Stop coddling the rich

[Sandy Eggo]

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://mobile.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.xml


I posted the entire op/ed because I like what he has to say. Too bad more people aren't as reasonable.

[Exterminator]

Bravo!

[Locutus]

Warren Buffett is da' man!

[Henry Hawk]

.

[followsthewolf]

And, of course, other than your trying to find a way to criticize him because he doesn't toe the party line, who is "super rich" is really a matter of perspective, isn't it?

I submit that there are millions of people in the world who, by comparison, would consider you "super rich."

[Exterminator]

I missed Henry's comment; was he trying to say that Warren Buffet isn't rich?  LOL...

[Sandy Eggo]

[Henry Hawk]

I retracted a lengthy response because I breifly forgot, I am no longer responding to politcal threads.......

Old habits...

[The Troll]

I retracted a lengthy response because I breifly forgot, I am no longer responding to politcal threads.......

Old habits...

  That's nice to know.  I think you have seen how wrong you have been and you're so pathetic and ashamed to admit it. 

[followsthewolf]

I retracted a lengthy response because I breifly forgot, I am no longer responding to politcal threads.......

Old habits...

I believe that once you post it, you are obligated to defend it.

Otherwise, posting and deleting leaves a lot of legitimate questions unanswered.

I also believe that, unless a post contains defamatory statements, unwarranted accusations, etc., that it is unethical to delete it.

[Palehorse]

WB just gained a HUGE amount of admiration from me personally. Imagine that, a billionaire that actually gets it!!!

[Locutus]

I retracted a lengthy response because I breifly forgot, I am no longer responding to politcal threads.......

Old habits...

Why?  I would have liked to have heard what you have to say regarding Buffett's remarks.   They seem pretty spot on to me.   What about you?

[Henry Hawk]

Why?  I would have liked to have heard what you have to say regarding Buffett's remarks.   They seem pretty spot on to me.   What about you?

The only thing I say is, I don't think anyone has a problem with the Warren Buffetts paying more....it is the $250,000 folks that most economist believe would hurt the economy if taxes were raised now and that is what the dems want to do, raise it on those folks and up.

Also, if Buffett thinks more should be paid then why don't he just send in more, and set an example.

Other than that, I have no problem with Buffett

[Exterminator]

The only thing I say is, I don't think anyone has a problem with the Warren Buffetts paying more....it is the $250,000 folks that most economist believe would hurt the economy if taxes were raised now and that is what the dems want to do, raise it on those folks and up.

Can you quantify that "most economists" believe that or are you simply pulling that out of your ass to give your statement credibility?  That's a rhetorical question, by the way; we already know the answer.

But anyway...I'll play your silly game...if those $250,000.00 folks are only paying a 15-20% marginal rate and I'm paying 39%, why shouldn't they pay more?  At what income level would you and your make believe economists be comfortable with raising taxes so they pay the same percentage as the rest of us?

[Palehorse]

According to the IRS, households making 250,000 dollars a year and up, amount to 2% of the entire population in this country. . . 2%!

By the way, that same policy would apply to billionaires. . .