- Obama's conservative pandering
Stop Coddling the Super-Rich
By WARREN E. BUFFETT
Published: August 14, 2011 in the New York Times
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.
- The debt-ceiling disaster was merely a symptom of much deeper problems with the ruling class in the US...
- In mid-April, the House passed Paul Ryan's Budget Plan, complete with its provision to privatise Medicare. In late May, Democrat Kathy Hochul won an upset special election in upstate New York, winning what had been over a 70 per cent GOP district just six months before. The issue that did it was her Republican opponent's expressed support for the Ryan Plan. Afterward, House Minority Leader Nancy Pelosi laid out the Democrat's campaign strategy to retake the House next year: "Medicare. Medicare. Medicare."
There was just one problem: President Obama had different ideas. Although he always speaks in carefully modulated tones, he has repeatedly placed cuts to Medicare and Social Security back onto the negotiating table, tossing politically suicidal Republicans a lifeline they will surely use to try to strangle him with next year - along with the rest of the Democratic Party.
Obama seems pathologically drawn to "move to the centre", somehow never noticing that Republicans are constantly moving the "centre" farther and farther to the right. How far to the right, exactly? Consider this: since 1984, the General Social Survey has asked Americans 18 times whether our spending on Social Security and health care is "too much", "too little" or "about right". Among self-identified conservative Republicans, just 3.4 per cent think we are spending "too much" on both.
Since Obama has repeatedly floated the idea of cutting both programmes, he seems to think that the political centre is somewhere to right of 96.6 per cent of all conservative Republicans in the population at large. When the so-called "professional left" [a derogatory coined by Obama and applied to critics of Obama] is screaming at him not to do this, they are actually speaking for almost the entire Republican electoral base as well.
- Since coming to Washington, Barack Obama has won a Nobel Prize for Peace, but he hasn’t been much of a peacemaker. Instead, he has doubled down on his predecessor’s wars while launching blatantly illegal ones of his own. But, as his supporters would be quick to point out, at least he’s standing by his pledge to bring the troops home from Iraq.
- Right?
...don’t count on cashing that check. The Washington Post brings the unsurprising news that Iraqi leaders have agreed to begin talks with the U.S. on allowing the foreign military occupation of their country to continue beyond this year – re-branded, naturally, as a mission of “training” and “support.”
- The US economy is reeling in the aftermath of poor decision making, and structural weaknesses threaten its future.
- The first act of the debt ceiling drama is over for now, with all the pundits now assessing the damage to the President, House Republicans, the economy, and more. But during the ordeal, while the politicians traded insults like carnival barkers, the real threats to America's future were ignored. It’s not simply that the country is spending money that it doesn’t have; it’s also a matter of what the money is spent on. Is the debt the result of needed investment - or waste?
Unfortunately, the US massively wastes money and resources in three critical areas, especially when compared with our international competitors: military spending, health care, and energy/transportation.
- Since he lowballed the initial stimulus, he hasn’t forcefully presented new programs to put people to work or to keep them in their homes. He’s shown no urgency, up to now, to deal with these central problems. Instead, he foolishly focused on the debt and the deficit.
- Independents will flee him in 2012 with the economy in the tank. Republicans hate him, some for thinly veiled racists reasons.
And the groups that were so enthusiastic about him last time—progressives, young people, blacks, labor, and Latinos—haven’t been exactly thrilled with his performance, and aren’t likely to beat the bushes for him this time around.
So it’s hard to see how he’ll win, unless the Republicans put up Bachmann.
- A little-known movement of radical Christians and self-proclaimed prophets wants to infiltrate government, and Rick Perry might be their man.
- Rick Perry’s November 2010 book Fed Up!: Our Fight to Save America from Washington is not a typical “campaign book” from a political candidate. For starters, its forward is written by former House Speaker Newt Gingrich, nominally one of Perry’s rivals for the nomination. For another thing, it’s overall tone much more closely resembles that of a B-list conservative radio host looking to stir up controversy and sell books than of a cautious politician trying out poll-tested lines. Consequently, while the book is by no means a good one, its certainly a lot more interesting than most comparable works. I read it over the weekend, and thus am proud to produce the following list of the Top Ten Weirdest Ideas in Rick Perry’s Fed Up:
- Not all cities are created equal. As part of Scientific American's "Cities" special topic issue, for the next five days we will feature recently compiled lists ranking cities across the U.S. on aspects of green living, pollution, health and technology. Today, we feature rankings of cities based on green living [Part 1 of 5]
- Scientists in California are reporting raised levels of radioactive chemicals in the atmosphere in the weeks following the disaster at Japan's Fukushima Daiichi nuclear power plant. The measurements are the latest evidence that the reactors melted down catastrophically.
- The government has described the leak as 'substantial' and estimates that it could be several hundred tonnes
- Historic Action to Stop Pipeline That May Push Climate Crisis Beyond Human Control...Some will react with skepticism to the sweeping tone of this title. There are so many worthy causes to pursue, and countless good people engaged in wonderful efforts to make this a better world. Yet all efforts to move humanity in a positive direction depend upon one thing -- a planet that can continue to support life. This is literally the "common ground" that binds together all activists for progressive social change. If we lose that battle, all hope for a transformed world becomes meaningless and of course impossible to manifest.
- America is a world leader in some respects, but it lags behind many countries when it comes to animal protection laws. So, where in the world are animals treated humanely? It often depends on the issue—or species—but one could argue that European Union (EU) countries tend to be kinder overall.
- William Rees of the University of British Columbia reports that human society is in a “global overshoot,” consuming 30 percent more material than is sustainable from the world’s resources. He adds that 85 countries are exceeding their domestic “bio-capacities” and compensate for their lack of local material by depleting the stocks of other countries.
- The U.S. Army suffered a record 32 suicides in July, the most since it began releasing monthly figures in 2009.The high number of deaths represents a setback for the Army, which has put a heavy focus on reducing suicides in recent years.
- Emails shared with The Indianapolis Star suggest that state Rep. Phillip Hinkle -- responding to a local posting on Craigslist -- offered a young man $80 plus tip to spend time with him Saturday night at the JW Marriott hotel.
- The emails, sent from Hinkle's publicly listed personal address, ask the young man for "a couple hours of your time tonight" and offer him cash up front, with a tip of up to $50 or $60 "for a really good time."
Stop Coddling the Super-Rich
By WARREN E. BUFFETT
Published: August 14, 2011 in the New York Times
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.
Sean
