Warren Buffet speaks common sense; alarms most Republicans

[Ben Kenobi]

They guy has pledged tens of billions of dollars to the Gates Foundation. He's obviously a greedy scumbag

WTF does that have to do with the price of tea in China?

If the man believes that he should be paying more in taxes, why then does he take advantage of tax loopholes to reduce his tax burden?

[giblets]

WTF does that have to do with the price of tea in China?

If the man believes that he should be paying more in taxes, why then does he take advantage of tax loopholes to reduce his tax burden?

What tax loopholes?

[Felch]

Buffet is behaving rationally, while at the same time urging reform. There's nothing wrong with what he's doing.

[Ben Kenobi]

Buffet is behaving rationally, while at the same time urging reform. There's nothing wrong with what he's doing.

So he was for tax loopholes before he was against them?

[Felch]

I don't know what Buffet was thinking in the past. He doesn't even seem to be talking about loopholes here. The issues are payroll taxes, which are a regressive burden on even the poorest Americans, and the disparity between earned and unearned income tax rates.

[OneFootInTheGrave]

Ben is one of the funniest posters around.

QFT

[DinoDoc]

Why would there be any concern, he is free to donate as much as he wants to the government. The question is why doesnt he despite his words to the contrary.

They even have a website dedicated to promoting the fact that people can pay extra to the federal government if they feel under taxed: http://www.treasurydirect.gov/govt/r.../gift/gift.htm

[Asher]

I'm really pleased that I had successfully predicted most GOP supporters (sans Felch ) miss the big picture because they won't like what they see.

[Zevico]

I'm really pleased that I had successfully predicted most GOP supporters (sans Felch ) miss the big picture because they won't like what they see.

Tax hikes or no, the Democrats and Republicans haven't had a plan to pay back the debt for years, including years in which they were both in the majority. To the contrary: despite talking about its dangers, they persist in increasing the sum of debt owed by their nation.

Until both parties present and argue their case in favour of comprehensive plans to pay back the debt and get the US budget back into surplus, a tax hike here or there will be like applying a band aid to a decapitated arm. It's a distraction. It simply won't do the job.

[Lorizael]

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.

Under a more rational measure, Buffett's effective tax rate was more like 98%...

What's the more rational measure? And what is the average tax rate under this more rational measure?

[Imran Siddiqui]

Buffet is behaving rationally, while at the same time urging reform. There's nothing wrong with what he's doing.

Indeed. This is a perfect encapsulation.

People would be calling him stupid if he didn't take advantage. He's simply saying that tax policy should be structured so that rational actors, such as himself, should be paying more under the system.

[Jaguar]

What's the more rational measure? And what is the average tax rate under this more rational measure?

I can answer this for him, because I know exactly what he's getting at.

The number next to Warren Buffett's name in the Forbes 500 list is just that: a number. It represents claims on resources, of course - massive claims on amounts incomprehensible to the average American. But the key is that 98% of these claims are never redeemed. 98% of his claims on wealth will go to someone else.

Buffett himself understands this:

I don't have a problem with guilt about money. The way I see it is that my money represents an enormous number of claim checks on society. It's like I have these little pieces of paper that I can turn into consumption. If I wanted to, I could hire 10,000 people to do nothing but paint my picture every day for the rest of my life. And the GDP would go up. But the utility of the product would be zilch, and I would be keeping those 10,000 people from doing AIDS research, or teaching, or nursing. I don't do that though. I don't use very many of those claim checks. There's nothing material I want very much. I'm going to give virtually all of those claim checks to charity when my wife and I die.

Buffett's claims on wealth aren't taken away by the force of the IRS, but it doesn't matter. Mr. Buffett pays a 98% tax rate to society anyway, in that he will only spend perhaps 2% of the wealth he has earned on himself. "Taxing" him will not change his behavior or force him to sell his house in Omaha or create massive amounts of new food for the hungry. All it will do is transfer some claim checks (dollars) from accounts in Buffett's name (and eventually, the charities that Buffett leaves the dollars to) to the federal government, which can just print dollars anyway.

[Ogie Oglethorpe]

Buffet is one of the 'good' rich people who donate to many charities (most of it tax deductable- in other words other tax payers make up the difference or here is a shortage of money.) Many rich people aren't as nice.

By that you mean he feels his philanthopy is better suited to reflect his personal preferences and/or believes that he is more efficient with his philanthropy than allowing the government access to his wealth.

Unbelievable!!

[Jaguar]

People like Asher who (I'm sorry) don't understand economics whatsoever tend to fall for a particular trap when it comes to wealth in a currency-based society, and they end up with the following fallacy:

Asher looks at Buffett (or, let's do this better and take an "unvirtuous" rich person: Jim Walton) and sees the numbers next to their names in the Forbes list, and thinks there's massive wealth there for the taking; if only we could spread that wealth to the needy! But that wealth is equivalent to a gift card that you never use. It doesn't take anything of value from anyone.

Jim Walton, who hasn't yet made any sort of philanthropic pledge, just lives in his house in Arkansas without going on massive spending sprees, and he works for a bank. He accrues billions in capital gains each year and reinvests it. Asher thinks that we can tax Walton and acquire more valuable things for the needy.

We can't. It doesn't matter that Jim Walton has an 11-figure net worth and I have a 6-figure net worth. What matters is that when he eats a cheeseburger, he uses the same kind of ketchup that I do: Heinz - available at the stores that Walton's father built for $2.54 a bottle.

Walton could buy the entire stock of ketchup available on earth. Easily. And it would suck if he did. He'd be depriving society of valuable food when many are hungry. But he doesn't do that. There's no hoard of food represented by Walton's money. Asher sees his $20 billion and thinks that there's enough to feed a billion starving people for a month. But it's just an illusion. If the government taxed every last bit of Walton's $20 billion, it wouldn't have food for the hungry. It would have pieces of paper that it can already print at will.

The problem of wealth inequality does exist, but it has absolutely nothing to do with the electrons buzzing around in computers on Wall Street, or the numbers that Forbes magazine prints next to people's names. Those are meaningless unless they're converted into actual physical items.

If you morally object to some people having three homes when others have zero, I do not blame you. If you morally object to politicians wearing Hickey Freeman suits, hand-stitched in Rochester, NY, while others are ill-clad, that is a perfectly valid opinion. If you object to a society that builds Country Clubs and Aston Martins or even Macbook Pros despite crippling poverty elsewhere in the world, that's fine.

If you object to the number next to Larry Ellison's name in the Forbes Magazine, you're an idiot.

[giblets]

Asher sees his $20 billion and thinks that there's enough to feed a billion starving people for a month. But it's just an illusion. If the government taxed every last bit of Walton's $20 billion, it wouldn't have food for the hungry. It would have pieces of paper that it can already print at will.

Uhh... taxing Warren Buffet prevents him from making investments, making room in the country's productive capacity for whatever the government buys with the money.