Buffett: Tax the Rich

[Mister Agenda]

If you argue for a higher tax rate for those at your own income bracket and higher then you should simply send the government your own money and shut up.

Actually, I think this particular argument goes 'If you argue for a higher tax rate for those at your own income bracket and higher then you should simply send the government your own money OR shut up.'

 

[Mister Agenda]

As for Buffett writing an extra check to the IRS - he has been directly asked that question on CNBC (I forget by who, probably Becky Quick). His response was that he was entirely willing to do that, if that was the best choice, but that he feels that he is somewhat better at asset allocation to solve social problems than the US Government is. It would be easy to cynically dismiss that, except that he gives away billions every year. He walks the talk.

I think I am somewhat better at asset allocation to solve social problems than the US Government is, too. Just sayin'.

 

[LTC8K6]

Pork spending is a tiny fraction of the system.

We've talked about allowing Medicare Part D to negotiate drug prices, and that should be a bipartisan issue, but it's not going anywhere.

I guess what I'm saying is that if you start pointing out the specific waste then you might have a point. Just keep in mind that people might disagree as to what counts as waste.

Yes, pork was the wrong overall term. Just waste. I'm talking entire departments eliminated or cut in half. It's huge. But, as you said, there will be no agreement, so the point is moot.

But the pork needs to go too, as does the system that fosters it.

As does the idea of Congress being your full time job.

In fact, that's where I'd probably start cleaning up the muck. Term limits for Congress.

 

[icerat]

I think I am somewhat better at asset allocation to solve social problems than the US Government is, too. Just sayin'.

The question is, relative to the current discussion, are all (or the majority of) wealthy people better at it?

 

[icerat]

Start dealing with the issue of how to better encourage risky (but beneficial to society) investments when such investments will be hit by higher taxes.

Well you could increases taxes on capital gains income, which might encourage corporate reinvestment instead .....

 

[LTC8K6]

Well you could increases taxes on capital gains income, which might encourage corporate reinvestment instead .....

Or discourage it...

Why not just tax cg 3 times instead of just twice?

http://www.econlib.org/library/Enc/CapitalGainsTaxes.html

 

[respect]

But if you put in a 40 hour week as a teacher/construction worker/etc, you are (in most cases) guaranteed to take home a paycheck. Nothing can take that away from you. Even if they fire you tomorrow, the time you've spent on the job will guarantee you get paid. Legally, you can't be denied compensation. (Ok, your company can go bankrupt, but that's still an extreme case.)

On the other hand, if you spend your time starting or expanding a business (either directly, or through the stock market) with the plan of getting rich off capital gains, you might find that at the end of the year, after all your work, you end up with nothing if the company goes bankrupt. Nada. Zip. Ziltch.

Because there is the risk of not receiving compensation, many people will require additional incentive to take that risk. That's why many countries tax capital gains at lower rate... it acknowledges both the risk, and it helps expand the economy.

This is correct. Investors base their decisions on risk and potential return. The higher the risk, the more potential return needed. Those who want higher taxes on capital gains want to essentially increase the risk of investing. The loss potential stays the same, the potential returns diminish with higher tax rates. I wonder if they would be willing to add in a negative tax return when the investor loses.

Small increases are unlikely to affect behavior, but significant increases would make safe low return investments like Treasury Securities much more appealing, and high risk investments in start ups, research expansion etc much less appealing. The potential return on them would have to be higher with a higher tax rate.

Why should someone making $40k a year pay a higher percentage of taxes than a billionaire?

In the context you are using, income tax vs capital gains tax, the laborer is guaranteed their wage, the investor is risking losing their money. Your attempts to conflate them are silly. Emotional appeals are not the same as good tax policy.

 

[3point14]

Actually, I think this particular argument goes 'If you argue for a higher tax rate for those at your own income bracket and higher then you should simply send the government your own money OR shut up.'

Yes, true. It's an argument that works for any increase in taxation. Taxes at 1%? think they should be higher as your country plummets into debt? The argument offered works in that instance too. I think it's a crap argument.

 

[LTC8K6]

Yes, true. It's an argument that works for any increase in taxation. Taxes at 1%? think they should be higher as your country plummets into debt? The argument offered works in that instance too. I think it's a crap argument.

Well, you can avoid the cg tax altogether for long periods if you wish...or decide how much taxes you will pay and when, by the way you sell.

That is not true of Joe Public's payroll tax.

 

[Skeptic Ginger]

You seem to have an envy problem that prevents you from reading properly. How does it harm anyone that Buffet makes $45M in cap-gains ? How does taking more than $8M of his money benefit anyone ?

If you believe the deficit is a problem, collecting more taxes is one solution. I keep hearing about government just needing to spend less, but spending less disproportionately costs the poor more. If one has to either increase costs for the poor or the rich or both, why are the Repubs only interested in increasing costs for the poor?

You're "let's cut the wealthy down to size" sensibility is exactly the reason no one wants to employ or invest in the US. The anti-employer/pro-employee attitude is self-defeating.

This is an unsupportable claim.

 

[jimtron]

On the other hand, those arguing for higher taxes (primarily jimtron) seem to be basing so much of their arguments on emotion ("Rich paying less than their secretaries!", "Rich paying less than teachers!"), and seem to be avoiding the points raised against him.

I don't believe I've argued for higher taxes anywhere in this thread, and I hope I haven't resorted to emotional arguments...I certainly don't recall using exclamation points.

 

[Skeptic Ginger]

What can be done to reduce the number of people riding for free and increase the number of people contributing to the fare?

Could we just tax the poorer half a little? Maybe 1%?

No, because that suggestion gets the same lid clamped on it as mentioned above, merely to end the argument.

Listen, let's all just sit back and wait until we all go off the cliff, because absolutely nothing is going to be done about the problem.

The main problem is the massive waste of tax money on crap that we don't
need. It's barely mentioned. Almost no one talks about any serious cuts in spending, except for the military.

We have a pork based system, and it's not going anywhere until the money finally runs completely out and the system stops working.

Until then, just get used to political statements about the issue, because that's all we are going to get.

It's cherry picking to claim the poor do not pay taxes. They pay lots of taxes, but they may not earn enough income to pay income tax.

I'm self employed. If I only earned $2,000 in a year I would still have to pay FICA tax on that amount even though it was not enough to even buy food. I have to pay the tax to license my car. Even if I rent, chances are some of the money I pay the landlord goes toward the property tax. If I am a poor elderly person on a fixed income who owns my home, I still owe property tax.

The idea the poor don't pay taxes is a lie supported by cherry picking the data.

 

[lomiller]

But if you put in a 40 hour week as a teacher/construction worker/etc, you are (in most cases) guaranteed to take home a paycheck. Nothing can take that away from you

These tax laws apply to all investment income not just start-ups. You also have the risk backwards. As a paid employee you could lose your job and income tomorrow, for most established investment vehicles the chances of losing all your investment income is negligible unless you are an idiot, working for a living is much higher risk.

 

[jimtron]

It's cherry picking to claim the poor do not pay taxes. They pay lots of taxes, but they may not earn enough income to pay income tax.

Here's a good article about all of the taxes paid by lower income Americans:
http://www.cbpp.org/cms/index.cfm?fa=view&id=3505

 

[Wowbagger]

If, and when, I become super-rich, I would probably gladly donate a bunch of my money towards specific government programs that I feel are worthwhile.

Perhaps there can be a policy to do this in lieu of paying much higher taxes. The money's still sorta going to the government. Just in a form they have a little less control over.

 

[lomiller]

One tax rate for everyone. That's fair.

Only viable if you work to the lowest common denominator. I.E. if your poorest people would rather keep their money to pay for food then pay for the service government doesn’t provide the service. This means no military, no police, no fire service, no ambulance service etc. Since most of us don’t care to live in a third world country this doesn’t sound like a very good or very fair solution at all.

 

[LTC8K6]

Who claimed that the poor do not pay any taxes?

We are talking about taxes on income, not all taxes that people pay.

Nevermind...it's just an endless game...

 

[Grizzly Bear]

I guess with respect to the OP I'd be interested in seeing what Mr. Buffet has to say about the 42% who don't pay any taxes... Should this 42% of Americans get the benefits of government spending whilst contributing almost nothing to the basic costs?

 

[jimtron]

I guess with respect to the OP I'd be interested in seeing what Mr. Buffet has to say about the 42% who don't pay any taxes... Should this 42% of Americans get the benefits of government spending whilst contributing almost nothing to the basic costs?

Could you show evidence that 42% of Americans pay no taxes? Here's an article that points out all of the taxes that poor people pay:
http://www.cbpp.org/cms/index.cfm?fa=view&id=3505

eta:

And I'd bet that Buffet doesn't think 42% of Americans shouldn't pay tax...his point is that billionaires shouldn't be paying less than middle class people.

 

[lomiller]

I don't think everyone here is rejecting arguments for higher tax rates out of hand.

I think people are rejecting bad arguments for higher tax rates.

Nope. A number of people have clearly argued that people are not allowed to say anyone’s taxes but their own should be higher. This is not just a rejection of argument against higher taxes.

Start dealing with the issue of how to better encourage risky (but beneficial to society) investments when such investments will be hit by higher taxes.

Your “risk” argument has already been show to be faulty, but you have a new twist here so I will expand.

Risk is already factored into investments in the form of higher expected returns and in practice this is exactly how it works. Higher risk yield higher returns on investment so investors are already paid more for higher risk. Note that your logic has gone circular. You are arguing that higher income vehicles should be taxed less because they can expect to earn higher incomes.

Furthermore there is already a well established working system for reducing the cost of capital and therefore making investments more appealing and even encouraging. This is exactly what’s going on when the Fed or central bank pushes interest rates lower.