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 Stop Coddling the Super-Rich 
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Post Stop Coddling the Super-Rich
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Op-Ed Contributor
Stop Coddling the Super-Rich
By WARREN E. BUFFETT
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.

http://www.nytimes.com/2011/08/15/opini ... -rich.html

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August 15th, 2011, 10:46 am
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Post Re: Stop Coddling the Super-Rich
WOW. I am stunned to near speechless. I just gained a great deal of respect for Mr. Buffett. I just hope he is right that other really rich people really would be willing to pay more. But, I bet he just made a whole lot of enemies.


August 15th, 2011, 11:13 am
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Post Re: Stop Coddling the Super-Rich
BillySims wrote:
WOW. I am stunned to near speechless. I just gained a great deal of respect for Mr. Buffett. I just hope he is right that other really rich people really would be willing to pay more. But, I bet he just made a whole lot of enemies.

This is nothing new. He's been saying this for years.

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August 15th, 2011, 11:28 am
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Post Re: Stop Coddling the Super-Rich
Warren Buffet has always been in favor of additional taxes for the rich, very rich and mega rich. The problem is, those folks in Congress who would have to turn it into reality are among the rich, very rich and mega rich who continue to ask everyday citizens to give, give, give while they enjoy ridiculous benefits so that they pay less taxes than most.

Example: minimum wage law. Nancy Pelosi (that BITCH!!!!) helped make sure that American Samoa was exempted from raising the minimum wage there. Why? Because her husband is a majority shareholder in Starkist Tuna, who happens to have their canneries in American Samoa. It was estimated that by keeping the company from having to pay minimum wage, they saved millions of dollars. Nice huh?

The American Congress....hard at work to save themselves.

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August 15th, 2011, 12:22 pm
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Post Re: Stop Coddling the Super-Rich
Increasing the tax rates on the wealthy would barely put a dent in our deficit. What we need to do is lower tax rates and eliminate all loopholes, subsidies, tax breaks/shelters for both individuals and corporations. That will definitely add more revenue, but once again, it would hardly reduce the current deficit.

Watch this video, which takes everything away from the wealthy, but still doesn't balance the current budget:

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August 15th, 2011, 1:53 pm
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Post Re: Stop Coddling the Super-Rich
slybri19 wrote:
Increasing the tax rates on the wealthy would barely put a dent in our deficit. What we need to do is lower tax rates and eliminate all loopholes, subsidies, tax breaks/shelters for both individuals and corporations. That will definitely add more revenue, but once again, it would hardly reduce the current deficit.

I don't think anyone is saying to just raise taxes/revenue. I think Mr Buffett was just saying that, as opposed to some folks, revenue needs to be increased too along with the spending cuts and that it should be the highest income earners that bear the brunt of those tax increases.

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August 15th, 2011, 2:25 pm
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Post Re: Stop Coddling the Super-Rich
Well, I suggest Buffett (a true libtard BTW) puts his money where his mouth is then. He should pay his 35% tax rate without claiming any deductions or tax breaks. He would then pay his "fair share", but he obviously didn't do that. Nobody is forcing him to take advantage of the loopholes, but he did anyway. The same goes for those idiots in Hollywierd. Just saying.

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August 15th, 2011, 2:37 pm
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Post Re: Stop Coddling the Super-Rich
slybri19 wrote:
Well, I suggest Buffett (a true libtard BTW) puts his money where his mouth is then. He should pay his 35% tax rate without claiming any deductions or tax breaks. He would then pay his "fair share", but he obviously didn't do that. Nobody is forcing him to take advantage of the loopholes, but he did anyway. The same goes for those idiots in Hollywierd. Just saying.



I agree 1000%.

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August 15th, 2011, 4:32 pm
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Post Re: Stop Coddling the Super-Rich
Hard to hate on a guy that gives away more money than anyone else in the world.

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August 15th, 2011, 4:36 pm
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Post Re: Stop Coddling the Super-Rich
Donations are tax deductible. There's a reason he's giving it away.


August 15th, 2011, 7:50 pm
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Post Re: Stop Coddling the Super-Rich
njroar wrote:
Donations are tax deductible. There's a reason he's giving it away.


Just because it's tax deductible doesn't mean it's not a noble act. You don't get all the money back you give away via the tax deductions.

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August 15th, 2011, 8:01 pm
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Post Re: Stop Coddling the Super-Rich
Oh I know. But Buffet was also the one complaining about the Jet write-off. He said he gets 100% back the first year, then nothing the second and gets nothing for his children and families that he bought air time for them.

The problem right now is the tax code itself. The rich want more taxes, because they would get more back under the current system. Until they simplify the system and lower rates but eliminate loopholes, then the system will not work. The burden falls on the upper middle half of the bracket, and the upper tiers just continue to abuse the loopholes to get more back.


August 15th, 2011, 10:12 pm
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Post Re: Stop Coddling the Super-Rich
CNN Money wrote:
America's Debt Crisis
Decoding Buffett's tax plan
By Jeanne Sahadi @CNNMoney
August 15, 2011: 6:23 PM ET

NEW YORK (CNNMoney) -- Warren Buffett is once again begging Congress to tax him more.

"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," the founder of holding company Berkshire Hathaway (BRKA, Fortune 500) wrote in a New York Times opinion piece on Monday.

Unlike President Obama, who wants to raise the top two tax rates on individuals making more than $200,000, Buffett wants income and investment tax rates raised only on those making more than $1 million in taxable income. In 2009, they represented just 0.2% of tax returns -- as opposed to the 2% to 3% who would be affected by Obama's proposal.

In Buffett's view, the very rich don't pay enough in taxes. And he doesn't think asking them to pay more will discourage investment or job creation. Some people will disagree with him on one or both those points. But here's a breakout on what he is talking about.

Why Buffett only pays 17.4% of his income in federal taxes: "Last year my federal tax bill ... 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."

Unlike most Americans, Buffett and the country's wealthiest taxpayers make much of their income from investments. The capital gains and dividends those investments generate are taxed at a much lower rate than wages. Long-term capital gains and dividends are currently taxed at 15% -- well below the 35% top income tax rate.

Managers of hedge funds and other investment partnerships, meanwhile, enjoy that same rate on the portion of their pay known as carried interest.

In addition, the wealthiest only pay a very small percentage of total payroll taxes, which support Medicare and Social Security. That's primarily because the payroll tax only applies to wage income, not investment income. Come 2013, however, a Medicare tax will be added to a portion of the wealthiest Americans' investment income to help pay for health reform.

How much money could be raised by hiking taxes on the super rich? Without specifics, it's hard to say. But it's possible to get a ballpark idea if one assumes nothing else changes about the current tax structure.

If lawmakers added a new 50% tax rate to taxable income over $1 million, that could raise an additional $34 billion, according to the Tax Policy Center. So adding that new top rate might raise at least an additional $340 billion over 10 years.

And if lawmakers opt to tax carried interest as ordinary income, the change could raise an additional $21 billion over 10 years, according to Joint Committee on Taxation estimates.

What about tax rates on capital gains and dividends? If they were raised to 20% for individuals making more than $200,000 (and couples making more than $250,000) that could raise roughly $107 billion over a decade, the Treasury Department estimated last year. The rate increase would raise less if it were limited to just those making more than $1 million.

All told, if one combines the three changes -- setting aside the economic effects if they were all implemented -- it's possible that Treasury could pull in more than $450 billion over a decade.

In the context of deficit reduction, $450 billion is less than 5% of the new debt the country is on track to accrue over the next decade. But it's a lot of money in terms of potentially valuable government programs that might otherwise need to be slashed absent additional revenue.

Higher rates won't discourage investment: "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."

It is unlikely that the wealthiest investors will pack up their marbles and go home if Congress raises the capital gains rate.

But an investor's calculus for what makes a "sensible" investment may change a little since the expected profit from an investment would go down once taxes are factored in.

Higher rates won't hurt job creation: "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."

There may well be a correlation between tax rates at the top of the income scale and job creation, but it's hard to nail it down.

Conservatives often contend that hiking taxes on high-income taxpayers will hurt small business job creation. Liberals say that's nonsense.

The truth is probably somewhere in the middle. "Tax policy is one of many, many things that affect it. Job growth, for example, depends on a host of demographic factors," said Donald Marron, a former acting director of the Congressional Budget Office.

What's more, there's no uniform definition for what constitutes a business on the federal tax return. So some of the business income reported by the wealthiest taxpayers may come from owning rental property or belonging to an investment partnership, neither of which are big job-creating businesses.

And nowhere on the 1040 does a tax filer indicate how many jobs his business has created in a given year.

What might help job creation, though, which Buffett's opinion piece doesn't address, is an overhaul of the tax code. Such reform would reduce income tax rates and pare down many of the very expensive tax breaks.

When Congress has that debate, the issue of how much the rich should pay will be front and center.

http://money.cnn.com/2011/08/15/news/ec ... s/?cnn=yes

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August 16th, 2011, 9:32 am
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Post Re: Stop Coddling the Super-Rich
CNN Money wrote:
America's Debt Crisis
What ever happened to tax reform?
By Chris Isidore @CNNMoney
August 2, 2011: 4:40 PM ET

NEW YORK (CNNMoney) -- Legislators finally approved an eleventh-hour plan to raise the debt ceiling on Tuesday, but one part of the debate was left out of the final draft -- tax reform.

Deficit reduction of up to $2.4 trillion was the centerpiece of the deal to raise the nation's borrowing limit, which passed Congress this week after months of debate. But the deal accomplishes that only through spending cuts, not an increase in tax revenue, as Democrats had pushed for.

According to a CNNMoney survey, most economists wanted some kind of tax reform to be included in the deal -- fewer deductions and loopholes for both individuals and businesses which would allow for lower rates but increase collected revenues.

"Tax policy is absurd on its face, keeping accountants and lawyers and especially lobbyists in gravy," said Gary Rosenberger of research firm EconoPlay.

"What people forget is that if oil companies and hedge fund managers continue to get the breaks that nobody else gets, it ultimately forces property taxes to rise for everyone," he said.

The economists surveyed widely agreed that current tax code is a drag on economic growth, because it gives advantages to certain portions of the economy, rather than letting market forces determine winners and losers. And eliminating or limiting deductions and credits and would also allow for a lower tax rate which could boost business activity.

"A flatter tax system with fewer special tax incentives or subsidies for various interests and a lower overall rate structure would enhance economic efficiency and potentially growth," said Lynn Reaser, economics professor at Point Loma Nazarene University.

Most conservatives in Congress agree that lowering tax rates could spur economic growth. And the idea is also popular among Democrats, because it would eliminate the loopholes that allow some companies to pay effective tax rates near zero.

Tax reform was a large part of a plan unveiled last year by the President's bi-partisan debt reduction commission headed by Erskin Bowles and Alan Simpson. Fed Chairman Ben Bernanke has also spoken in favor of tax reform in general terms.

And it was discussed by President Obama and Speaker John Boehner last month as part of a so-called "Grand Bargain" that would have also made changes in entitlement spending such as Social Security and Medicare.

When those talks fell apart, President Obama continued to push for some limited changes in the tax code to eliminate some breaks, such as those for corporate jet owners, oil companies and hedge fund managers.

In the end, Republicans refused to support any increase in tax revenue or change in the tax system as part of the debt reduction plan.

But economists doubt that spending cuts alone can produce the savings needed to trim long-term deficits.

"I don't think there can be enough cuts in the major programs to give the cuts in the deficit we need on the coming years," said David Wyss of Brown University.

According to the survey, economists believe the ongoing debt ceiling debate was a drag on economic growth. About a third of those surveyed said they were worried about the economy falling into a double-dip recession without an increase in the government's authority to borrow.

http://money.cnn.com/2011/08/02/news/ec ... htm?iid=EL

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August 16th, 2011, 9:33 am
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Post Re: Stop Coddling the Super-Rich
If he gives 100 dollars, only 35 goes as a right-off. He isn't getting 100% so overall he loses money when he gives like everyone else.

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August 16th, 2011, 9:37 am
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