Warren Buffett: "Stop Coddling the Super-Rich"
In Monday’s NY Times, the paper's editors call out the administration and Congress on their"triumph of bad policy and craven politics," concerning job creation. Meanwhile, Warren Buffett rips Washington a new one on taxes as he opens up his op-ed column by stating, “OUR leaders have asked for ‘shared sacrifice.’ But when they did the asking, they spared me…”
Stop Coddling the Super-Rich
By WARREN E. BUFFETT
New York Times Op-Ed
August 15, 2011
…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…
Buffet continues on to explain that the wealthy pay income taxes primarily based upon the capital gains tax, which is 15%, but they pay “practically nothing in payroll taxes.” He notes,“It’s a different story for the middle class,” whose incomes typically end up in the 15% or 25% brackets, but “then are hit with heavy payroll taxes to boot.”
He reminds us that as recently as the '80s and '90s, taxes were much higher for the wealthiest in America. And, in one of my favorite pair of sentences in his piece, he states, “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.”
At this point in his column, he rips to shreds the entire corporate Democrat and Republican job-creation meme about taxes scaring off the job-creators, simply by reminding us that 40 million jobs were added in the 20-year period between 1980-2000. And, since then, there’s been lower taxes, and far lower job creation.
Referencing I.R.S. data and putting this all in context, Buffett tells us that, at the very highest income level for the 400 most successful Americans that submitted returns to the I.R.S. in 1992, they had total income of $16.9 billion and they paid federal taxes of 29.2%. By 2008, the income of the top 400 people reporting to the I.R.S. had risen to $90.9 billion, but they only paid federal taxes of 21.5%.
Returning to the income tax disparity issue, he also notes that 88 of the top 400 earners in 2008 reported no wages, at all; but all 88 of them reported capital gains.
He then shifts over to the "Gang of Twelve" in Congress, who “will soon take on the crucial job of rearranging our country’s finances.”
He then states…
… 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…
He suggests leaving tax rates for 99.7% of taxpayers unchanged, along with maintaining the current 2% reduction in the the employee’s contribution to the payroll tax. He states, “This cut helps the poor and the middle class, who need every break they can get.”
He further proposes immediately raising rates on the 236,883 U.S. household that, in 2009, earned more than $1 million, including having those tax increases apply to dividends and capital gains. And, for households making more than $10 million, of which there were in 8,274 in 2009, he believes taxes should be raised even more on them. He closes out his column with the following statement…
…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.
Meanwhile, also in the opinion section of Monday’s NYT, the Times’ editors cite the administration’s jobs agenda as “thin,” in their editorial entitled, “A Jobs Agenda, Anyone?”(Frankly, I think they’re being quite polite about it.)
A Jobs Agenda, Anyone?
New York Times
August 15, 2011
In what can only be described as a triumph of bad policy and craven politics, Congress and the Obama administration have spent the year focused on budget cuts, as the economy has faltered and unemployment has worsened. Official unemployment is 9.1 percent, but it would be 16.1 percent, or 25.1 million people, if it included those who can only find part-time jobs and those who have given up looking for work. For the past two and a half years, there have been more than four unemployed workers for every job opening, a record high, by far. In a healthy market, the ratio would be about one to one.
By a large margin, Americans have told pollsters that job creation is more important than budget cuts. Yet Republican leaders are wedded to austerity and appear to think that high unemployment will hurt President Obama politically more than it will hurt them, so they will likely resist efforts to create jobs, no matter how great the need.
Without more jobs, both the economy and the budget will deteriorate further. It is past time for Mr. Obama to send a jobs plan to Congress that has popular appeal, one that he can use to try to shame Republicans. He will need cooperation from the Senate, which should bring one jobs-related bill after another to the floor, forcing its members to approve jobs initiatives or go on the record to show that they just don’t care.
Mr. Obama has begun to talk more about jobs, but his agenda is thin…
Read the whole thing. It’s well worth it!