Warren Buffett on Taxing the Mega-Rich

Aug 15th, 2011 | By Sharon Shaw Elrod MSW EdD | Category: Social Security & Medicare

Shared Sacrifice Should Include the Mega-Rich

An opinion article by Warren Buffett in the August 14, New York Times, confirms what SCJ has been writing about for over a year now.  He says, “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.”

Now let me get this straight.  We senior citizens are expected to cave in to demands to increase the retirement age, lose some Medicare benefits and look forward to changes in both Medicare and Social Security that could impact our very survival.  Half of us over 65 struggle to live on about $1200 a month Social Security benefit.  The rest of us have some additional income from part time work and/or pensions.  By 2020, there will be more than 50 millions of us in the United States alone.  Thousands of us buy food only after we’ve paid the rent and the electric bill.  We’re struggling, but we’re making it.  Barely.

And Congress has seen fit to coddle the mega-rich and insure they don’t have any tax increases.  Warren says this,

“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.” (New York Times)

The inequity in who shares in sacrifices that must be made is startling.  The IRS revealed some income and tax figures that blew us out of the water today: “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.” (New York Times)

Mega-Rich and New Job Creation: Another Myth

The argument that the mega-rich cannot pay any more taxes because they have to have that money to use to create jobs holds absolutely no water either.  Back in the ’80s and ’90s, tax rates for the rich were higher than they are now.  Warren and his mega-rich friends continued to invest their money and unemployment was much lower than it is now.  He says, “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. (emphasis added) 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. (italics added) You know what’s happened since then: lower tax rates and far lower job creation.” (New York Times)

These are Warren’s suggestions to the Committee of 12 appointed to rearrange finances in the US:

  • “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. (emphasis and italics added)
  • 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.

Thank you, Mr Buffett, for your lifelong commitment to doing what’s right, and not being afraid to say so.  Let’s hope this knocks some sense into our elected officials in Washington DC.

 



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  1. [...] SCJ has talked about this in the past, but now that there is a concerted effort to pass legislation about it, it’s time to look at the Buffett Rule again.// It’s really pretty simple.  Omaha billionaire, Warren Buffett, has been rather candid about the fact that his income tax rate is less than that of his secretary.  He believes, as do many senior citizens, that millionaires and billionaires should not pay less in taxes as a share of their income than middle class families pay — as a matter of fairness. In fact, if the wealthy paid the same share of their income as middle class families pay, (including lifting the payroll tax ceiling), the debt issues would be significantly addressed and the conversation about what should happen to Social Security and Medicare would go away. [...]

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