top tax rate was lowered and capital gains were taxed at the same rate as ordinary income. Yet in the years since, Congress has steadily drilled loopholes back into the code while lowering the tax burden for wealthy people who make money through investments rather than labor. That was the source of Buffett's complaint.
"The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes," Buffett wrote. "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."
(Excerpt) Read more at latimes.com ...
If that idiot wants more taxes I suggest a Wealth Tax of 10% on their net worth every year. Because he pays NO taxes on his accumulated wealth and loop holes his income tax.
See my post #16
Yeah, Reagan was ALL about raising top-bracket rates and LOVED the fact that the 1986 compromise DIDN’T tax capital gains at a lower rate than ordinary income. EXACTLY in agreement with Buffett’s op-ed.
/sarc
Freaking liars. They take two bits of a 1,000-part compromise — parts that Reagan opposed, taken individually — and say that they were “Reagan’s IDEAS” because Reagan agreed to the package as a whole.
You’ll see those tax returns right after Obama’s college transcipts and John F’n Kerry’s DD214.
He's not really asking to be taxed more. He knows how to shield his money from taxation. He is really asking to tax the hell out of the upper middle class. He and his ilk are trying to use the progressive tax code to further insulate themselves from those lower income people who keep trying to move up the ladder.
One minor nitpick: You are confusing dividend taxes with capital gains taxes. Capital gains are not distributed out of corporate income. Capital gains (or losses) are realized by the selling of investment assets.
Selective "targeted taxation" /"targeted tax cuts" is what lead to all these "loopholes" Worried Buffoon is lamenting.
You are right see my post #16. Buffet’s company paid $5607 million in taxes and reported $19,051 million pretax income.
That’s just a bit under 30%
In addition, simply adding the payroll tax %, ignores the fact that it is eventually returned to the person under a formula that returns more percentage wise to those who had lower incomes during their working years.
“I thought that the mega-rich have tons of tax lawyers and accountants to ensure that they pay minimal taxes. The mega-rich also donate many dollars to candidates that support their quest to avoid taxes.”
Yes, they do. But I’ve always found criticizing them for this akin to yelling at a kid for running away from a bully. There’s only so much taxing a man will allow, and above a certain point he just won’t pay. Loophole hunting, avoidance, evasion, etc., like “breakage” or “leakage” in the private sector, are the costs of doing government business.
“You are confusing dividend taxes with capital gains taxes. Capital gains are not distributed out of corporate income. Capital gains (or losses) are realized by the selling of investment assets.”
No, I was ignoring for simplicity the dividend tax. I was also using what Buffet said in the interview. HE said he only had to pay 15% on CAPITAL GAINS.
Mutual Funds do make distributions of both capital gains and dividends, so if the holding company owns mutual funds I would assume that mechanism would also be available, but again, I was just relying on what Buffet said.
Is it possible that Buffet is equally confused about capital gains and payroll taxes? He did claim that his secretary paid 15% payroll taxes in that same interview.
“The article total ignores the double taxation issue.”
So does all of the mainstream media. The apparent counterintuitivity of Buffet’s secretarial anecdote is too juicy to pass up, no matter how misleading.
Hey, you know what? If it seems odd that Buffet is taxed less than his secretary, he’s probably not taxed less than his secretary, you boob.
“I think his point is that it is not fair that the rich pay less than the middle class and the tax code should change”
His point is a lie. Any idiot knows the rich—or perhaps I should say “the rich,” but that’s another argument—pay more than the middle class. Buffet is shucking, jiving, and puffing up smoke screens in an effort to portray the tax code as imbalanced.
Back in reality, the balance is tipped entirely against the rich. Duh, they’re the ones with the money, and the rest of us have the votes. Squeezing ever more dough out of them only makes things ever more unbalanced. Not that leftists care. But they do figure you care, and as such have no shame in lying to appease you.
“Selective ‘targeted taxation’ /’targeted tax cuts’ is what lead to all these ‘loopholes’ Worried Buffoon is lamenting.”
I’ve always wondered why this sort of thing doesn’t violate bills of attainder or equal protection, since every other group under the sun is apparently able to invoke it. I’m sure SCOTUS has babbled on about how the wealthy can be discriminated against because we say so, but I frankly don’t see how special tax classes are any different than other forms of discrimination.
By the way, this is all assuming current trends in equal protection thought (or should I say feeling). In my perfect world rights talk would be much, much, much more limited.
“Freaking liars. They take two bits of a 1,000-part compromise — parts that Reagan opposed, taken individually — and say that they were ‘Reagan’s IDEAS’ because Reagan agreed to the package as a whole.”
According to this model oughtn’t Bush II, given his veto allergies, get credit for the mighty achievements of the Democratic Congress during his term? Remember before the One ascended to Washington and Nancy Pelosi was the Most Powerful Woman in the World? Well, Bush was totally on board, Jack. He was right there with her. Where’s his due?
You said,
“Buffett did give a huge amount of money to the Gates foundation...I don’t understand all the negativity towards Buffett here.”
Well, let’s think about that — and use some public information to rough out what actually happened.
Mr. Buffet’s “gift” was reported to be $31 billion.
But his gift was not cash. It was shares of Berkshire Hathaway stock “worth” $31 billion. How many shares? At a reported share price of $130,000, that would be about 250,000 shares.
So how much did those shares actually COST Mr. Buffett? A “initial” price for Berkshire Hathaway shares of $11.50 per share was reported. That indicates the total cost to Mr. Buffett was about $3,000,000.
So let’s see Mr. Buffett’s silent partner here, the US taxpayer, benefits from this gift.
Case A:
Mr. Buffet buys shares for of Berkshire Hathaway for $3MM.
He sells them in 2011 for $31 billion. Capital gains are $30.997 billion. Capital Gains taxes (at 15%) are $4.7 billion.
Mr Buffet’s “net” capiptal gians income is $26.3 billion, which he gives to the Gates Foundation. In his 35% tax bracket, that gift reduces Mr. Buffett’s tax liability on other income by $9.2 billion.
Net, net, the cost to the US Treasury of Mr. Buffet’s gift is $4.5 billion.
[tax paid of $4.7 billion less $9.2 billion not paid = $4.5 billion]
Case B:
Value deducted for gift: $31.00 billion
Tax saved by Mr. Buffett: $10.85 billion
Net cost to US Treasury: $10.85 billion
Tax benefit to Mr. Buffett
of his gift of shares: $4.5 billion
So, we see it is still possible to “do well” by “doing good”. If Mr. Buffett were lobbying to “cap” charitable deductions at say $1 million per year, I would respect him more.
Are you sure? Or is the LA Times Editorial attempting to make the point that Reagan would support the Democrats in their bid to raise taxes "on the rich"?
You got to look back and remember why Reagan signed the 1986 Tax Reform Act. The Democrats, as usual, wanted to increase taxes. Reagan did not. A deal was struck where dozens of write-offs were written out of the code in exchange for simplification, with the understanding that the lower tax rates were put in place to balance out the removal of the write-offs.
Of course look how long that lasted before the Democrats started whining about raising taxes again.
There is no solution to today’s economic problems nor any basis for a future economy that reasonably includes a tax increase on the people who make jobs. If one wants to increase taxes, do so on the 50% who presently pay no federal tax so they can have some skin in the game. Call it an educational program so these wastrels can understand what the rest of us already know; the cost of government is largely a waste.
Dividends are taxed as ordinary income, along with taxable interest. Capital Gains are taxed at the lower long-term capital gains tax rate.
When you talk about double taxation due to corporate income being taxed and then the individual paying tax when the capital gains are distributed (those were the words you used) then you are describing dividend taxes but calling them capital gains taxes.
The several articles and interviews stated that the main reason given for the discrepancy was that Buffet paid 15% capital gains tax.
Berkshire Hathaway has many holdings and could include mutual funds which do have the ability to distribute capital gains, so I was not about to say Buffet received Dividends since all the documentation I had seen was saying he received capital gains.
I simply chose to ignore the issue rather than spend time researching to see if Buffet received capital gains from a mutual fund, or dividends from the corporation. Besides I thought the post was long enough to begin with.
The point was the double taxation he was ignoring not capital gains vs dividends. I do agree that it is highly likely that he actually received dividends. However, I have neither the time nor the inclination to prove it, and saw no reason to include it in my post.
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