Warren Buffett didn’t become the world’s richest man by being anything less than forthright. Last night he said it’s long past time to hike taxes on the super-rich, instantly discrediting anybody who claims that the wealthy are taxed more than the middle class:
Buffett offered $1 million to the audience member who could show that one of the nation’s wealthiest individuals pays a higher tax rate than one of their subordinates.
Ain’t no way he’s paying out on that bet.
Of course, a higher tax rate would have been unlikely to cost Warren Buffet much more than what he did pay in taxes. Because Buffet has never sold a single share of Berkshire Hathaway stock in his life. He’s just held onto it all the way along and all of his income is derived from his salary as an employee and Chairman of the company. Which is far less than what most CEOs of large corporations make these days.
Thus there would never have been any taxes to pay, since he never sold any of the stock that represents the vast majority of his taxes.
Now I understand that he is planning to give just about all of that stock to the Bill and Melinda Gates foundation. Which is really great and all. But since those capital gains will be 100% donated to charity, he will STILL pay no taxes at all on the bulk of his income.
Not that I disagree with Buffett’s point. I just find it ironic coming from him.
Oops. I meant to write: “he never sold any of the stock that represents the vast majority of his WEALTH.’ Not ‘taxes.’
Well it all depends on how one defines “the rich.” If you Buffett and Gates and Michael Dell and so on, then, fine, add a surcharge to their tax bills. But if you define “rich” as some entreprenuer making $125K or even $250K a year, growing a business, employing others and the like and you want to impose confiscatory tax rates on him, that’s something else entirely.
We’re on the cusp of a dangerous imbalance in this country over who’s paying taxes. Around 50% of families pay no federal income tax. I don’t know about you, but this strikes me as potentially dangerous. When people are absolved from contributing to the federal treasury in a meaningful way and those same people form a majority, what will happen if they are disposed to simply vote themselves largesse from the treasury?
I realize, of course, that this makes me sound as if I’m advocating raising taxes on the working poor. I’m not – at least not unless it was part of a general tax hike of which they were merely one component. But it seems to me a bad idea to begin imposing Carter-era taxes on the rich just b/c Warren Buffett and Bill Gates, Sr. think it’s a good idea.
Jack — he may not have billions in capital gains, but he did have taxable income of $46 million this past year. On which he paid taxes at the rate of 17%. If he had had capital gains, I suspect that most of them would have qualified as long-term, and would have been taxed at 15%.
I’ve got a better question: how much has Buffett paid to the government in excess of his required tax burden? Unless it’s a substantial amount, I’m really not interested in listening to his idea about how much more I should pay.
Well that’s fine, James, as I’m sure that Buffet wasn’t really talking to you. I understand that he’s a man who doesn’t waste much time or effort.
On legalistic, moralistic, and just plain logical grounds, this doesn’t make any sense. Are we supposed to abide by laws that don’t yet exist? Or should we be paying the government for the right to advocate change in it? How in the world does what you wrote have any bearing on reality? Did you bother to read what was wrote?
Besides, is it now a “conservative” ideal that we should be taking a smaller cut of each successive dollar you make? Damn that liberal flat tax!
Also, I had no idea that you were “super-rich” and therefor in the set of people that Buffet was talking about.
@James: Reread the post — I think you have it backwards. (This is a man-bites-dog story.)
“Around 50% of families pay no federal income tax.”
This actually isn’t true: it’s based on an average which uses the EITC to calculate things, skewing the numbers considerably. However, to the extent that it is true that a lot of people don’t pay federal income taxes, it’s still misleading, because most of those people barely have any money to tax away in any case (especially after payroll taxes). When the vast vast majority of the wealth of a country is held by a tiny few, ANY tax system that actually takes in anywhere near enough to fund the current size of the government is going to fall disproportionately on the wealthy.
It’s not really hard to see why. We tax income, and a very small percentage of the population have enough to bother with. You could make the income tax heavily regressive (taxing the poor a higher rate and making all those non-federal taxpayers pay out) and you’d STILL take in barely anything more from that move.
Y’all are just assuming that James isn’t a billionaire.