Stop Coddling the Super-Rich by Warren Buffett

**min0 lee** · 08-15-2011, 01:21 PM

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.

**min0 lee** · 08-15-2011, 01:23 PM

**Ichigo** · 08-15-2011, 01:45 PM

To bad he's the only billionaire that feels that way.

**anxious1** · 08-15-2011, 01:45 PM

Phenomenal man.

He has written many essays, and had many speeches that reveal a masked prejudice towards the lower class. People flock to hear his investment advice, yet fail to truly understand why he is so successful. He realizes the necessity to help others, and of a true equality.

**Zaphod** · 08-15-2011, 01:47 PM

**Wookiemonster** · 08-15-2011, 01:59 PM

If he is so agianst the tax breaks given to the wealthy...why did he take them?

Lead by example.

**anxious1** · 08-15-2011, 02:16 PM

Originally Posted by Wookiemonster

If he is so agianst the tax breaks given to the wealthy...why did he take them?

Lead by example.

I believe he gave over three billion dollars away to public charities instead. Hmm government miss-use funds, or give funds directly to those in need... He also didn't say he got tax-breaks, he said he was just in a lower bracket.

**Wookiemonster** · 08-15-2011, 03:17 PM

Originally Posted by anxious1

I believe he gave over three billion dollars away to public charities instead. Hmm government miss-use funds, or give funds directly to those in need... He also didn't say he got tax-breaks, he said he was just in a lower bracket.

That's great...those that can give should.

That doesn't negate his taking the very tax breaks he is denouncing.

**anxious1** · 08-15-2011, 03:40 PM

Originally Posted by Wookiemonster

That's great...those that can give should.

That doesn't negate his taking the very tax breaks he is denouncing.

He isn't taking any tax breaks though. He is merely being taxed less, withou any tax breaks being involved...

Let's say you bought a new house in Apr. of 2010 with a household income of $35,000. The government would have given you a new home-buyers tax break of $8,000 for your taxes... Well that is a tax incentive/break. He doesn't get those at his income, he just has to pay 17.9%. All is said and done for him then. :-/

**Wookiemonster** · 08-15-2011, 03:52 PM

Originally Posted by anxious1

He isn't taking any tax breaks though. He is merely being taxed less, withou any tax breaks being involved...

Let's say you bought a new house in Apr. of 2010 with a household income of $35,000. The government would have given you a new home-buyers tax break of $8,000 for your taxes... Well that is a tax incentive/break. He doesn't get those at his income, he just has to pay 17.9%. All is said and done for him then. :-/

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

His tax bill was lowered becuase of the way certian types of income (namely those that the "rich" have) are taxed. Those special classfications on how income is taxed are tax breaks.

The entire article is about how the wealthy (including him) in this country pay less (percentage wise) in taxes than do those who make mid level incomes.

**IronAddict** · 08-15-2011, 04:07 PM

We around here have been saying this for years now.

I guess you gotta be Warren Buffett to be taking seriously!?

**maniclion** · 08-15-2011, 04:22 PM

I always like his views, he reminds me of my millionaire step-father... He didn't want any of us kids to inherit money, but instead his wisdom to make money. Had his will had not been contested I would have had just enough to get a masters degree and only work part-time, instead his daughter took everything and opened a failing Buddha sculpture store in a Hillbilly town... Buffet's children aren't trust fund slackers either...

**pawn** · 08-15-2011, 04:33 PM

good article

**irish_2003** · 08-15-2011, 04:39 PM

i've decided i no longer want to be uber rich....it's simply not worth it anymore

**TJTJ** · 08-15-2011, 04:48 PM

Where did you find this article?

**hoyle21** · 08-15-2011, 04:50 PM

Originally Posted by TJTJ

Where did you find this article?

http://http://lmgtfy.com/?q=Stop+Coddling+the+Super-Rich+by+Warren+Buffett

**irish_2003** · 08-15-2011, 04:51 PM

and why should a rich person pay a higher percent when they use a much less percent, if any at all, of the benefits from the taxes they pay in.....the opposite should happen...the more you receive, the more you should pay (in benefits that is).......in addition there shouldn't be ANY nonprofit tax benefits....you should only be able to receive benefits if you pay in taxes......survival of the fittest has unfortunately turned into strive to be average mentality in this country......the fix is to stop giving out participation trophy's in little league if they suck....they need to know how terrible losing is and it's better to be a winner

**AdmiralRichard** · 08-15-2011, 05:17 PM

With warren say stuff like that.Means he has a plan he kill the markets and Dollars all over the world, he kill more economys than most goverments.....

**MDR** · 08-15-2011, 05:23 PM

Originally Posted by TJTJ

Where did you find this article?

Article was originally published in The New York Times.

**irish_2003** · 08-15-2011, 05:27 PM

Originally Posted by MDR

Article was originally published in The New York Times.

of course it was........no surprises there

**LAM** · 08-15-2011, 07:54 PM

Originally Posted by irish_2003

and why should a rich person pay a higher percent

because they have access to methods of increasing wealth that the "common" person does not. when is the last time anyone you know got a loan for a couple of billion dollars at 0% interest? when their investments go bad it effects everyone down the ladder but when things go bad at the bottom it does not effect the top. and when their investments go good they are the only ones that benefit.

with the easy money policy from the FRB and 0% interest rates those with excess capital have to find riskier and riskier methods to make money, this is why the derivative market is hot for the capitalists right now. this or the bond market will be the cause of the next big crash and with almost 30% of homeowners being upside down right now that will soon by 50%+ with the upcoming loss of equity in homes in the near future that is almost inevitable.

**irish_2003** · 08-15-2011, 08:17 PM

Originally Posted by LAM

because they have access to methods of increasing wealth that the "common" person does not. when is the last time anyone you know got a loan for a couple of billion dollars at 0% interest? when their investments go bad it effects everyone down the ladder but when things go bad at the bottom it does not effect the top. and when their investments go good they are the only ones that benefit.

with the easy money policy from the FRB and 0% interest rates those with excess capital have to find riskier and riskier methods to make money, this is why the derivative market is hot for the capitalists right now. this or the bond market will be the cause of the next big crash and with almost 30% of homeowners being upside down right now that will soon by 50%+ with the upcoming loss of equity in homes in the near future that is almost inevitable.

create by taking away instead of building up? that's typical leftist bullshit that doesn't work and never will.......if distribution of wealth worked then those countries wouldn't be up our ass asking for continued handouts year after year........

we NEED poor people just like we need a middle class and also uber wealthy.....when taking away more people would have more, but overall everyone would have less......liberalism is a fucking disease with eradication as the only known cure.....

**LAM** · 08-15-2011, 08:26 PM

Originally Posted by irish_2003

create by taking away instead of building up? that's typical leftist bullshit that doesn't work and never will.......if distribution of wealth worked then those countries wouldn't be up our ass asking for continued handouts year after year........

we NEED poor people just like we need a middle class and also uber wealthy.....when taking away more people would have more, but overall everyone would have less......liberalism is a fucking disease with eradication as the only known cure.....

your concept of "wealth" is not in touch with reality nor do you have any knowledge at all of the US or global banking system or it's development and how it came to dominant. I grew up next door to some of the Strawbridges, Gambles and some of the Pews. they didn't need legislation in Washington to increase their profits or bogus mathematics (CPI deception) they were true entrepreneurs.

you should also probably learn what the term liberal means in economics and capitalism because it isn't an insult. it just proves how ignorant you are on the subject of capitalism when you use it.

**anxious1** · 08-15-2011, 08:33 PM

There was a study done on a small town somewhere in North Africa I believe. The study was basically to make everyone in the village have an equal amount of wealth. By giving to them some, or leaving them be. Well they watched the village over a few years and after around 3 years it was back to how it was before the study... Those who had money before by-in-large had the money again, those who were broke before were once again broke....
Those who spend, spend.
Those who save, save.
Those who invest, will invest.
There isn't going to ever be an equal distribution of wealth because people will never be identical in their fiscal habits.

(I am on my phone so I can't find the sources to cite).

**lnvanry** · 08-15-2011, 08:49 PM

The whole idea of taxing capital gains differently than income tax is ridiculous IMO...income derived from investments should be taxed as the respective salary (wages) income tax bracket.

problem #1 solved.

this requires politicians to go against every investment bank, retail bank, brokerage firm, retirement svcs provider...all of which heavily donate most candidates (both sides of the aisle).

**LAM** · 08-15-2011, 09:43 PM

Originally Posted by lnvanry

The whole idea of taxing capital gains differently than income tax is ridiculous IMO...income derived from investments should be taxed as the respective salary (wages) income tax bracket.

Check out the attachment below and the increase of capital as income over the years, it explains it all...

**KelJu** · 08-16-2011, 06:22 AM

Originally Posted by Wookiemonster

If he is so agianst the tax breaks given to the wealthy...why did he take them?

Lead by example.

Just a heads up, but you might want to steer clear of open chat if you can't spell and you don't know anything about what your posting about.

Welcome to IM!

**Zaphod** · 08-16-2011, 06:36 AM

Originally Posted by irish_2003

create by taking away instead of building up? that's typical leftist bullshit that doesn't work and never will.......if distribution of wealth worked then those countries wouldn't be up our ass asking for continued handouts year after year........

we NEED poor people just like we need a middle class and also uber wealthy.....when taking away more people would have more, but overall everyone would have less......liberalism is a fucking disease with eradication as the only known cure.....

You really need to learn how other countries and their governments work. There isn't any "redistribution of wealth" in other countries. That's a fairy tale fed to you by those who gain personally be keeping you in the dark.

**MDR** · 08-16-2011, 06:48 AM

Originally Posted by KelJu

Just a heads up, but you might want to steer clear of open chat if you can't spell and you don't know anything about what your posting about.

Welcome to IM!

Seems to me that there are a lot of regulars around here who can't spell and don't know shit about the subject they are posting about. He'll probably feel right at home.

**Zaphod** · 08-16-2011, 07:12 AM

Originally Posted by Wookiemonster

That's great...those that can give should.

That doesn't negate his taking the very tax breaks he is denouncing.

Buffett is all about making money. Right now he's making more money because he's getting taxed less, percentage-wise. He is still going to make money regardless of how much he gets taxed because that's what he does. He's saying that people like himself should be taxed more because they can afford it and that the public perception that the super rich will just close up shop and leave is just a load of bullshit.

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