Tag Archives: millionaires

Warren Buffett like President Obama Believes Super Rich Should Pay Their Fair Share of Taxes

Stop Coddling the Super-Rich

Published: August 14, 2011

From Today’s New York Times

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.


Don’t Be Hoodwinked By The Republicans

We cannot afford to allow John McCain to be elected president of the United States. We are facing 6.1% unemployment. Gas prices have averaged over $3.50 for nearly a year. Houses are foreclosing left and right across America, because of lending practices and a stagnant economy. Corporate America, is outsourcing jobs to India and laying off people by the thousands. Many of us don’t have health Insurance and we are one hospital visit away from financial diaster. People are saying that $250,000 a year is not rich, well tell that to someone making $50,000 a year with take home income of $36,000 after taxes. Tell that to someone who doesn’t have a car note, but drives around in a beat up car, trying to make ends meet, because they cannot afford a car note.

If you’re sick or have cancer or a terminal illness, good luck trying to get health insurance. Because you’re labeled as someone with a pre-existing condition. I bet Sarah Palin and John McCain have health insurance. McCain has cancer, but I bet he gets the best of coverage. I can say that because I was diagnosed with Cancer myself 6 years ago, and I struggle to keep my job, because if I lose it, I will lose my coverage beacuse of my pre-existing condition.

Yes, my friends if you make $250,000 a year, you are rich, compared to thousands of Americans who cannot dream of ever making that kind of money. If you are in your fifties, there is a good chance you will be laid off or dismissed, because you or a liability to the company. Particularly if you have worked for the company for a long time, you are a target. The company wants to pay someone with less experience a lower salary to get rid of your draining big salary.

The Republicans have hoodwinked and bambozzled 90% of Americans, with their trickle down theory for too long. Don’t fall into the trap of voting for them. They don’t care about you. If you make less than $250,000 a year, and I am being generous with that number, your are at risk. McCain only cares about CEO’s who have elaborate pension packages, who get $5 million dollars, plus severance pay if they leave the company. Why should they get perks, when you and your family are suffering, trying to make ends meet? It is time we hold corporations accountable.

What about social security, why should you have one foot in the grave before you can collect it? The typical Republican response is invest in 401K, your company will match it and you will have control of your future. That my friend is the option that you have. The trouble is you may be laid off from your company. Don’t fall in the trap of believing McCain that he is an agent of change.
The Republicans are trying to hoodwick you again. Don’t fall into that trap and believe them. Less than 1% of Americans are millionaires. I’m no millionaire, and I believe most Americans aren’t either. Most of us are merely trying to keep our head above water and support our families. Republican have alaways been for earmarks, corporations, big money and oil. No Matter how they try to cast themselves. They have always been notorious liars and hypocrites. They are still your enemy. Don’t join their army vote for Barack Obama.

Republicans got us into this mess, why give them another chance? You only have yourself to blame if you do.