Warren Buffet Is Shrill

In a few concise paragraphs, he demolishes the Galtian nonsense:

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.

The whole thing is worth a read, because it discusses all the simple facts that are consistently skipped when raising taxes is discussed, including payroll tax. And his plan can be expressed in two simple sentences:

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.

Every Democrat running for federal office should pull out their sharpie and write that on their hand.






89 replies
  1. 1
    Odie Hugh Manatee says:

    Fucking A, right on! Damned right we need to update the tax brackets to take into account the increased incomes at the top. People are going to work to make money, taxes or not, and Buffet is dead on with that. Cutting (and gutting) tax revenue only chokes the government and that’s all the right (read: pols bought off by the wealthy) is interested in.

    Buffet is right but it’s too bad our politicians will not listen to him. Too many of them are too busy raking in their own cash to care about anything else. By the time this all collapses, they will have made their wad and will have left the incoming schmucks to deal with the mess they created.

  2. 2
    Comrade Javamanphil says:

    Why that is nothing but class warfare! Warren Buffet should be ashamed so brazenly declaring war on himself.

  3. 3
    PeakVT says:

    I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains.

    Hopefully at least one Kock brother will stroke out after reading that.

    ETA: Also shrill: Krugman on Perry and Texas.

  4. 4
    Alex S. says:

    Republicans say that low taxes incentivize investments, but sometimes I wonder if the opposite is true.

  5. 5
    Baud says:

    I don’t know if he is coordinating with the Dems on this, but I suspect the timing of this piece is designed to buttress the Dems on the Deficit Commission.

    Edit: Wrote before I read the whole article. Clearly designed to buttress the Dems.

  6. 6
    Baud says:

    Can any tax lawyers explain this:

    Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.

    How does someone get a tax burden of 41%? No tax bracket is currently that high.

  7. 7
    danimal says:

    Buffett is a class traitor!

  8. 8
    PeakVT says:

    @Baud: Read the paragraph again.

  9. 9
    Montysano says:

    I’ve worked for a local small business for 20 years, and am always in the room when new hiring is discussed. Never, not even once, has the owner’s tax rate been a factor. Instead, it’s very simple: is there consumer demand to justify the hires?

    The fact that so many Americans buy into this line of bullshit makes me despair.

  10. 10
    Baud says:

    @PeakVT: Ok, he wasn’t limiting his discussion to income taxes, but including all taxes. It was a little confusing because Buffet referred to his “taxable income”, which is usually a term used with respect to income taxes.

    Edit: It’s too early. My brain is still asleep.

  11. 11
    Keith G says:

    ..should pull out their sharpie and write that on their hand.

    Buuuut they won’t.

    The Democratic Party officials from the top down (sorry Elie) have reneged on their role as teachers. Hell, they won’t even mention the word “tax”.

    Why should they? They know they can count on much of their support remaining constant no matter how they under perform, since “they are not as horrible as the other guys”. Until that that attitude can be changed, the caps will stay on the sharpies.

  12. 12
    OzoneR says:

    @Montysano:

    Instead, it’s very simple: is there consumer demand to justify the hires?

    At least where I work, even if there’s consumer demand to justify the hires, they just put extra work on the already existing employees to avoid having to pay a new salary and benefits.

  13. 13
    Baud says:

    @Keith G: Right, the way to a better future is to not support the Democrat Party. And we lament how the Republicans have been so successful for the last 40 years.

  14. 14
    PeakVT says:

    Speaking of tax issues, according to the BBC tax evasion costs the Italian government $142 billion annually. Equivalent losses in the US would be about $1.1 trillion.

  15. 15
    Kirbster says:

    Favored rates for capital gains and dividend income only made sense as an needed incentive back in the early eighties when interest rates were really high and investors could make 10 to 12% annually risk-free on bank CDs. Now, with interest on money market accounts and CDs at practically zero, investors would go for stocks and bonds even if they were taxed as ordinary income. What else can they do with with their investable money?

  16. 16
    J. says:

    @mistermix, Thanks for posting this.

    @Odie Hugh Manatee, Right on!

  17. 17

    This is what we will hear in response:

    “But, but, the rich pay like 70% of the taxes in this country!”

    As if there is a cap on the amount of taxes a particular demographic can pay? Its funny, the ones that will defend the tax cuts on the rich are the real class traitors. Most of them will likely be dumb-a*s lower-middle class people struggling to make ends meet, with the dream of being rich one day.

  18. 18
    RossInDetroit says:

    @PeakVT:

    It’s even worse in Greece, where dodging taxes is pretty much standard practice for everyone. It’s difficult for the government to improve the budget when tax changes only affect those they catch, honest people and those who have no choice.

  19. 19
    dmsilev says:

    We definitely need some new tax brackets above the current top. My personal favorite is “Marginal rate increases by two percentage points for each doubling of income”. Say the $250K bracket has a marginal rate of 30 percent. Then, income above $500K is taxed at 32 percent. Above a million, 34 percent. Above two million, 36 percent. Etc. Yes, it does mean that eventually you hit very high marginal rates. If, that is, you have an income significantly larger than the gross economic output of the entire planet.

    Oh, and this is *all* income. Wages, salaries, capital gains, dividends…

  20. 20
    RossInDetroit says:

    @Keith G: “Closing Loopholes” is still acceptable language. One man’s legitimate deduction looks like a cheat or a dodge to the next guy, but overwhelmingly “loopholes” elicit a negative reaction. How many times have we heard “corporate jets” come out of the President’s mouth?

  21. 21
    gnomedad says:

    Thank God I’m not rich; I’d just hate paying those taxes!

  22. 22
    Omnes Omnibus says:

    @efgoldman: I will note that there is a difference between tax avoidance and tax evasion.

  23. 23
    RossInDetroit says:

    Remember Leona Helmley? “Taxes are for little people”.

    Jail.

  24. 24
    John Puma says:

    Only about 25% of Dems (“blue dogs”) are stupid enough to have to write Buffet’s two sentences on their hands.

    Another 70% are smart enough to understand and remember the issue, but are lacking the spine to do anything about it.

    The other 5% have the smarts and the spine but not the numbers.

    The party’s “leader” seems willing only to negotiate with the competitor party.

  25. 25
    JohnR says:

    Warren Buffet, like Paul Krugman, only gets published so he can be publicly mocked and vilified by the punditocracy. Their writings also allow the Serious and Thoughtful Talking Heads (no, not them) to serve up softballs to the right-wing fanatic fantasists that let them dismiss reality with time-tested soundbites. Buffet and Krugman have no real power in our best of all possible innumerate worlds.

  26. 26
    lol says:

    @PeakVT:

    Of course, any effort to bolster the IRS so it can chase after tax cheats is decried as “Obama’s jack booted tax men” despite the incredible amount of return for the dollar.

  27. 27
    El Cid says:

    __

    Every Democrat running for federal office should pull out their sharpie and write that on their hand.

    Okay, but not only would it not be implemented, but I can’t see any sign that any but one or two leading figures of the party would even raise this in a serious manner.

    Sounds like common sense, but to me it seems just like another thing to be dismissed as “liberal” or “prog” or whatever blogger extremist fantasy, because you don’t understand this, that, or the other.

  28. 28
    Enlightened Liberal says:

    Buffett knows this, all the “super-rich” know this. Even legislators know this. However, the purpose of keeping rates low for the wealthy is to starve the government of revenues, so that social programs (to include SS and Medicare/Medicaid) can be eliminated. That’s the end game, the only one.

  29. 29
    PeakVT says:

    @efgoldman: IIRC current estimates for evasion are $300-400B.

  30. 30
    Chris says:

    @The Other Bob:

    This is what we will hear in response:

    “But, but, the rich pay like 70% of the taxes in this country!”

    That percentage number will vary wildly, in an upwards direction, as the argument goes on.

    Which kind of misses the point that when they’re the only ones with any money, of course they’re the only ones taxed. The burden was probably spread a lot more evenly back in the 1950s and 1960s.

  31. 31
    Keith G says:

    @Baud: Goddamnit. I did not say that and I am quite tired of the “either/or” fallacy of bifurcation. That is so weak.

    Our society is in peril and in the name of political expediency important arguments are not being made in the political arena. And thus, I believe that important turning points are being passed by.

  32. 32
    Baud says:

    I like Buffet, and op-eds are nice and all, but it would nice to see him take some of that money he is not paying in taxes and go all Citizen’s United on some Republican asses. If the Kochs can do it, why can’t he.

  33. 33
    Dennis SGMM says:

    @RossInDetroit:

    “Closing Loopholes” is still acceptable language.

    Not here in California. The GOPers in our state lege have declared that closing a loophole = raising taxes and they’ll fight it to the death – of the state.

  34. 34
    cleek says:

    @Kirbster:

    What else can they do with with their investable money?

    stock market is still looking good.

    for all the drama, the DJIA only fell 175 pts last week. and it’s up about 1000 for the year.

  35. 35

    Phillip Swagel is the little rightwing pointy head on Washington Journal right now. When the host brought up the Buffet oped just now, Swagel said, “He’s a billionaire. He’s free to write a check anytime.”

    Gah.

  36. 36
    gnomedad says:

    @Baud:

    it would nice to see him take some of that money he is not paying in taxes and go all Citizen’s United on some Republican asses.

    There’s still time. Why be premature while the loons are still generating material for the ads?

  37. 37
    PeakVT says:

    @Baud: It would be nice, but left-leaning billionaires tend to give to causes, not invest in (or buy, depending on your level of cynicism) political candidates.

  38. 38
    Omnes Omnibus says:

    @Joseph Nobles: Thus missing the entire point of taxes…. Gah indeed.

  39. 39
  40. 40
    Yurpean says:

    Has anybody on the right managed to write a rebuttal of this that doesn’t boil down to “So write the IRS a cheque, you hippy”?

  41. 41
    Omnes Omnibus says:

    @Yurpean: I think the other arguments are that the rich pay 70% of the taxes and they create jobs.

  42. 42
    The Republic of Stupidity says:

    Every Democrat running for federal office should pull out their sharpie and write that on their hand.

    Except that far too many of those farkers ARE millionaires and simply BLANCHE at the idea of raising their own taxes…

  43. 43
    dpCap says:

    @Baud: How do you know he isn’t? If it’s totally anonymous, we’d never know.

  44. 44
    Napoleon says:

    @dpCap:

    Until the last year or so it really was not anonymous. Has he given in the past?

    BTW, 2 years ago or so I read a book on McGovern’s 72 run and it mentioned in the book him taking a side trip to Neb. to meet with Buffet. Read into that what you will.

  45. 45
    ericblair says:

    @Omnes Omnibus:

    I think the other arguments are that the rich pay 70% of the taxes and they create jobs.

    Yup, and that’s such a stupid howler of an argument that in a just world talking heads should spontaneously explode from saying it. I, like most people, have never been hired by a rich person: I’ve been hired by limited liability corporations whose hiring authority was vested in decidedly middle-class middle-management mopes. Unless you’re a pool boy or a bodyguard, you’re not going to run across rich people much in your job search.

    From observing the complete mess that the last several decades of investment activity has made, it’s pretty obvious that rich people have no idea what to do with their money. They’ve got a growing pile of idle cash that they want to place in high-return investments, but won’t actually get their hands dirty building businesses or anything like that so want liquid, no-work securities. Since there aren’t really enough of these with good prospects due to their hollowing out of the US economy, the good people on Wall Street have been making up weirder and weirder side bets on whatever financial hiccups are expected to happen. This has made everything more and more unstable as they all chase the latest bubble of synthetic derivatives.

    So in short, we need to tax the super-rich because they’re financial morons who are making the economy more and more unstable by confusing investment with a weekend at Caesar’s Palace.

  46. 46
    MazeDancer says:

    Celebrity “moments” like this excellent one by Mr. Buffet better be happening all year and next. Daily, weekly, as often as possible.

    For one thing, the Repub primary is going to dominate the news. And the lies and Obama slashing are already constant every night. Media doing the Repubs job for them even more than ever. Plouffe better have a whole lot of events and interesting ways to combat this.

    For another, Buffet laying it all out clearly and coversationally gives the both-sides-do-it-media cover to offer the “other side” in questioning Repubs. Who then will give some standard answer. But still, Buffet’s “other side” points could be used all year.

    And most Americans do want to tax the rich. “Shared sacrifice”. So people are not going to understand why Buffet is wrong and Repubs right. It could help a little.

  47. 47
    Original Lee says:

    Warren Buffet is full of win. That is all.

    Well, actually, not all. I was re-reading some of Rex Stout’s Nero Wolfe murder mysteries, and in every single one of those I read, Archie talks about Wolfe’s tax rate as why it was difficult to get him to take on new cases. The tax rates were well over 30%, too.

  48. 48
    Derf says:

    Cue voices from the grave of Hoover calling for Buffett to be investigated for communist sympathising.

  49. 49
    Villago Delenda Est says:

    Buffet isn’t a parasite, and understands that his prosperity depends on not being one…on being a symbiote, not a parasite.

    Unlike the Kochs, who intend, in their short term greed, to suck the host dry, destroying the environment around them in the process.

  50. 50
    hildebrand says:

    @gnomedad: Exactly.

    When people play the ‘if I won the lottery’ game, no one ever seems to complain about the taxes that would be taken off the top. Why? Because even after you take out the taxes, you are still sitting on more money than you ever could have made in your entire life.

    Of course, there is another point, and a rather good one – in actual communities, where the people actually care about one another’s welfare, paying taxes is seen as a good thing as it benefits everyone. We pay taxes because we are good citizens and neighbors. I know, naive. But still true.

  51. 51
    The Spy Who Loved Me says:

    But I thought being rich now started at $200K AGI for individuals. What’s all this shit about income over a million dollars?

  52. 52
    ericblair says:

    @Villago Delenda Est:

    Buffet isn’t a parasite, and understands that his prosperity depends on not being one…on being a symbiote, not a parasite.

    Buffet can be a real asshole and isn’t above talking his book, but he knows what the hell he’s doing and like the Gateses understands the broader implications of wealth on society. The Kochs are ideologically-addled trust-fund morons that are firmly in the rentier class, and seem to genuinely believe that they’re inherently superior to everyone else and nobody else matters except the superrich and their rape of the economy.

  53. 53
    Lee says:

    My wife is a veterinarian so we know quite a few small business owners.

    The biggest hindrance to hiring is health insurance costs. Not their tax rate, not labor costs, not the EPA or OSHA requirements. Every single one of them says they would hire more people if health insurance was cheaper.

    From what I understand, nationally most small business owners have the same issue.

  54. 54
    Villago Delenda Est says:

    @Lee:

    Small business owners are not the backbone of the country.

    No, that would be Fortune 500 CEOs and investment bankers. You know…Galtian overlord types.

    Everyone else is a useless appendage…a moocher.

  55. 55
    kay says:

    @The Spy Who Loved Me:

    But I thought being rich now started at $200K AGI for individuals. What’s all this shit about income over a million dollars?

    Right. There’s that. And there’s also this:

    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.

    Job one is “future promises”, which means Medicare and Social Security, I assume.

    I’m fine that he wrote it, but what he’s proposing is big cuts to social programs in return for a tax increase on millionaires. With the cuts locked in before the tax increases.

    I don’t know that we should be dancing in the aisles.

  56. 56
    Sly says:

    @Chris:

    Which kind of misses the point that when they’re the only ones with any money, of course they’re the only ones taxed. The burden was probably spread a lot more evenly back in the 1950s and 1960s.

    The biggest shift in the tax burden from 1960 is very likely in payroll taxes, as the share of revenue collected through payroll taxes as a percentage of total revenue has about doubled since then. It began increasing with the additional Medicare tax and has continued going up since. The percentage of revenue from income taxes has remained fairly constant; 44% percent in 1960, 46% percent today.

    When people bring up things like the super high marginal rates for the mega-rich that existed before, they usually don’t take into consideration the deductions that were also present. The point of the “millionaire’s tax” wasn’t to collect revenue, but provide a disincentive against hoarding money. It was the same reason Andrew Carnegie, who thought anyone who died wealthy led a wasted and unworthy life, proposed a 100% tax on large, inherited estates.

    @ericblair:

    So in short, we need to tax the super-rich because they’re financial morons who are making the economy more and more unstable by confusing investment with a weekend at Caesar’s Palace.

    There’s a better reason, actually: progressive taxation means economic growth. The rich, as a group, do not buy as many goods and services as the middle class or poor, as groups. Consumers buying goods and services are the foundation of every modern capital economy, as their economic decisions will ultimately determine everything from prices and employment. So you want their tax burden to be as low as possible, so they have more money to be more effective consumers. On the other hand, if you keep the tax burden of the rich low, the tendency to hoard money and not put it to productive uses increases.

  57. 57
    redshirt says:

    Can someone tell me or share a link in regards what the Koch brothers own or are financially in control of? I want to be sure and never use anything that touches them.

  58. 58
    Monkey Business says:

    When I look at someone like Warren Buffett, I think “Here’s a guy that has had opportunities and made the best of them through hard work and intelligence. Not only that, but he actively contributes a large portion of his wealth to charitable causes, and has guaranteed that most of it will go to charity when he dies.”

    When I look at someone like the Koch Brothers, I think “Here are guys that had opportunities and made the best of them through hard work and intelligence. Unfortunately, they’re going to make damned sure that no one else that isn’t born rich like them has those opportunities.”

  59. 59
    Matt in HB says:

    Two t’s in Buffett please. He’s not a table full of food.

    Thnx.

  60. 60
    jefft452 says:

    Dmsilev

    I like it, we defiantly need more brackets, not fewer
    but how we peg the base line at median income?
    So that median income is x%, double median income at x+2% etc
    This way if working people’s incomes go up, rich peoples taxes go down and visa versa

  61. 61

    So, in summary, he made his money, and now he wants to close off the route for anyone else to make any money, while he passes down his earning to his children and heirs, thus creating through tax rates some kind of feudal system?

    When are these rich going to learn that they can’t keep the working man down by jamming high taxes on us? When are they going to learn that high taxes only means that earners pay more to the government while those who inherit or live off their already earned wealth pay nothing more?

    As a good union man, we should be ripping this guy for holding us down while he lords it up over us.

  62. 62
    Matt in HB says:

    @A Conservative Teacher:

    Actually he’s giving nearly all of his money to charity via the Gates Foundation. But I don’t suspect facts are of much interest to you.

  63. 63
    currants says:

    haven’t read all the comments–sorry (exam in 90 mins), but is he talking about individuals only, or does he hit the corps up for cash too?

  64. 64

    More importantly, don’t ever forget the perversity of tax policy.

    *LOWER* tax rates means each employee costs the company *more* in after-tax cash.

    If you’re a partner, or sole-proprietor, and the tax rate is 40%, each $100,000 in salaries costs you a net of $60,000. You get to expense the $100,000, and so you don’t pay $40,000 in tax. (I.e.: If you kept the money, you’d take home $60,000 net after taxes.)

    If the tax rate is 25%, each $100,000 in salaries costs you a net of $75,000 – 25% more! You get to expense the $100,000, but that only avoids $25,000 in taxes, instead of $40,000.

    The Republicans are pushing for higher net costs to job creators, guaranteeing fewer jobs.

  65. 65
    MattR says:

    @A Conservative Teacher:

    When are they going to learn that high taxes only means that earners pay more to the government while those who inherit or live off their already earned wealth pay nothing more?

    So you advocate taxing people on their assets in addition to their income? Doesn’t sound very conservative to me.

  66. 66
    daverave says:

    @cleek:

    Check your math cleek, the DJIA is down about 200 YTD

  67. 67
    Lurking Canadian says:

    @hildebrand:

    Of course, there is another point, and a rather good one – in actual communities, where the people actually care about one another’s welfare, paying taxes is seen as a good thing as it benefits everyone.

    When I was growing up, my parents had friends who were Holocaust survivors. Every year, in April, when people were whining and griping about having to do their taxes, this couple would say, “You’re wrong. It is a privilege to pay taxes in Canada”. That usually ended the whining.

  68. 68
    rikyrah says:

    he was on point

  69. 69
    Keith G says:

    @A Conservative Teacher: You are a teacher?

    I hope it is in the arts, since the amount of baseless assumptions that you have packed into three small sentences is astounding and shows a careless attitude toward the truth.

  70. 70

    […] federal office should pull out their sharpie and write that on their hand,” wrote mastermix at Balloon Juice of the billionaire investor’s New York Times op-ed advocating for higher tax rates for the […]

  71. 71
    Chris Andersen says:

    The idea that investors don’t invest because they are afraid of high taxes is the most absurd lie imaginable. Investors will invest if they have money to invest and they think they can make money off it. Taxes don’t enter into it and Buffet says so in the clearest terms possible.

  72. 72
    trollhattan says:

    @Dennis SGMM:

    Not here in California. The GOPers in our state lege have declared that closing a loophole = raising taxes and they’ll fight it to the death – of the state.

    This. Also, too, our “third rail” is Prop 13 and the venerated corpse of Howard Jarvis. He’s zombie Reagan part deux.

  73. 73
    trollhattan says:

    @A Conservative Teacher:

    As far as summaries go, yours fails to grasp both what he said and the structure he’s targeting in his piece.

    “F” and stay after school to re-do.

  74. 74
    Stefan says:

    @Chris Andersen:

    In fact, there’s a saying in the financial community that you don’t let the tax tail wag the investment dog.

  75. 75

    Steve Pearlstein is even shriller.

    Warning: You may need a ciggy and a short nap after reading this thing of beauty.

  76. 76
    Paul in KY says:

    @Monkey Business: The Koch brothers inherited all their money.

  77. 77
    Joel says:

    Long term capital gains comes at a 10-20% discount over normal income. Which is incredible. The discount gets larger for the wealthier, too.

  78. 78
    Paul in KY says:

    @Thoughtful Black Co-Citizen: Thank you for linking to it. We need about 40 other columnists to be shouting this as well for it to gain any traction with the powers-that-be (IMO).

  79. 79
    Neo says:

    Warren needs to wait no longer … he can mail his check to:

    Attn Dept G
    Bureau of the Public Debt
    P. O. Box 2188
    Parkersburg, WV 26106-2188

    .. or visit:

    https://www.pay.gov/paygov/forms/formInstance.html?agencyFormId=23779454

    So you don’t forget, mail by midnight tonight.

  80. 80
    300baud says:

    @Neo:

    Warren needs to wait no longer … he can mail his check to:

    You know that’s obvious idiocy, right?

    The reason we have taxes at all (versus voluntary contributions) is because otherwise we get free rider and tragedy of the commons problems.

  81. 81
    Ruckus says:

    @efgoldman:
    About 25 yrs ago I asked my accountant what I could do to lower my taxes. His response was classic.
    He said he could pull all kinds of tricks and get my taxes lowered. He would also guarantee that every thing he did would be legal and upheld at the audit which would be automatic. The kicker? My bill from him would easily exceed any and all tax savings. His advice? Pay your fucking taxes.

    And he is just as right now as then.
    It’s the cost of living in a society, free or otherwise.

  82. 82
    JGabriel says:

    @A Conservative Teacher:

    When are these rich going to learn that they can’t keep the working man down by jamming high taxes on us?

    Apparently you didn’t read the article. Buffets want to increase taxes on people making over a million per year — hardly the working man constituency.

    .

  83. 83
    Ruckus says:

    @Thoughtful Black Co-Citizen:
    At least a drink is in order. A strong drink, perhaps whiskey, rocks or up, 4 fingers?

  84. 84
    Will Reks says:

    Gotta love it when these clowns ignore the point he’s making and just tell him to mail the check.

  85. 85
    JillS says:

    Let’s give Howard Schultz of Starbucks some love as well…
    http://www.msnbc.msn.com/id/44.....knqAr-M8tI

  86. 86
    honus says:

    @Enlightened Liberal: Here’s the really cruel and stupid thing. Starving the Beast and eliminating SS and Medicare won’t really make the rich any richer. So the goal isn’t to prosper, it’s just to hurt people. For their own good, I guess. So they really are philanthropic and compassionate.

  87. 87
    David Miller says:

    Warren Buffett conveniently omits the fact that his Berkshire Hathaway stock appreciated by $3 billion last year and, unless he is extraordinarily patriotic, there will never be any income tax paid on his unrealized appreciation. So his tax rate on the economic income he earned last year is more like 0.22% ($6.9/$3.039.9). Even if his tax rate on recognized income was increased to 100%, the tax on his economic income would be a little more than 1% ($39.9/$3.039.9).

    To correct this fundamental problem with our realization-based tax system, we need to tax the super-wealthy like Warren Buffett on a mark-to-market basis. When Buffett’s stock appreciates each year, he should pay at least some tax on the appreciation (and, of course, receive a refund if the stock depreciates the next year). There is no good reason why wage earners pay income tax on all of their economic income but Buffett can escape all tax on nearly all of his. And a mark-to-market tax on appreciation at a 15% rate would have raised $450 million in 2010 from Warren Buffett alone!

    For more on a mark-to-market system of taxation, see http://www.cadwalader.com/asse.....xNotes.pdf.

  88. 88
    MattR says:

    @David Miller:

    Warren Buffett conveniently omits the fact that his Berkshire Hathaway stock appreciated by $3 billion last year and, unless he is extraordinarily patriotic, there will never be any income tax paid on his unrealized appreciation.

    This seems like a twisting of the facts. While it is techinically true that he will not pay tax on unrealized appreciation, he also does not technically have access to any money from that appreciation until he does something to realize it. Assuming the assets maintain that appreciation. eventually taxes will be paid on it.

    I also have an issue with taxing people on the appreciation of their assets when that can force them to have to sell the assets to pay the taxes. This actually looks like it would cause many of the problems that critics of the estate tax worry about.

    Lastly, I can only imagine what would have happened to our economy if we had implemented a mark to market system five years ago. As the market goes down in a recession, tax revenues would plummet even further than they already do if the ultra rich get to write off all their mark to market losses, especially given the Republican stance that we can neither increase taxes nor borrow more money.

  89. 89
    David Miller says:

    Of course Buffett has access to money from the appreciation; he can simply borrow against his appreciation. That’s what Larry Ellison does. http://www.cbsnews.com/stories.....1547.shtml

    And no, no income taxes will ever be paid on Buffett’s or Ellison’s appreciation. Under section 1014 of the internal Revenue Code, heirs get a “stepped up” basis in assets that are inherited. This means that they can be sold without tax.

    Under a mark-to-market tax, taxpayers would be entitled to a refund of any mark-to-market taxes they paid if their shares subsequently depreciate. So it works like its own stimulus.

    A mark-to-market tax would have raised $450 million from Warren Buffett alone in 2010! It would raise hundreds of billions of dollars over ten years. For more on this see http://danshaviro.blogspot.com.....-rich.html

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