All of the comments here attacking Warren Buffett's authenticity, suggesting that he should put his money where his mouth is and write the Treasury a big fat check, are missing the whole point.
Services provided by the government are public goods. It's blindingly obvious that a single person cannot pay for those public goods. Just Buffett's own contributions, no matter how much he donates, will not be enough to solve our budget issue. It's called shared sacrifice because it's meaningless unless everyone participates.
It's like the neighborhood park (i.e. medicare/social security): Everyone wants one, but nobody wants to pay for it. In steps the neighborhood's rich kid (Buffett), who suggests that all the rich kids pitch in to pay for the park. If that happened, everyone would be made better off, but one kid alone isn't enough.
This is a very canonical problem of public services provisioning and funding. It's completely naive to sit back and suggest Buffett tackle the issue himself, because we all know that's ridiculous.
Open your eyes. The problem is not Buffett's to solve. But he recognizes that there is a problem.
Apologies for the harsh tone, but it baffles me how members of Hacker News can think so naively. The attacks on Buffett are utterly unfair and unjustified. We should all have an open mind and try to understand the proposal.
I don't know, but I would assume so. I think most people try to pay the minimum tax they are required to, and I guess that includes Mr Buffet.
However, that's not the point. He's not saying "I want to personally pay more tax", he's saying "Why are people like me not being required to pay the same percentage tax as middle-income earners"?
OK, what about the many "breaks and loopholes." for the other tax brackets? I'm in the 25% bracket (Married filing jointly, $68,001 - $137,300) and I paid under 6% effective rate for each of the last few years.
Buffet is not talking about income tax. He's talking about capital gains taxes, since most wealthy people are making money from investments, not paychecks.
Wouldn't you if you had tons of money?, especially if all the other "rich kids" are doing the same?. If you expect people to always do the altruistic thing then be prepared for a life full of disappointment. The best you can do is try to shape peoples behavior.
Personally I would prefer a flat percentage rate of tax with an exception for very low incomes where it just isn't worth the governments time trying to collect it.
This would probably raise most peoples tax and lower rich peoples tax but I believe it is "fairer" for everybody to pay the same fixed proportion of their income. At the same time though I would simplify business taxes as well, get rid of loopholes, stop companies that do business in a country off shoring their profits. It is insane that some companies view their accounting departments as profit centers.
Flat tax economies boom, and they are progressive in the sense that there is no penalty for trying to earn more money.
> a flat percentage rate of tax with an exception for very low incomes
That's not a flat tax, then, is it? It's progressive with two bands, 0% and x%.
There is a real case for tax simplification, but the progressive nature of income tax is probably the simplest thing in the entire tax code! It's the classification of different kinds of income and capital gains, exemptions and penalties for particular uses of money/assets that makes it challenging and is the reason there is real money in tax avoidance. Don't throw out the baby with the bath water.
Finally, a progressive tax means higher earners pay a larger proportion of their income than lower earners. It's hard to gauge the validity of your argument when your assertions run contrary to the definitions of the words you use.
The reason I put fairer in quotes is because it is a term that can be argued over.
Yes two bands, with the focus on making it attractive for people to earn money and pay tax, ideally the 0% band would be just enough to clothe, feed yourself and pay rent in a bad neighbourhood.
Progressive is a word that seems to mean different things to the left and the right, I notice you didn't define it.
As I said a flat tax is economically progressive because it doesn't discourage people from trying to earn more money.
At the moment you have people buying houses they don't need or using complex financial instruments just to do something with their money because if they don't they will get taxed more. Investing this money for the sake of it is not always beneficial to the economy or society, I favour a persons right to choose what to do with their own money.
I am coming from this from a libertarian perspective, whether you earn 50k a year or 500k the government should not be taking a higher percentage from you than other people. Especially considering that with a percentage rate whilst the proportion is the same, the actual amount of tax high earners pay is greater (which is socially progressive enough for me, but perhaps not for you). I believe I am using the word proportion correctly here, but if not please feel free to let me know how I have got it wrong.
Here in the UK the top rate of tax is 50%. I doubt I will ever be taxed at that rate but the government taking half a persons income scares me a little, no wonder people try to move their money around so the taxman can't get at it.
'Progressive' as used in the same context as your original post is basically a placeholder for 'benefiting the groups I care about'. It's not a meaningful word to use, and you even know that. Contrast with 'progressive tax', which is well-defined.
I don't understand the line of thinking which effectively says "people don't want to earn £2 if they have to pay £1 in tax". Erm, you're still richer than you were if you didn't earn more. The only possible argument against this is if earning another £100k takes more amount of effort it took to earn your first £100k. But if you know anything about making money it doesn't work that way. With more capital comes greater opportunities. You can afford an accountant to manage your money, you have more investment options, and so forth; and you still have enough to spare for a comfortable lifestyle.
A flat tax implies that a dollar is worth just as much to Warren Buffett as it is to someone flipping burgers, which demonstrates a complete lack of perspective.
Put it this way: everyone's living expenses are, say, £12k. now if you're earning a median wage that leaves you £10k to invest how you like. If you're earning £50k you get to invest £38k. assuming the schemes offer the same rate of return, guess who is going to amass £50k first? Hint: it's not the guy who has to get a 5x return on his investment.
The higher rate income tax is an incentive to invest the money you receive back into the economy via business or charity, where it is taxed at a lower rate or even not at all, rather than spent on your own personal gain. Why should it scare you that the government would take that money? BTW, investment in financial instruments of dubious benefit is giving money to the financial system (this should really be obvious...) so it does contribute to the economy, but there are almost certainly better ways to do so.
The problem with the libertarian perspective is that it irrationally assumes the best of people when there is no incentive for them to do so. If a billionnaire can afford to fund all the services he requires that someone on the poverty line would depend on government for, why should the billionnaire give his money away? If you want a society you have an obligation to provide for one, if you believe it is unfair that someone with broader shoulders should carry more weight, then perhaps you should consider how fair it is that he has broader shoulders and others do not.
> The problem with the libertarian perspective is that it irrationally assumes the best of people when there is no incentive for them to do so.
I assume no such thing about people regardless of whether they are rich or poor.
I think crux of our disagreement is about the involvement of government in peoples lives. I heard a quote recently, "The more the government tries to do the less well it does everything", I might have mangled that slightly.
Your supposition is that we need the government to force us to be nice and act in a way that is beneficial to society, if so isn't that a losing proposition from the outset?. Who is the moral arbiter here?, I would really like to minimize the amount of situations where government passes judgement on its citizens.
What I am really against is mob rule, the state is a necessary evil, a large state is a larger evil.
I am convinced that while the last century's politics was dominated by left versus right, this century will be dominated by authoritarian versus libertarian. The world isn't black and white, in certain situations we can't avoid making those kind of judgements but where we can avoid it we should.
> I think crux of our disagreement is about the involvement of government in peoples lives.
The involvement of government in particular does not concern me.
My concern is the involvement of any powerful group.
If all you seek is a reduction of the state, you leave a void waiting to be filled by corporatocracy.
The argument of left vs. right, authoritarian vs. libertarianism is a red herring, what really matters is the distribution of power. Given that money is approximately power and that the government is more accountable to me than an individual, I have no qualms about the higher tax rate.
We are probably in agreement with regards to your last statement.
I think one of the major themes of politics to come will be the separation of business and state (much like how America pioneered the separation of church and state).
This will require a shift in society though, most voters see it as the governments job to manage the economy and help it grow. But corporate welfare is as damaging to business as social welfare is to individuals.
This is unfortunately a very gray area, at what point do tax breaks stop "encouraging" business versus at what point do businesses become dependent on them?. The inequality is what bothers me most, small businesses paying a higher percentage of tax than big businesses, the percentage should be the same.
I don't believe we can get there by regulation alone, citizens have to care as well, although I do concede that regulation may be necessary to a certain extent.
> if earning another £100k takes more amount of effort it took to earn your first £100k.
That's not the issue. The issue is that the 2nd 100k is worth less in terms of happiness than the first.
Various studies have shown that after around 80,000 peoples happiness is proportional to the amount of money they earn, and after that it levels out.
Thus if one didn't really care too much about that 2nd 100k, making it merely 50k might just be enough for the person to throw up their hands and say "its not worth it, I'll spend the weekends at home instead of at work".
>Progressive is a word that seems to mean different things to the left and the right, I notice you didn't define it.
"Progressive" has a very specific meaning when you're discussing tax structure, independent of its political meaning. Specifically, a progressive tax is one in which the effective rate you pay rises with income.
It's a word that has been at best deliberately overloaded, and at worst hijacked. Who would want to stand in the way of "progress"? It could equally well mean, the more you earn they more you get to keep.
No, it is a description of the tax code. It is not a judgement of the tax code. It is a 'progressive tax' or 'progressive tax rate'. It has nothing to do with 'progress' or the 'Progressive party'.
You clearly don't understand what the definition of 'progressive' tax is. It's 'progressive' in the sense that marginal tax rates increase as you make more money.
It is not 'progressive' as in 'progressive politics' or 'economic progress' or any other left or right politics.
Saying something is a 'pregressive tax' isn't a value judgement , it is just a description of the curve of the tax rate, i.e. the opposite of a regressive tax. As for 'discouraging people from trying to earn more money', that is a debate about rates but remember marginal tax rates never allow a situation where making a higher salary would leave you with less net income.
Of course it's relevant. At his level, he can pay however much tax he wants, anywhere in the world, and this will always be the case. What he's calling for is other people paying more tax.
You fundamentally miss his point. Even without finding a thousand loopholes to get out of his taxes, he will pay a lower percentage just based on HOW he makes his money.
1) The payroll tax is capped, so a guy making exactly the income it is capped at, and a guy making 100x that, pay exactly the same payroll tax. No accountant required and it is an enormous difference. For Warren, that is millions of dollars right there.
2) Money made from investments is taxed at a lower rate than salary, EVEN IF INVESTING IS YOUR JOB. I personally believe that money you have paid taxes on before should never have capital gains taxes on it - basically you are getting taxed twice. If I choose to take my money and invest it and then buy a car later I pay more tax than a guy who just takes his money and buys a car. So i'm not fan of capital gains taxes. But a guy who gets paid by investing and has no other income should be paying income taxes, not capital gains taxes. How you distinguish the two is definitely hard, but smarter people than me can figure out a way to make that happen.
I would also note that it is worthwhile to be wary of the "double tax" rhetoric. At best, it is an ideological point of dubious worth - i.e., that there is a moral injustice in taxing some money twice. How much moral injustice? Well, I don't know - how much worse is it really than the idea of taxation itself? If I'm okay with being taxed, I'm probably more concerned with how much I'm being taxed, how fair it is compared to other folks, etc., than I am with whether it's two smaller taxes vs. one larger one.
At worst, though, it's a shell game that distracts from what's really going on in the tax code. In everything I've seen, taxes occur on transactions, not on stored wealth. So it's pretty easy to point at any income and outflow and argue that the money itself is being taxed twice. One could argue that the sales tax is a double tax - I'm paying income tax when I earn my paycheck, and then sales tax on the same paycheck when I spend it on groceries.
Anyway - in your example, the non-investor pays taxes on, let's say, $50k of income, then buys a car with it. The investor pays taxes on, let's say, $40k of income, invests it shrewdly, then takes the final $50k out of the investment and buys a car. The non-investor pays income tax on his $50k; the investor pays income tax on $40k, then capital gains on the $10k he made on the market.
The government could have easily taxed the investor on the entire amount withdrawn. That would obviously be pretty dumb, though.
"He did the bookkeeping himself and prepared his own tax returns. With its numbers, accuracy, and the measuring of results, the recordkeeping aspect of the job pleased him."
[...]
"Warren was still handling all the money and doing all the clerical work himself: filing the tax returns,..."
[...]
"'Bill started trying to convince me to get a computer. I said, I don’t know what it’s going to do for me. I don’t care how my stock portfolio is doing every five minutes. And I can do my income taxes in my head.'"
Seems like indeed he is doing them himself (his personal tax bill; to do it for Berkshire, they surely have hired help)
He does not need to do anything unusual to avoid paying taxes because the law is setup to give him such a low rate. One of my aunts was once audited by the IRS who is not going to do anything creative to help people out. Net result, her rebate was close to 1 million. She had a fairly competent Accountant and good records but several minor rules helped her out.
Buffet's receptionists should get a good tax guy. With the availability of tax breaks for even middle class income ranges there is no reason his receptionists should be paying more.
The phrase was used by Dr. Garrett Hardin in his 1968 essay on global overpopulation, "The Tragedy of the Commons".
Oh, and the example Hardin explicitly cited as an example of mutual coercion? Taxes:
"Who enjoys taxes? We all grumble about them. But we accept compulsory taxes because we recognize that voluntary taxes would favor the conscienceless. We institute and (grumblingly) support taxes and other coercive devices to escape the horror of the commons."
I honestly don't understand your question. I don't mean that statement to be argumentative – I really don't understand.
Are you saying the top 1% should pay what I paid in taxes last year? I paid around $100k. I'm not sure why someone making millions to billions a year should only pay $100k. If you assert I should pay the same as high-income individuals, should someone making far less than I am also pay $100k?
To flip it around, if you assert someone making less than me should not pay the same dollar amount as me, then why should someone making many orders of magnitude more than me pay the same dollar amount?
Now then, if I assume you're asserting the mega-rich should pay the same percentage as me, then we both agree that Buffett should pay more. My tax rate was 23% while Buffett's was only 17%.
How ever you slice it, someone's going to have to pay more than someone else. Either the poor need to pay less since they can't afford the flat dollar rate that's established, or the rich need to pay more because the flat percentage rate means they owe more.
Thus, I don't understand your question – it seems logical that, given any taxation system, the rich should pay more. Am I missing something?
I was just trying to point out the fact that taxes is one of the few (if not only thing) that is almost always paid as a percentage of income.
This messes up how people see taxes and how the burden is distributed. And make people say things like Warren Buffent pays less taxes than I do.
You don't buy soldiers, schools, police officers and roads with percentage of incomes. You buy them with dollars, which is why I argue that we should measure the paid tax in dollars and realize that the rich already pay the largest share of it.
Since they don't actually use more government services (they properly use less, but that is another matter) I can't see the problem with reducing the amount paid by the highest income earners.
Although the rich do not necessarily use more of some services (i.e. food stamps), they benefit the most from government's main role: That of protecting property, ensuring safety/stability, and enforcing the law and contracts.
"It's blindingly obvious that a single person cannot pay for those public goods." ... "It's called shared sacrifice because it's meaningless unless everyone participates."
Huh? By this logic, taxes are "meaningless" unless everyone pays taxes. However, many poor and lower-income people do not pay income taxes. Does that render the income tax "meaningless"?
Also, the claim that it's "like the neighborhood park... [e]veryone wants one, but no one wants to pay for it" is absurd. We see many examples of charitable contributions made by the rich and the middle class which are used to purchase public goods such as museums, nature preserves and the like.
When push comes to shove, what Buffet really wants -- and what you are advocating when you say that no matter how much money he donates, it "will not be enough to solve our budget issues" -- is an increase in the size of government fueled by higher taxes, rather than a diminution of its scope by reducing the funds made available to it.
A bigger government benefits crony capitalists like Buffet, because they have sufficient power and influence to ensure that the goodies that can be redistributed by the Leviathan are steered their way. I wish Buffet would be honest enough to say that, rather than bloviating about how terrible it is that he doesn't pay enough taxes when he is unwilling to take the obvious direct action necessary to rectify that unfortunate situation.
You have so completely missed the point I'm not sure it's worth arguing with you, but imagine for a moment that the additional revenue from closing loopholes on the rich was used to lower payroll taxes on the average working man, lowering the cost of employment...
> Also, the claim that it's "like the neighborhood park... [e]veryone
> wants one, but no one wants to pay for it" is absurd. We see many
> examples of charitable contributions made by the rich and the middle
> class which are used to purchase public goods such as museums, nature
> preserves and the like.
We also see many cases of governments which have much higher tax rates than ours and provide fantastic public services.
> When push comes to shove, what Buffet really wants -- and what you are
> advocating when you say that no matter how much money he donates, it
> "will not be enough to solve our budget issues" -- is an increase in the
> size of government fueled by higher taxes, rather than a diminution of
> its scope by reducing the funds made available to it.
Being blunt: How do you know what Buffett really wants, or what orijing is really advocating? You've just described how you perceive Buffett's motives and orijing's assertions.
And why present this as a "lower taxes vs. smaller government" issue? That seems incredibly disingenuous. What is truly being advocated by many is a combination of both. What's the best way to solve a debt issue? Increase income while also decreasing spending. Why cripple the process by ignoring half the solution?
> A bigger government benefits crony capitalists like Buffet, because they
> have sufficient power and influence to ensure that the goodies that can
> be redistributed by the Leviathan are steered their way. I wish Buffet
> would be honest enough to say that, rather than bloviating about how
> terrible it is that he doesn't pay enough taxes when he is unwilling to
> take the obvious direct action necessary to rectify that unfortunate
> situation.
What evidence do you have of Buffett benefiting from government programs, or having taken advantage of cronyism? Honest question – he very well may have significantly increased his wealth from connections with other "crony capitalists". I have no evidence either way.
That said, do we need to look at past examples of when aggressive government spending has helped individuals or small companies? Once again, this doesn't need to be a black and white world – as the spender of last resort, the government can provide liquidity and resources to individuals, small companies, and large companies when no one else is willing to take the risk. Yes, some people may profit immensely as a result. Does that mean those programs were wrong? And a bigger government doesn't have to only benefit "crony capitalists"...
I don't understand why a holistic view is so rarely considered in these discussions. Rather than making this an "right vs. wrong", "rich vs. poor", "liberal vs. conservative", "communist vs. capitalist" argument, let's make it a discussion to find the best solution to our problems. Only then will we actually solve the problems our country faces.
While strictly true, this statement ignores all the other taxes that people pay. Rather than rehashing the entire conversation, I'll simply point you towards the thread where this was previously addressed:
http://news.ycombinator.com/item?id=2885574
The problem is getting low to middle income people to stop voting against themselves. Good luck with that, they all seem to think they are going to be billionaires someday so better keep those billionaire taxes low.
Either that or by bribing the wealthy with low taxes they might only ship out half the jobs overseas instead of all of them.
It's just dumbfounding. Election after election, over and over.
"The great bulk of the legal voters of the South were men who owned no slaves; their homes were generally in the hills and poor country; their facilities for educating their children, even up to the point of reading and writing, were very limited; their interest in the contest was very meagre—what there was, if they had been capable of seeing it, was with the North; they too needed emancipation.
-Ulysses S. Grant
People fighting or voting against their own self interest has gone on for a long time, sadly.
I've come to the conclusion that the logic becomes "well if I can't have it, no-one will". People basically trying to take away assistance/help to others by trying to vote it away from everyone, since they somehow perceive themselves as better than others suffering on the lower rungs on society.
This also explains why people try to vote away unions and benefits for teachers/schools, the very foundation of society, while they are okay with CEOs having multi-million annual stock bonuses while getting paid $1 to dodge taxes.
The biggest scam is that the wealthy have managed to convince even the poorest that they are just a "little hard work" away from being a successful owner of family business or the next Donald Trump. It is the American Dream.
So ... they should vote accordingly and just get their future selves those nice tax cuts for when they become wealthy.
There is also the good'ol "trickle down" trick. Vote for us and we'll trickle it down, we promise...
Steinbeck: “Socialism never took root in America because the poor see themselves not as an exploited proletariat, but as temporarily embarrassed millionaires.”
I was pretty surprised when I learned about Huey Long - he was a genuinely left-wing US pre-war politician (including Governor of Louisiana and Senator).
I think your last sentence is painfully false. I don't think most people are OK with CEOs dodging taxes. I also don't think they have the slightest clue (I sure don't..) of what to do with it. These things are decided in the details (capital gains vs income in this case) that I think can very easily fly past most people. Then it comes down to rhetoric/politics, and no one ends up winning once it's at that point.
I also don't think that people are trying to vote away unions and benefits for teachers/schools, but unions/benefits for crappy teachers/schools. It's incredibly difficult for schools to get rid of bad teachers, and a decent number of people come into contact with it. This doesn't do anything for the other side of the equation — getting less bad teachers, but again, I don't think spite is the reason people vote against teachers unions.
"I've come to the conclusion that the logic becomes "well if I can't have it, no-one will"."
I don't think the poor who consistently vote Republican really care about the economics of social services. That's too removed and abstract a concept for them (ironic, given that it affects them directly). Instead, they're voting emotionally: on social values, and on the politics of identity and nationalism. These abstract concepts are very "real" to a lot of Americans, because they're the things people cling to and hold fast when everything else is taken from them.
Bear in mind that a lot of these people have seen social values work for them amidst their own circumstances. Those among them who work their asses off, keep out of trouble, go to church, stay clean, and don't overspend will do markedly better than their peers who slack off, abuse government assistance, and engage in reckless behavior. Meanwhile, a preponderance of military personnel are drawn from the families of the working poor -- so these folks eat, breathe, and sleep patriotism. They love America, even if the version of "America" they love is largely a myth.
Republicans have become masters of speaking the language of identity politics and values. They understand what tune these guys want to dance to, and they play it flawlessly. Meanwhile, Democrats are tonedeaf. Nevermind that Democrats may actually have the interests of the little guy in mind; they don't speak the little guy's language. And that makes all the difference.
Case in point: the Democrats consistently talk about "the middle class," and sometimes "the working class" or "the poor." Meanwhile, Republicans always talk about "Americans." They rarely even speak of classes or social divides. It's a brilliant rhetorical gesture, because it recognizes that the working classes don't enjoy hearing about how shitty their lives are. They don't like the labels. If you ask them, many of them won't even agree that they're "working class" or "poor." They're in denial, and it's a defiant denial. They're too proud to face reality, and when Dems constantly throw the reality of their misery in their faces, they get angry and resentful.
There is a huge difference between voting on compensation for public employees, and punitive taxation on private employees.
Plus the vast majority wouldn't vote for teacher pay cuts. There are a few exceptions, but look at the trends for education spending. America spends more per capita on education than most developed countries.
I keep trying to formulate my take on this, and failing, but here goes anyway:
The democratic party and American leftists no longer understand non-college working people and, for the most part, no longer reach out to them. Working people think that the left today advocates either for weirdos or for the completely screwed up, and wants everybody to pay for its programs to help said weirdos and fuckups. There is some valid reason for this impression, with the Great Society programs and affirmative action in the sixties and seventies being partly funded by taxes on the middle classes, along with fiascos like school bussing and over-compensated hiring practices screwing over people who didn't feel like they deserved it. (And poor management of government agencies making them ineffective at cost effective delivery of services.)
However, working people don't see themselves as fuckups (because they're not), and they don't have a lot of patience with weirdos. So they aren't going to feel comfortable with the gay marriage/ social worker part of the left (the old union guys were socially very conservative for the most part).
Also, most of the left today seems to me to be made up of people who really have no connection to actual poor working class people, so there is automatically a divide that is mobilized by the Karl Roves of the world.
Furthermore, if you have ever been lower middle class or "working poor", you learn early that very traditional personal character values can make the difference between you and your family living in a truly shitty situation or rising out of the muck around you to actually have a decent marriage/ nice friends/ safe home. So when college educated lefties come around and tell them to have pity on fuckups and weirdos because its society's fault, or that personal character and traditional values don't matter, any working class person is likely to tell them to go to hell.
So today's Republicans mobilize personal character rhetoric, traditionalism rhetoric, and the cultural non-understanding between leftist leadership and working people, and -- voila, working people voting against their own interests.
Until the left figures out the working classes again -- which means taking the time to show up in the middle of the country, go to church, eat ribs, etc, etc -- Capital will continue to screw everyone. So quit whining about how stupid working class people are -- nobody represents their interests today, neither left nor right, but at least the Republicans pretend.
I think your analysis is close to home, but with one huge caveat: it really only applies solidly to the white working class, which is these days only about half the working class (though it depends on how you define "working class"). The black and hispanic working classes, which are a large portion of the country, are strongly organized within the Democratic Party, though the hispanic working class is a bit more split.
There are plenty of disconnects between them and the white middle-class wing of the party as well, especially around issues like gay marriage and separation of church/state, which tend to be seen as "rich white liberal" issues. But I think it's a bit more complicated than simple conservatism, and it's often more than balanced by significant left-leaning sentiment on economic issues. There is, for example, huge support for social safety nets, welfare systems, socialized healthcare, etc., among the non-white working class. If you put single-payer healthcare to a referendum in black working-class neighborhoods in Atlanta or Brooklyn, it'd pass by lopsided majorities. So I think the left wing of the Democratic party is fairly well in tune with that portion of their concerns, but most of the party is arguably out of touch by not being left enough on economics, promoting more of a middle-class, centrist liberalism that's roughly ok with the economic status quo and not very interested in major social-justice initiatives.
There's also no real cultural understanding between the GOP and this segment of the working class: a good showing for a Republican is 10% of the black vote, almost all of it coming from the wealthier portion (i.e., they only connect on class issues). But I agree that the Democratic connection is not great, either, especially if you take the national party; they're often seen as economic-centrist social liberals, less bad than the GOP but not really willing to fight for the working class on economics (or at least not succeeding at doing so).
> They're just, apparently, completely unable to actually get those initiatives through Congress.
There is a Progressive Caucus in Congress but they just don't have the numbers to pass anything, especially with a refusal for any sort of compromise from the Right. And there are simply too many Blue Dogs that will tow the line in the middle.
If someone were a "liberal", it would be best to get progressive candidates in Congress, not just any Democrats.
Ok, so the urban leftist elite don't get "Joe Six Pack". Then why don't the working people go left on their own?
Here's the thing: they did. They just don't know it. The rural populace gobble all sorts of government programs, from farm subsidies to electric power generation. Most of the solid Republican states receive more federal spending than they pay.
And the GOP knows it, so it keeps Farm Subsidies off the table while it takes pot-shots at NPR.
> However, working people don't see themselves as fuckups (because they're not), and they don't have a lot of patience with weirdos. So they aren't going to feel comfortable with the gay marriage/ social worker part of the left (the old union guys were socially very conservative for the most part).
I'm not sure if this was always the case though. In the 60s and 70s it seemed that the weirdos and labor guys were able to work together because they had the same goals. And we have seen this recently with the labor protests in Wisconsin: they were started by university TA's but picked up by sanitation workers, cops, firefighters and the like.
I don't think it's fair for the working class folks to just write off everyone else just because they're "weirdos." Social issues can be just as important economic ones. Plus I think it's extremely shortsighted that someone will not be able to work with me on shared goals just because I don't go to church or eat ribs. I know these are just examples you brought up, but it's dangerous for people to never reach beyond "one of us."
The mistake of the Democratic Party was to abandon the unions and to embrace corporations as a source of funding. This continues to this day as Obama never supported the Wisconsin workers.
Forgive my reply to myself, but I have been thinking about this all day. Here are some random thoughts, partly for my own edification, but partly because the conversation seems to be lingering:
I actually think the "core" of the democratic part / left is the marginalized on one hand, and those that minister to them on the other. The white working class aren't really marginalized like they were in the depression and earlier, so don't fit in anymore -- but the super poor are marginalized, so they fit. Non-whites are interesting -- 40 years ago, blacks and latinos were marginalized as weirdos, except they were poor too (double whammy -- like being gay AND broke all the time). Now that we are actually becoming a less racist and homophobic society (slowly and imperfectly, but definitely) these folks lose their marginalization and drift away from the core since social conservativism and personal character ideologies become more appropriate, unless they go to college and become social workers and join the ministering class rather than the ministered-to class. The Republicans see this with latinos and keep trying to bring them in; they haven't succeeded yet, but they will, just like they did with Italians and Catholics.
The other, maybe dominant group now, in the democratic party are those folks who would have been "Rockefeller Republicans" back before Reagan and Goldwater redefined the party. My family is in this camp, and so are, I think, all the smart capitalists who run/ own businesses that require lots of infrastructure and educated employees -- the Hewletts and the Packards, Bill Gates, Hollywood, Google, the rest of the educated "blue" USA. These guys rightly understand that simplistic market bullshit and simplistic christian bullshit are not appropriate to a complex industrial economy. Remember, Carnegie ordered the slaughter of unionizing steelworkers, but he also understood his world was completely fucked without universities and libraries to make his engineers and managers. He could have been a Clinton democrat today.
A couple of replies to people:
Yeah, Eric Hoffer is great -- I only read the true believer, but it made a huge impression on me; I am sure I repeat him without knowing it.
To the guy who asks why the Joe Sixpack world doesn't evolve its own leaders (forgive me if I paraphrase too brutally): because they lack the training or they wouldn't be joe sixpacks in the first place... It is mostly the managerial class (myself) or the owning class (my friends at prep-school) who have the know-how to organize people into social systems like political parties, churches, businesses, and the like. The working class have great hand-eye coordination, but pretty crappy social and language skills (sorry for the gross generalization, but I think you understand what I am trying to say); those that do have these skills tend to drift upward into the managerial class. When there is no room for these smart organizers to promote, they get involved in union politics or communist cells (or avoid the question altogether by getting involved in the arts/ drugs/ weird religious things / whatever.)
So here is my parting thought: There is a vacuum organizing the working class today, and if someone put their finger on the cultural stuff like the Republicans do, but also fought for working people's actual interests, it could be a WILD ride. Just saying.
So at what point are the "working poor" not stupid by voting for taxes against the rich instead of tax cuts for the "working poor".
All the stuff you said is media nonsense and frankly suggesting that the republicans in any way represent the working poor is, well, nonsense. What you seem to be wanting is some sort of friend who can tell you that gays or gay marriage is bad, church is good, though I bet you or the working poor never go, and that character matters, but that this friend of yours takes a lot of your money you desperately need in order to take less from filthy rich people that actually do not need it at all does not seem to matter to you at all or indeed this characteristic of this friend of yours does not seem to bother you at all.
I'm not sure what you're on about, because there's no party representing the left either. The US Democrats are a fair way to the right of the conservative party here in Australia, yet in my discussions with americans there are a great many people who would be considered left-wing here in Aus. There appears to be no choice for the left in the US, so how "the left better understanding the working class" would change things, I'm not sure.
This assumes low to middle income people are single issue voters and that issue happens to be the effective tax rate of billionaires. What's dumbfounding is that there are people who believe that wealth is zero-sum, and that by taking from the rich and giving to the poor, "justice" would be done, never taking into account what produces wealth or the fact that living standards have improved despite the rich getting richer. 99.9% of us will never become billionaires, but so what? If my neighbor has a nicer car than me, should I try to get the government to raise his taxes and decrease mine? Why not? Here's a possible reason: The conditions that permit my neighbor to drive a nice car are the same conditions that produce billionaires.
Just because I want Warren Buffet to be able to keep most of what he produces doesn't mean I believe I will be in his shoes one day, it just means that I don't trust people who are trying to take more of his money in order to improve my life. Warren may trust those people, but his life really doesn't need much improvement now, does it?
living standards have improved despite the rich getting richer.
Citation needed. Please explain how the living standard in the US can have improved if real wages have fallen. Oh wait, the answer is an incredible increase in consumer debt. That seems to be working out.
Please explain how the living standard in the US can have improved if real wages have fallen.
If by "real wages", you mean "wages adjusted for chained CPI" (this is what most people mean), the answer is because the basket of goods used to compute CPI has become larger.
I.e., consider the following scenario. In year 0, there is one good - food. A basket of food costs $100. In year 1, medicine is invented, and the cost of food goes up to $101. Inflation is 1%.
The basket of goods is modified to reflect the invention of medicine, and is now comprised of 50% food, 50% medicine. In year 2, the cost of medicine increases 10%, and food decreases by 2%. Chained CPI now reports an inflation rate of 3.45%. Is life worse in year 2 than in year 0? (This is a combined 2-year inflation rate of 4.5%.)
Of course not. In year 2, you are paying $99 for a basket of food. In year 0, you are paying $100 for food and Medicine doesn't exist.
I have yet to see anyone construct an inflation measurement based on a fixed basket of goods (which is held constant over the years) that shows real wages have gone down.
thanks for your response - do you have a link to any data that shows the outcome of holding the basket of goods fixed? i will try to find some as well, just thought you might have some data handy.
Data from 1970 - 2009, detailing living conditions for Americans as a whole. In recent years, many data tables have a column for Americans below the poverty line. Compare the data for living standards for the poor in 2009 to the overall population in 1973. By any reasonable measure of "living standards" I've been able to come up with, the data shows the poor in 2009 are doing well in comparison to the overall population in 1973.
I can't believe it either. Some even believe in the economists' equivalent of a cosmological constant: PPP, which when employed miraculously turns Louisiana into a richer place than Switzerland.
"Comparisons of national wealth are also frequently made on the basis of nominal GDP, which does not reflect differences in the cost of living in different countries (See List of countries by GDP (nominal) per capita). Using a PPP basis is arguably more useful when comparing generalized differences in living standards on the whole between nations because PPP takes into account the relative cost of living and the inflation rates of the countries, rather than using just exchange rates which may distort the real differences in income."
The problem with Economics is that, in trying to get a handle on the enormous complexity of its field, they constantly over-simplify. GDP, for example, is in itself a poor indicator of wealth.
If I sell you something for $10, you sell it back to me for $20, and I sell it back to you for $30, GDP is up $60.
But in all of Stupidtown, PPP is the village idiot. First, which basket of goods do you choose? Whatever you select will favor some cultures over others. Second, what about the quality of goods? Butter might be cost the same in terms of hours worked, but for that same amount, the Swiss get pure, mountain-made butter, whereas in LA they get corn-oil margarine. Then there's the flattened world. It used to be that you would earn more in Switzerland, but a couch, for example, would cost more. But now, both go to IKEA and the costs are nearly identical. A tablet computer? Flat-screen TV? Car? Those things essentially cost the same everywhere. When the Swiss go on vacation, their better income means they get a lot more and they go to much nicer places. Then there's taxes. The Swiss pay about the same percentage as in LA, but for that they get amazing things: free university, guaranteed health care, etc.
Finally, there's the wet-finger test. If the weather models show that it should be sunny and you step outside and it's wet, please consider that despite what you read: it's raining. I'm American but I've lived in Switzerland, and I must humbly admit that there's nowhere in America that comes close to being as wealthy as Switzerland.
Visit Baton Rouge and then visit Zurich. You will laugh your ass off at the notion that LA is 10% off of Switzerland's wealth. You will then laugh at economists themselves as the poorest of weather scientists who simply don't know how to walk outside.
That's interesting. From my subjective observations while traveling in Louisiana and in Switzerland I'd say people in Switzerland are living much better. Where does all that GDP go?
i don't think you can really make an argument that the GDP graph given in the google link is applicable to what i said. but if you can, i'd be interested to hear it.
Look at the amount of time the average American has to work in order to by food. It's much less than it used to be. The only reason it feels like we have less money is because we have more stuff to spend it on.
That just proves my point. Once again, we feel poor because we have so much more stuff to spend money on. Houses in America today are HUGE compared to what was acceptable in the past. A nice house today would have been considered outrageously opulent 40 years ago.
This was also primarily caused by a housing bubble. A bubble that was created in part because of government intervention causing increased demand for houses (mortgage interest deduction, low interest rates).
I think there is a point about fairness as well. Taxes are progressive for a reason. Those with the broadest shoulders should bear the greater burden.
Warrent Buffet is perhaps giving away a lot of what he maybe would have given in taxes but plenty of billionaires or super rich just spend it on their spoiled sons and daughters, some who end up in rehab, spent a tremendous amount of resources to create a parallel society where meritocracy applies only to some people and/or just waste it in obscene luxuries such as a 10k bottle of champaign, etc and to boot it all, at the end of the day, they are rich only because they are in many ways not paying the working people the proper wages so that they can pay themselves obscene amounts. I mean, how much more smart are the bank CEOs who got us in this mess to start with to justify a salary 100 times more than others working there.
But even on a practical rather that political level, for most of these supper rich, the difference between 1 million or 2 million does not mater but in some silly psychological keeping up with the jones nonsense and for many even the keeping up with the jones does not apply because they are the jones. But for a lot of "working poor" lowering the taxes from 25% to 17% makes a real difference, a difference of a kind which may mean that their children will properly be looked after and have all the support to say study and do well in school.
Finally, you say you want Warrent Buffet to keep the money and you don't want people to take it away from him. Well, I don't want people to take my money away through taxes either. No one does. Its not about want, or even opinion, its about fairness. Some of the deficit was built up because the rich pay so little and to ask the non rich to bear all the burden is a double wammy. No wonder you have 250k people protesting in Israel and kids burning chain stores in London.
1) the rich (top 10%) pay almost 70% of taxes. I wouldn't call that "so little"
2) you can't just take property from people based on a such wildly misused and subjective term as "fairness". Running a government is necessary for society to function. Everybody benefits, especially free-riders, crony corporations, politicians, and bureaucrats. The rich have the resources to fund a big chunk of the government, and they get a lot out of it too, sometimes to our detriment.
3) what does our deficit have to do with protest and riots in other countries?
I don't think I'm going to be a billionaire someday, and if I did I couldn't care less about tax rates.
I do think however that maybe I'll be able to retire some day before I die. But the likelihood of this is very much affected by LTCG rate, wouldn't you agree?
Now how is it even fair that long term capital gains taxes even exist? I make some money, I pay taxes on it. I buy whatever instrument I hope will be the best at preserving the value of it (since I know if I just stuff the money under the mattress, I won't be able to buy much with it in say 40 years). After 40 years, the nominal price of the thing I bought will have gone up, chiefly due to inflation. When I sell it, I pay taxes again. How is it not double taxation?
That's not really a counter argument. You stated republicans stand for small government, not democrats. You were given concrete examples which disprove what you stated. Arguing that the democrats are just the same is simply stating that republicans do not stand for small government.
Reading this just makes me think of all of the lobbying dollars and campaign contributions that must have been paid by the super-rich to get these tax breaks.
Am I the only one that feels some populist rage welling up when he hears how much money is wasted on campaigning for office and influencing people in office? Aren't there more worthy uses of wealth and scarce resources?
And it just pains me that so many people think that they "have to play the game" to get things done by politicians. Non-profit organizations that use large percentages of their spend on "wining and dining" elected or appointed officials to try to make things beneficial things happen. Ugh.
They only do that because it pays off. If the government was more decentralized and controlled significantly less dollars the incentives wouldn't be there and it wouldn't happen. It's a structural problem that happens in any system. Where power is concentrated it becomes beneficial to influence it - the more concentrated the more that can be spent.
I bet it wouldn't phase them a bit. They would create a watchdog professional organization (see US Chamber of Commerce) that makes sure local elections and appointments are influenced just as effectively as federal ones.
This already happens in judge elections in many states. Certain "business-friendly" candidates are showered in campaign money, with the expectations that when certain cases are appealed those judges will end up making "the right choice".
It's easier for people to control their government at the local level, than at the national level. For instance, the city of Cambridge a year or so ago removed all the DHS cameras that were put up after 9/11. That wouldn't happen if they were controlled at the national level. Look at gay marriage or marijuana, only a problem at the national level - let the states do what they want; it's less of a chance of one group going in and ruining it for everyone. Sure, it's probably not optimal there will be some laggards, and perhaps even backward progress. But overall, the system will be more stable and allow the most amount of freedom for those who want it - being able to vote with your feet is much better than voting in an election.
> being able to vote with your feet is much better than voting in an election.
I've had this idea for a while already. Indeed, it would be interesting to set up a free market system for the governments. US seems to be an ideal place for this sort of experiment given the ease of movement. Competition between states could be quite healthy.
It's not necessary (or even wise) to decentralize government in order to remove the influence of money on politics.
One relatively easy change that would almost completely remove the quid pro quo bribery effect of campaign contributions is to anonymize contributions so that candidates never know who their contributions are coming from. That way there would be no payback possible, and influence peddling through campaign contributions would become a thing of the past.
Candidates expresses their opinion on X; those with a vested interest in X pour tons of money into his campaign so that the candidate that they agree with is selected. And since that candidate already shares the position with them, when he needs backing from industry that's who he'll meet with.
If you really believe that campaign contributions are constitutionally-protected speech, then outright political bribery should be legalized.
Anonymizing campaign contributions wouldn't have an effect on political speech and it wouldn't have an effect on who you gave money to. (You'd still be free to say who you contributed to. You'd also be free to lie about who you donated to.) It would only change the way the money was handled, with the ultimate effect of removing the quid pro quo from donations.
Do you think you should limit how much time someone can volunteer on a campaign? What about famous people expressing their opinion? These have the same effect as someone donating money. They just favor different groups of people.
It's not bribery to try and support someone whose views you agree with, or to have experts available to answer questions on complicated issues. Remember, campaign contributions don't give them a house, or boats, or planes, etc.
You're missing the point. Limiting campaign contributions is not a part of this. The point is to anonymize donations so that there can be no way for the candidate to correlate a contribution to a donor. That way the quid pro quo that is implicit in campaign contributions would go away. Politicians would have to go back to representing voters again.
I'm saying it's not the quid pro quo. I'm saying that generally are multiple sides to an issue, and people want to represent their side. A corporation would just fund the person who represents the views that are most inline with theirs. Corporations would tell the candidate what they feel is important, and then when he espouses the views the candidate receives anonymous donations.
And by corporation I don't just mean GE etc, I'm thinking of any group of people who have a shared ideology and are working to influence policy.
I'm sure that it pays off for a percentage of organizations, but for many, that game represents a lot of time, money and effort that create no value.
And with campaign contributions? Come on. For the federal elections of 2008, we used $5.3 Billion dollars. What did we get for it? The exact same number of elected officials we would have if we spent $0.
What value was created? Better representatives? Quality entertainment?
What else could that money have been used for? As I said earlier: Ugh.
The problem is not how much money is being 'donated'. The amount is fairly insignificant. The problem is the influence it buys and how that influence impacts the bigger picture.
So yes, I agree with you that this kind of corruption is a big problem. But how much money goes around in that circuit is not what concerns me, personally.
I'm not overly put-out by the amount of money "wasted" on campaigns and elections. I understand that there are many different ideas on the nature and function of government and I believe debates on such subjects (and campaigns and elections, which are effectively the same thing) to be extremely important. Personally I think we should do much better and have higher quality campaigns and higher quality candidates, but I think it is fully justified that such enormously important processes require significant amounts of resources. Though also I could imagine, and might prefer, a scenario where the process was not nearly so expensive.
A couple of recent quotes of his: "I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than 3% of GDP all sitting members of Congress are ineligible for reelection."
Also, he's against having a debt ceiling. "All it does is slow down a process and divert people’s energy, causes people to posture. It doesn’t really make any sense,"
It looks like Joe Nocera got his wish from a week ago.
"I keep waiting for one wealthy, well-known figure to stand up and say publicly that he or she is willing to pay more in taxes as part of the shared sacrifice necessary to gain control of the country’s deficit."
We'll let them voluntarily pay more taxes then, or donate to charity, or start a charity or whatever.
By their very nature taxes are not voluntary, they're taken by force of law. Don't pay them then go to jail.
This is a stupid (but very easy) argument to make, one (of the richest)rich person says he'd be happy to pay more tax, therefor all rich people should pay more.
If he really wants to make a difference he'd be way better off spending his money on charirty, then it's not going to be entirely eaten up paying for beurocracy. THe government is not efficient AT ANYTHING.
When you pay taxes you're funding all that crap you don't agree with. Wars, funding for lobbies, paying politicians fat saleries, all those police raids on pot smokers etc. Why the hell would you want to give more to that?
Why does Buffet donate to charity rather than the treasury? Does he believe that the government will use his money less efficiently than the organizations he donates to?
There are any number of possible answers to that question that don't fall into the false dichotomy you've set up. Why are you not a plumber? Is it because you believe that plumbing is worthless?
Good, he practices what he preaches. The point remains, paying higher taxes is not an efficient way to help your fellow man. You'll get much better bang for your buck donating to a worthy charity. Thought of this way, it's a simple question of utility.
True, but what solves the forced rider problem and why presume that it is more benign a problem than free riding? One man's public good is another man's public bad.
The US's tax burden is already the lowest of the OECD countries bar Chile and Mexico. It's 30% lower than Great Britain, and half that of Denmark. And what that hides is we spend an extraordinarily large portion of that on "defense", so in terms of money spent on citizens, we're necessarily lower.
But if that's still too much governmental interference, then tax haters are able to select from a wide variety of third-world countries. I might suggest Somalia, where effective tax burden is zero. There being no effective government at all, of course.
Exactly, as much as some individuals would like to focus solely on the ills of government, there are socially beneficial programs supported by the government which need continual funding:
You're taking my abstract argument farther than I intended; perhaps I should have been more careful. I'm not saying we should give all our money to charity, just that it should be strongly preferred to paying increased taxes, especially with the goal of helping people.
Notice that Warren Buffett is asking for tax increases on those who make more than $1M and $10M respectively. I'm fine with this. He seems to "get", unlike so many Democrats, that $250k/year is not rich.
Where I get nervous is all the Democrats who seem to think that there is no difference between $250k and $1M/year and up. I get kind of ill seeing obscenely wealthy Democrats in Congress, almost all making MUCH more $250k, trying to lump my household in with the rich. I'm willing to pay more, but not if these wealthy Democrats won't create a distinction between $250k/year, $1M/year, and $10+M/year.
While I agree there's a big distinction between someone earning $250k/year and $10m/year, are you aware that if your family is earning that much then you're earning over eight times the median household income?
You're wrong. First, the median income in the US is now at or slightly above $50K per year.
Second, assuming earned income (which is fair even for $250k earners), a median income household will be in either a 15% or 25% tax bracket (depending on if married). A $250k household will be in a 33% tax bracket.
My statistic was showing $31k, but if we say $50k, fine - it's now merely five times the median, not eight. That's still a comfortable situation by almost anyone's standards.
Now, if your $50k household is in a 25% tax bracket, they're paying $12.5k so leaving a net income of $37.5k. Your $250k household at 33% are paying $83k, net income $167k, 4.4 times the net income of the $50k household. So what was your point exactly?
I suspect that the kind of people working behind the scenes to keep things as they are aren't anywhere near the super rich but the well off for who a high tax rate would impact their standard of living. Once you get up to the super rich they really aren't putting all earnings into the standard of living they keep.
(Don't have anything to back this up, just the impression I get from reading bits and pieces on the issue)
He really is amazing. I live in Omaha. You can drive by Buffett's house, and you'd have no idea who lives there if you didn't already know. I know people who have interacted with him on a regular basis, and he is just as personable and down-to-earth as his public image suggests.
I've always enjoyed reading Buffett's remarks in Berkshire's shareholders reports because of those very reasons. There's no BS; he just tells it the way it is, covering both successes and failures. And when he talks about the overall economy, he puts it in terms that people can readily grasp the concept without being swamped by gobbledegook.
He also puts on a great shareholder's meeting every year, where he and his #2 Charlie Munger spend a lot of time just answering questions. And of course, there are the discounts at Dairy Queen and Nebraska Furniture Mart. He even supports local independent businesses like The Bookworm.
One has to ask, if any super rich person really considered the U.S. Government a worthwhile investment, why are they donating to various charities instead of to the Treasury?
The problem is that gifts to charity aren't coercive. I know, it's strange to say that it's a problem if it isn't coercive, and I'd agree that many of the inefficiencies of government stem from the coercive nature of taxes (no need to convince people to give you money if you can just take it by force). But I'm really a moderate in all of this - I personally don't think a modern state can survive on donations, or a "pay only if you think the government will do a good job with the money" tax code. We're gonna have to collect some taxes, rich people (in my opinion) should pay more than poor people, and there's no way people, rich or poor, are just going to pony up out of a deep affection and fondness for the federal government.
If tax rates are going to be paid and progressive (they actually aren't), then they'll have to be coercive. I think what Mr. Buffet is arguing here is that the rich need to be coerced into paying more in taxes than they currently do. I'm inclined to agree with him, even if I have to hold my nose as I do.
It's not just that - even when we're talking Warren Buffett here, the scale of the US govt is totally different. Buffett's entire fortune ($50B according to Wikipedia) would only cover a few weeks' worth of borrowing and then we're right back where we started only Warren Buffett has no more fortune. It's silly to say we should expect him to do that.
What he's saying by advocating tax raises is "I will pay more if I know that everyone else will also pay more." He's not interested in paying $XM to reduce the debt by $XM, but he would happily pay a personal cost of $XM if it meant reducing the debt by $XB.
(This is called "collective action," and it's also Groupon's business model.)
Why not? It's not like it's all or nothing. The taxes paid by the others today will be at least somewhat useful to the federal government before the billionaires pay their "fair share". If Buffet pitches in, it's just that much better for the federal government, and an example to set for his friends.
>What he's saying by advocating tax raises is "I will pay more if I know that everyone else will also pay more."
No he isn't. He's saying precisely the opposite:
"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...But for those making more than $1 million...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...I would suggest an additional increase in rate."
Even at the current tax rates, Buffet properly pays more than you do. And he certainly pay more than those who are on the various forms of government relief.
More is a relative term, for instance he's not being taxed out of a holiday, eating out one or two times a month, having enough food to support his family, etc.
The utility on that 7million is much lower for him than say 20k a year would be for someone making less than 100,000 a year.
That is a stupid way to measure how much one should pay in tax, honestly.
You rent, electricity, food and clothing doesn't go up because you double your income (unless you move, but then you presumably get better housing too). Why should your tax?
I'll assume you're trolling but the relatively inelastic nature of fix costs like room and board, food, entertainment etc. is part of the reasons for promoting a progressive tax system. Those who have made fortunes here in the us are likely those who have benefited from federal and state oversight and infrastructure, which is an additional justification behind taxing the wealthier members of society at a progressive rate.
For the anecdotal insight on this: paying about 20k a year in federal taxes with my current annual salary is nothing compared to the impact of the 5k or so a year in taxes I paid when I was a poor waiter/college student in terms of its impact on my budget. At this point I could easily pay out an extra 10 or 20k with out severely impacting my quality of life or rate of savings; corollary, a few extra thousand back when I wasn't making all that much money would have been the difference between sleeping on an air mattress versus a real bed, or having enough good (as in nutritionally worth while) food to eat.
Most people do move to better housing, buy more expensive food/clothes and use more electricity when they double their income. And as that doubled income doubles, the amount they are willing to pay for/use those items also goes up. Just as the amount they are willing to haggle for these items goes down (note: I'm talking about majority, I know there are exceptions).
I was a little worried that when I wrote that the rich should pay "more" without specifying that I meant a higher tax rate, someone would point out that they would pay "more" in the absolute even at a lower tax rate (as if I'm unaware that 10,000,000 * .24 > 100,000 * .24).
I really like open debate and discussion, but why do we go through this charade of nitpicking? It's clear that my post supports progressive taxation, so why get all crapped up about some non-existent ambiguity around the word more. If you're opposed to progressive taxation, and you think that warren buffet pays so much "more" in the absolute under a regressive or flat tax that it's fair to tax him at a lower rate than your average middle class worker, by all means, express your opinion. I certainly wouldn't downmod someone for disagreeing with me, and I think that probably goes for most of the people on hacker news.
It is a logical fallacy to equate the statement "I believe the rich should be obligated to pay more in taxes" to "I believe I alone should pay more in taxes."
Most decent charities deliver far more per unit donated than the US government could ever wish to achieve. If you're interested in pure charity, you're not going to get much bang for your buck at the federal level.
really? I thought that there was something of a problem with some charities spending the bulk of their budget on marketing and CEO salaries.
as greenspun says:
"The federal government funds roads and airports that we all enjoy using. The feds pay for health care for the poor and the old. Our tax dollars pay for intrepid military personnel who go out and kill angry foreigners (in most cases) before they can arrive on U.S. soil and kill Americans here at home. For a non-profit organization of its size, the federal government is surprisingly efficient. Most federal employees work in big box-like office buildings, not in $300 million monuments to an architect's ego. George W. Bush gets paid only $400,000 per year, less than half of what a lot of university presidents earn."[1]
I personally have a somewhat less charitable view of effects of military action, at least the military action during my lifetime, but I do think that most of the personnel involved do believe that they are doing the right thing, and those other things, roads and healthcare and stuff; those are pretty great to have.
Now, I'm too lazy to dig up non-greenspun references, but it seems that many non-profits serve up rather nice salaries, for rather inefficient work[2]
My point exactly. It's easy to consider who's paying what taxes and thinking about if that's fair, but the right question to ask is, "Is this a worthwhile investment?"
Since when is the US government a charity? Taxes are not optional.
Most major donors contribute to things they can put their name on like buildings (see Stanford campus). It's difficult for even most charities to cover operating costs (i.e. labor) with only donations. Most have to apply for grants or do lots of funny numbers to keep their administration costs (i.e. labor) low.
Using government data, Robert L. Woodson calculated that, on average, 70 cents of each dollar budgeted for government assistance goes not to the poor, but to the members of the welfare bureaucracy and others serving the poor. Michael Tanner cites regional studies supporting this 70/30 split.
The U.S. Government could be a worthwhile investment (as a charity), but it's not doing so right now. We could raise taxes to invest in infrastructure, which would increase future GDP. A charity cannot do this owing to eminent domain issues.
That's the real rub about this deficit/debt limit drama: it wouldn't be so bad if the government spent in areas to increase future GDP. However, the government is basically an old-age insurance program with a large army. I don't see these expenditures contributing greatly to future GDP.
The really low hanging fruit, IMO, to raise tax revenue without "raising taxes" (in the sense of raising tax rates) is to reclassify carried interest as ordinary income.
That, combined with a few other similar changes (mortgage interest deduction, maybe funding ssi and medicaid separately from old age and medicare) and huge cuts in defense (due to ending 1-4 of the wars), seems like it would be fairly effective.
What I'd like to see is a flat income tax for ordinary and dividend/capital gains at 25-35% for all income, huge cuts in spending, combined with a single refundable tax credit set at ~subsistence income, universally applied. However, that's a much bigger change and pretty unlikely to happen.
If you just count the top 400 income earners in the US that he mentions in the article, and they restore the the 1992 rate of 29.2% (as opposed to the 21.5% of 2008), then we're talking about 7 billion dollars
So here's a question- if you follow Buffett's logic, then a guy who builds a company for 40 years, most likely goes with barely any income in some years, and sells it for $10M when he retires, that guy gets slapped with a 100% tax increase.
Buffett doesn't differentiate the Walton kids who inherited billions and assuredly live off capital gains their entire lives from the entrepreneur who makes $10M that ONE year of his life that he sells his company.
Buffett claims that the tax rate in fact was of no consequence to his behavior. Well, I guess if you're in the business of speculation, that's true... you must invest/speculate because that IS your job.
But the same is not true for entrepreneurs who build stuff. What's the entrepreneur's incentive to build his company and to wait to reap his gain if his gain is taxed like ordinary income? Why not just pull income out of his company instead of reinvesting it? On the margin (that's the key), this tax policy will affect entrepreneurs decisions.
I've read Snowball, Buffett's biography, and it's pretty clear Warren has never built a company that serves customers. He's always been a speculator.
Bottom line, Buffett's proposal would have punishing consequences on entrepreneurs who earn big windfalls a handful of few times in their lives. That absolutely WILL have consequences on entrepreneurs decisions and risk/reward tradeoff.
Unless a policy to tax the super rich is proposed that doesn't somehow have that pernicious side effect of treating entrepreneurs' gains as earned income who see precious few windfall gains in their lives, I'd never support it.
There's a reason why society created lower tax rates for capital gains. Perhaps we should go back and study them.
First, we're talking about the difference between ~20% and ~30%, so for your case, the business owner will only walk away with 7 million dollars to retire on. Is this entrepreneur undergoing undue hardship?
What's barely any income for someone who builds a $10M company? 60k? 50k? It's certainly not $10,890 (the federal poverty level). Even if we're talking about a business owner who takes no income, it's because they're living off of the money they've already earned, not because they're taking welfare checks while running their business.
I would alo like to remind you that your typical employee, who's paying the higher tax rate, will be laid off in years of recession, may have to take a lower salary because of outsourcing, etc. I'm not going to classify one hardship versus the other, but I do want to point out that the business owner usually has a higher mean salary, even if the variance is larger.
You ask what the entrepreneur's incentive is if his gains are taxed like ordinary income? That's simple: money, and lots of it. Business ownership is a risk, and it comes with a reward.
Do you really think that a higher tax rate will stop an entrepreneur from creating a company? I dare you to head down to Startup Camp, and ask anyone there if they are planning to start a company because they expect to receive a lower tax rate. I can save you some time: they won't. There's a passion and a drive that accompanies entrepreneurs, and they will start companies because that's what they want to do, what they need to do.
If entrepreneurs choose to take a higher salary during the course of the business, that's fine, it's just tax planning. Anyone with sizable income does it.
You say there is a reason why society created a lower tax rate for capital gains, and that's true, but the economic situations of those times were different than now. I would suggest to you there was also a reason why there were bloody revolutions against the aristocratic class.
The rules of our society must continually adapt to the situation at hand. We are currently in the middle of the two extremes mentioned above, I just hope we realize it and don't get too far to one side or the other.
"Do you really think that a higher tax rate will stop an entrepreneur from creating a company"
No, but more likely to sell early, give up more easily when the going gets tough, not invest as much in growth (and pocket the profits)... Yes. This is all about decisions "on the margin." It's truly a canard to suggest, as you do, that incentives don't matter.
"there was also a reason why there were bloody revolutions against the aristocratic class"
Please. Would you rather make $70k/yr today or $70k in 1900. Let's not pretend the pie is smaller today for those in middle or even bottom.
As to the additional revenues Buffett wants from the 236,883 richest households, if we assume the average of those households had taxable income of $5 million and if we raise their rates by 10% we get $118 billion.
No, he is talking about restoring the 1992 rate onto the 2008 income, which was 90.9 billion NOT your 16.9 billion. So the increase would be about 7 billion.
from the article:
>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.
I'd have liked to see that, too, but one can run the numbers if one wants.
Also, isn't getting more money better than not getting more money? (NOTE: We certainly need to slow our spending, as well, but I fail to see how an increase in revenue is a bad thing.)
As a freshly minted middle-class American, I disagree with Mr. Buffet's argument here. Though his eagerness to share the tax-burden is laudable, I hope that tax rates stay low for him. I would pay higher taxes to keep it that way.
Simply put, I don't trust the government with that money.
It's as if wealth is zero-sum, and Mr. Buffet believes he and his ilk have taken some of it from the rest of the population. But he's not going to go without his generous slice of the pie if his friends aren't forced to go without theirs. But he and some of his friends are voluntarily giving their pie to worthwhile causes... as we speak! no force necessary!
I would pay higher taxes to keep it that way.
The sad reality is that the government is going to have to raise revenue somehow, and if that's the case, I'd prefer to raise it on those with a lot of passive income, who are less likely to move their assets out of the country. How you achieve that objective is beyond me.
> Simply put, I don't trust the government with that money.
The only logical conclusion there would be moving out to a different country that offers equal or better living standards because the longer you stay, the more money you give to that government you do not trust.
Warren is omitting very crucial information and knowingly deceiving most people. He's pretending he doesn't pay very many taxes, but he does, he just pays different taxes. In this article he mentions capital gains, income, and payroll taxes but does not mention corporate income taxes. Corporate income taxes are taxes on the owners of corporations. I don't know exactly how much he paid, but some quick math I'd guess he alone paid 1.6 billion last year in corporate income taxes. (Berkshire paid 5.6 billion, Warren's worth 53 billion, Berkshire 178 billion, giving Warren 29% ownership, if you have better numbers feel free to share). So he mentions 6 million dollars in taxes but omits 1.6 billion from the discussion.
If Warren owned 100% of Berkshire would you still think it's unfair to consider what Berkshire pays in taxes a tax on Warren? Then why is it not fair to consider it on a percentage basis like I have?
The owners of corporations are the people being taxed by corporate income taxes, since without these taxes, that money would be theirs to spend as they wish, either by investing in their business or taking it out by paying dividends.
Without a corporate income tax owners can withdraw the incomes minus dividend taxes. With corporate income tax they can withdraw income minus corporate income tax minus dividend taxes. How can you say they're not the ones paying the tax when the money could go directly in their pockets if not for the tax?
Corporate money belongs to the corporation, not to the shareholders. Corporation is a separate legal entity, it has its own property rights and its own will power. It also has an obligation to heed the interest of all stakeholders, including shareholders, employees, managers, customers, the public etc. Shareholders exert certain level of control over corporation, similar to how the board, the management, the employees and the customers have their own power, and while shareholders can change the board, they don't have any kind of fine-grained control, and even their control over the board might be limited by the corporate charter.
To say that corporate money belongs to the shareholdes is to trivialize a very intricate balance of powers.
Corporate income tax is a tax on corporate income. You can't call it shareholder tax any more than you can call it employee tax (or employment reduction incentive, if you will), or manager bonus tax, or capital re-investment tax. It's all of the above, and then some. It's not just one of the above.
My understanding is that most tax incidence economists believe the corporate income tax is primarily born by shareholders. Sure it's a very complicated issue, but if you pin it on one party then shareholders is the least inaccurate.
Majority of the comments seem to be discussing the merits / morality of taxation, rather than Buffet's central points.
Entertaining the discussion on the merits of taxation, I've found John Rawls' Justice as Fairness to be especially enlightening. (http://en.wikipedia.org/wiki/Justice_as_Fairness) Essentially, a just society is one in which decisions are made to benefit the worst-off in society. Given a majority of the factors that contribute to individual success are outside our control (what family you were born into, what neighborhood you lived in, what school you went to, etc), a just society would in turn be one which compensates for such naturally-occurring inequalities. He provides a well-thought out argument for how progressive taxation is a necessary (but certainly not sufficient) lever to do so.
Now in practice, it is true that our government has been terribly inefficient in managing tax revenue and creating public goods. But that shouldn't discount the role government can play. Realizing the potential reach and role of government, the goal shouldn't be to neuter it, but to make it more efficient.
On Buffet's central points, I find them hard to argue with. 1) Lower taxes on the rich in the last 10 years have been neither necessary nor sufficient for economic growth or job creation, especially in light of the 20 years before that. 2) The front-end drivers for entrepreneurs, VCs, and angels have more to do with product creation, addressing a market need, and simply playing the game. Money is of course a big part in too, but tax cuts only play a back-end behavioral incentive- they affect the NPV of behavior that was already in play.
3) Just because the actual tax revenue on the rich may not put a huge dent on the deficit (as some comments seem to imply), the point is that the billions in tax revenue it would raise could still stave of cuts to programs that the poor and middle class depend on.
Taxing the money that moves - as it is earned - will only produce so much revenue. The rich need to be taxed, not beccause it will allow lots of lovely spending, because the gov will inevitably do a bad job of spending it. Though you could put it towards debt reduction first.
You have to tax the money that doesn't move. The millions of unneeded unspent $ that the rich are sitting on, with a wealth tax. You may not even make the poor richer, but you will make the rich poorer. Good.
Right. It's all of our money, because we all share the same society. Sorry, "it's mine, all mine" doesn't cut it outside an Ayn Rand fantasy novel or a Ron Paul forum.
That might have worked in the 1910s when the vast majority of people worked up to the day that they died. In the 2010s we have a concept of "retirement"; and in order for people to practice it, they need to save money while they're working.
The government does that already by printing more money. The more money printed the less valuable your $10K. Better to keep money on assets that do not devalue with inflation.
Very well pointed, it takes a lot of altruism to say that when you are the potential target.
I read Snowball and like this man actions and thoughts. He is really a very unique kind of person, some might argue that he did some things to benefit himself in the past, But I disagree and think that the world would be a better place if more man like this were in charge of the power over civilization.
I'm a huge fan of Warren Buffet but in this case I think the math just doesn't seem right. I don't have the exact numbers, I took data from wikipedia and the NYT article, so, please, let me know if my math is way off.
From the article, there are about 200,000 people with income of $1M+. Let's make it $5M per person. That's 1 trillion USD combined income.
The rest of the taxpayers seem to be about 200,000,000 with an average income of about $25,000. Combined income = 5 trillion.
So, if they reduce the tax of the bottom group with 2%, as Mr. Buffet suggests, the tax of the upper bracket has to be hiked with 10% just to compensate. And if we add another 10%, just for the fun of it, that's 100 billion taken from the rich but it's still a measly part of the budget (around 3 trillion) not to mention the debt (15 trillion).
And don't forget that people with 1M+ income have a vast number of legal and semi-legal tricks at their disposal to reduce their tax rate. The moment you increase the tax too much, you start seeing money flowing to offshore locations.
So, while "tax the rich more" and "let them share the burden" are great feel-good slogans, I don't think they offer any practical solution for the huge USA deficits.
Your big assumption there that those 200,000 people with income of $1M+ have an average of $5M per person is where your logic fails. This source: http://www.google.com/publicdata/explore?ds=a7jenngfc4um7_&#... shows the US total personal income for 2010 being over 12.5 trillion, your two groups only add up to 6 trillion.
It says average income for top 0.1% is $3M and those 200,000 are exactly the top 0.1%.
I'm not sure where the huge discrepancy comes from, when it comes to the total personal income stats you posted and I hope someone can clear this up.
People always say stuff like this, but I think quite the opposite.
Buffet, and people like him (Gates, Jobs, Welch, etc...), while great businesspeople are used to being able to say something and everyone jumps. In business, everyone is working together to make the company more money. With some exceptions, you can create an incentive structure that rewards that.
Government, in the US at least, is very different. Buffet would be dealing with people, congress, who will certainly not jump when he says something. In fact they'll often make themselves completely unavailable. He'll be in a situation where people will actually do things that harm the country if they could remove Buffet from office (to get someone from their party in office). In government, you don't negotiate in good faith.
And Buffet wouldn't be able to fire anyone in congress. I suspect one of the first things Buffet would say after working with congress is, "I'd fire half of these bozos if they worked for me!" Unfortunately, these are the people who will decide what legislation lands on his desk.
I feel like gang leaders are the people who best understand what it would be like to be President.
Definitely. He might not be able to buy the whole thing, but as long as he substantially drives up the cost of a Congressman, that's a step forward. A couple hundred grand (and 10 million in lobbying money) gets you billions of benefits, which is way too cheap.
If we want shared sacrifice, maybe we should ask people at the bottom to share as well. Anecdotes of Warren Buffet's office aside, in general the richest people pay the largest proportion of taxes.
We already lean quite heavily on the top 1% - the top 1% actually pays more in taxes than the bottom 90%.
This year the first $9,350 of income is exempt from taxes for singles and $18,700 for married couples, just slightly more than in 2008. That means millions of the poor do not make enough to owe income taxes.
But they still pay plenty of other taxes, including federal payroll taxes. Between gas taxes, sales taxes, utility taxes and other taxes, no one lives tax-free in America.
When it comes to state and local taxes, the poor bear a heavier burden than the rich in every state except Vermont, the Institute on Taxation and Economic Policy calculated from official data. In Alabama, for example, the burden on the poor is more than twice that of the top 1 percent. The one-fifth of Alabama families making less than $13,000 pay almost 11 percent of their income in state and local taxes, compared with less than 4 percent for those who make $229,000 or more.
and
It’s true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008 (the most recent year for which data is available). But people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government.
Social Security, Medicare and unemployment insurance taxes (known as payroll taxes) are paid mostly by the bottom 90 percent of wage earners. That’s because, once you reach $106,800 of income, you pay no more for Social Security, though the much smaller Medicare tax applies to all wages. Warren Buffett pays the exact same amount of Social Security taxes as someone who earns $106,800.
Don't let some fool you into believing that the poor don't pay their share of taxes. They do.
Warren Buffet is specifically talking about federal income taxes, not payroll taxes such as Social Security and Medicare, which can be considered benefits because people contributing will get a return when they retire (it's actually a progressive system, in which the poor get more than what they contribute).
The link that he gave already adjusts the numbers for payroll taxes (but it's obvious from looking at how the tax is collected that it's regressive -- i.e., flat rate up to $106k and then no tax on wages above that).
The link he gives does not provide % of tax burden / % of income earned, nor do I see any way to figure that out from the data given.
I agree that payroll taxes are regressive past $106k, but it's hardly clear that this changes the picture significantly. I.e., the 12.4% a poor person pays in payroll taxes need not outweigh the 0% they pay in income taxes.
Second, the use of the federal itemized deduction offset is very misleading, given that the deduction's purpose is to avoid double taxation in the first place, and that the money states get from the federal government comes almost exclusively from progressive sources.
Third, the intersection of the previous two. Most of the difference between brackets regardless of states is accounted for by the wealthy paying very little sales tax. They pay very little sales tax because they consume very little of their income. What they don't consume ends up being taxed in the estate tax mentioned earlier or given to charity neither of which are included in this report but both of which pay for similar things to state taxes (helping the poor, schools, libraries, parks, etc)
Ask yourself how much you need to make in order to live comfortably, and feel "rich enough". Maybe $100,000/year would do it in most parts of the country? And probably a lot less.
Now suppose you had a million dollars (and just a million, ignoring these billionaires for the moment). That mean you could risk, without really blinking an eye, $900,000 on any investment; even if you lost every penny, you'd still be left with enough to live "well" and feel pretty "rich". At no point would you fear missing your next meal or losing the roof over your head, and you probably wouldn't care if you had a job. Of course, the odds of losing all $900,000 are slim; you'd probably see some payoff, and never really approach that unfortunate low.
Rich people will always have opportunities to make money that the poor will never have. Even if you tax a millionaire or billionaire at a very high rate, they'll have enough money left over to take many risks and very likely end up richer anyway. At the very least, they won't miss the money that went to taxes.
Now suppose you only make $15,000/year. Not only would it take years to reach the above "rich" $100,000 level, but you'd be insane to risk much of that low income on any investment: failure means you come out with zero and miss your next meal and lose your house. If they're lucky, these people may have a handful of investment opportunities and ways to become richer; if they screw up, most of those opportunities go away forever. Taxes at the bottom won't fix anything at all.
What I have always wondered: there has got to be a certain amount of money that by all normal standards HAS to be enough for a human being. If you are so rich, you can only have so many houses and cars and all sorts of other toys that you don't even need half of... then you want to leave something for your kids and their kids and generations to come, your relatives and family but still, that is considerably little. A few million go a LOOONG way.
So, after all the toys, investments and securing your offsprings, you are still left with a HUGE amount of money and assets which you will likely never make any use of anyway.
I know this goes against our ideals and system of capitalism but: if such a limit exists why not cut billionaires off above it and give the exceeding money directly to the government or charity?
You are trying to tell me that someone like Warren Buffet with a net worth of $50 billion can really actually make good use of all that money? I know, "there can never be enough" out of principle. But really, with 50bn I imagine you could not (sanely) possibly spend it fast enough in a way where you get something out of it or in return; it would grow back faster in interest than you can dish it out.
Well, assumed you were talking about sums < $1B. I can think of useful (starting businesses, research/engineering projects) things to do with up to $1B or so.
Now, suppose we wanted to cap individuals at say $2B. How would this actually work? That's not cash that's lying around. Almost all of Buffett's wealth is in equity of Berkshire Hathaway. He can't sell that without also losing ownership of BRK. Is BRK worth as much without Buffett and/or the people he's explicitly groomed?
Billionaires are billionaires not because of their income, but because of the assets that they control.
I'm not asking for his generalizations; I'm asking if he personally knows actual poor people in the US. E.g., a single mom, an elderly widow, a recovering alcoholic, a laborer whose back is shot.
Also, I utterly refuse to accept third-world conditions as a baseline for "poor enough". You might as well use the 15th century for all the relevance it has.
This is getting absurd. Poor people in America aren't as poor as you think. I absolutely hate it when people like you generalize how poor people live. Reading a blog post does not make you an expert on the poor or the bottom 1%. Try living it, like my family has. None of us are starving (a lot of us are fat in fact), and we all have smart phones and game consoles.
I have just come back from a trip to Vietnam in which I visited homes in the Mekong delta. We're talking about a place where half the homes are made of palm, there's no running water at all, and the people are dirt poor. I've seen some of these palm shacks with large-screen TVs - older CRT types, admittedly, but it drove home the point that "big screen TV" is no longer a sign of opulence.
Similarly, the people aren't starving, but that doesn't not mean that they aren't poor - if "electronic gadgets and absence of famine" is all you need to define as "not poor", I disagree with you.
Suggesting the bottom 1% has game consoles and smartphones is a) ridiculously wrong, and b) irrelevant.
Regarding wrong, The bottom 0.2% don't even have housing, which is going to make a game console hard to use. The I was talking just this morning with somebody doing financial literacy programs, and they decided against doing a web or smartphone tool because most of the people they are trying to reach don't have regular web access. And that's in the San Francisco Bay area, where tech adoption is very high.
It's irrelevant because having a few hundred dollars worth of consumer electronics says nothing about whether they have important basics like physical safety, a sound education, decent medical care, regular dental care, reliable transportation, clean water, and healthy food. All of which are necessary for people to reach their full economic potential. That shit costs a lot more than a game console.
This is getting absurd. What I find a ridiculously disgusting is your pretentiousness is assuming how poor Americans live. You're justifying your argument based on a shoddy and superficial experience with poor people?
My family immigrated from a third world country and the adult members earn ~$20K salaries. The children have a free and subsidized $10K+ education, is safe (yes, the ghetto isn't on high alert for drive by shootings 24/7), have access to clean water (yes, we use the same water that you use), healthy food which can be purchased at Walmart for a price much less than prices you can pay for food at a fast food restaurant. (Yes, we all don't eat at fast foods).
We also have access to the free emergency room when needed, and dental services for my family goes for about $35 per visit (it's subsidized in a lot of cases actually). The poor in America do not live like the poor in third world countries. Quit insinuating that and stop assuming how poor Americans in 2011 live. We're not as poor as you make us out to be.
As I explained elsewhere in the thread, adult members (plural) earning ~$20k means (depending on number of children) you probably aren't poor, or at least not very poor. 12.9% of households earn under $15k, 24.7% earn under $25k, and 35.6% earn under $35k:
The use of subsidized education and dental services helps to prove my point, which is that the poor in America don't have much to give up, and need the assistance (government and otherwise) that they're getting.
Also, emergency room access does not equal medical care. It does mean emergency care, but it does not mean preventative or chronic care. For example, it means you won't have a doctor helping you avoid diabetes and you won't get your diabetes treated. However, they will amputate your gangrenous toes once the disease develops that far.
I'm really glad that your family has done well. Every family should do at least that well. Many don't.
It's cheaper to buy off the Dollar menu than to buy out-of-season, expensive fresh produce (like raspberries, red peppers, etc.)
It's much, much cheaper to buy rice, beans, corn, potatoes, and pasta and supplement with cheap proteins (eggs, chicken) and cheap fresh fruits and veggies (melons, bananas, apples, cabbage, carrots; see the list starting on page 34 of http://www.ers.usda.gov/Publications/EIB71/EIB71.pdf ) Page 36 of the same report shows how an adult on a 2000 calorie diet can meet their recommended fruit and veggie intake for about $2 per day, with a pretty good variety (including some expensive options like strawberries.) This is more or less how I eat, and I'm just above the poverty line.
I notice you've dodged my question three times in a row.
I don't agree or disagree with your statistics. They're irrelevant, because Scalzi is describing things he has seen, and that match things I have seen. In the lives of actual poor people. In the US.
I ignored the question because the answer is irrelevant. One can gain knowledge about the world via statistics, not merely personal acquaintance, and statistics also tend to be more useful.
However, to answer your question, yes. I know poor people. I've lived most of my adult life in poor neighborhoods. My experiences tend to agree with what the official statistics say - most poor people eat enough or perhaps too much (virtually none are underfed), don't work much and do not live in overcrowded homes.
These are the specific points on which I disagreed with Scalzi. I cited statistics which back up my position.
You are also dodging a question, so I'll ask it again: which set of statistics do you disagree with? The BLS, the Census or the USDA?
Are you serious? You're dismissing statistics because you believe your anecdotal evidence holds more weight? You're now an expert on poor people because of the things you have "seen" and someone else has "seen"?
Please quit it with the BS. You're not poor. You're not around poor people. Stop describing how poor people live.
I am dismissing his statistics because they do not have bearing on the question that we were discussing, which is whether or not Scalzi was describing poverty in the US. Scalzi is definitely an expert on what he has seen. I'm an expert on what I have seen. As are the hundreds of other contributors to that discussion.
I am definitely not poor now. But we were poor when I was a kid, and only made it through via the help of family and government programs. I am still in regular contact with people who are not as lucky as I was. So enough with your baseless assertions, ok?
My family is actually at the bottom 1%. We can afford a solid standard of living at $15K-$20K salaries because of corporate behemoths like Walmart, which I assume you despise, feed, clothe, and entertain our family at $15 per day.
The poverty line for one person is $10.9k. For a family of four, $22.4k. That covers circa 15% of the population. For comparison, the median income is $44k, so if you're making $30-40k per year (assuming two salaries) then that's not far from the average American household.
It's interesting that all of these links talk about federal income taxes, but you talk about them as if they're talking about all taxes that people pay. Once you take into account payroll, sales, and sundry other taxes that people pay (many of which are pretty regressive), the system becomes much less progressive (it's still slightly progressive as a whole, but much less so than conservatives like to cast it).
This is one reason why Buffett suggests that we keep the 2% deduction in the payroll tax that President Obama proposed (and Congress passed) last year.
The richest pay the largest proportion of taxes because they earn so much. In the article, 400 hundred people make $90 billion, and it takes 3 million people working at $30,000 a year to collectively earn as much.
A family of 4 starts paying tax at around $27,000. They're already paying 6.2% in Social Security and 1.45% in Medicare. (This is also matched by the employer.) That's $2,066.
I want to know how many dollars they should pay in taxes. So, we've said social security and medicare is $2,066. How much should a family of 4 making $27,000 be taxed?
Stop spreading lies - it's incomplete data! Do you work at FOX News or something?
It’s true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008. But people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government.
Social Security, Medicare and unemployment insurance taxes (known as payroll taxes) are paid mostly by the bottom 90 percent of wage earners. That’s because, once you reach $106,800 of income, you pay no more for Social Security, though the much smaller Medicare tax applies to all wages. Warren Buffett pays the exact same amount of Social Security taxes as someone who earns $106,800.
Warren's real federal tax rate on 99% of his income: 59%
A portfolio company makes $1 in income. Without any taxes, Warren could put $1 in his pocket if he wished. Instead the portfolio company (Wells Fargo) pays 33% taxes, then the holding company (Berkshire) pays 29% taxes, then Warren pays 15% dividend taxes. In the end it's 59%, all of which is really truly a tax on Warren once the smoke and mirrors go away.
(- 1 (* 1 0.67 0.71 0.85)) => 0.595655
So right now 7 out of 12 months of his income is taken by the federal government, and he thinks they should take more! Maybe 9 out of 12 months, where ideally (in his mind) the state government would then come in and take the rest.
Could everyone make sure every Republican and Tea Partier they know reads this? Republican concerns are critical to this country, but the current incarnation is deeply harmful.
The combined wealth of American's billionaires is only $1.5 trillion. [1] If we taxed them 100%, it would only pay off our budget deficit for one year. We still have around 54 trillion total debt to pay down. Not to mention 115 trillion unfunded liabilities.
And which entrepreneurs would be stupid enough to work 14 hours a day and hire workers, knowing that the government will tax them 90%? They would all flee the country.
We have too much debt, period. From military, medicare, and social security spending. Problem is, if we reduce any one of these, either our soldiers returns home broke and angry, or the seniors die of starvation/disease. (35% of Americans already over the age of 65 rely almost entirely on Social Security payments alone. Median retirement savings of households over the age of 65 is less than $45,000).
Tough choice. But it looks like the current politicians aren't going to make a decision, but let Bernanke print dollars until hyperinflation arrives.
Stop fabricating numbers. The US National debt is about $14.5 trillion, not anywhere close to 54 trillion.
Btw, the Bush tax cuts — costing $1.8 trillion from 2002 to 2009 — are a big reason we got into this deep hole.
Buffet: 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.
Had you checked the first google result for United States debt, you would have found where the confusion is coming from: the national debt is 14.5 trillion, and the total debt is 54 trillion (Source: http://www.usdebtclock.org/). I'm guessing "total debt" according to the debt clock includes things like state governments and private citizens, although Wikipedia claims that the 14.5 trillion figure is total debt (http://en.wikipedia.org/wiki/United_States_public_debt).
Warren buffet pays about 17%, and the people in his office pay an average of 36%. So the solution, the way to restore fairness, is to raise taxes on him? I don't really think so. Maybe I'm a bit of a wingnut, but I find tax rates of about 30% disgusting simply on moral grounds, and I don't see why the discussion should go much further. Surely one of a government's prime constraints should be not screwing its citizens?
I live in Australia, I'm in my late 20's, I've got a pretty good software dev job and I pay about 25% income tax (which includes 37% above $80k). I don't know what the real tax rate would be after factoring in all of the other taxes I pay.
For such a high amount of tax, I enjoy a very high standard of living. A four year software engineering degree cost me about $18k due to our sane education system, and I've never had to worry about whether I can afford decent healthcare or factored health insurance into career decisions.
Our high tax rate is offset by lower costs for universal services, and people generally have more freedom with their life decisions. As such, a substantially lower tax rate or major cut in social services would be disgusting on moral grounds to me, and I feel that your government is screwing its citizens by doing just that.
You know what I find "simply disgusting on moral grounds"? Shortening the school year by a week because we can't find enough money to pay teachers to teach a full school year. This is happening in our school district and in districts all over the country. The reason is because nobody can make a correlation between the taxes we pay and the benefits we receive.
I don't feel like I'm getting screwed. As a small business owner, I think I get fantastic value for the taxes I pay every year. It could be better, sure, but having lived on 4 continents, it's here that I've chosen to live and start my latest business.
Without government to pay for the roads citizens drive to their businesses, and the infrastructure that gives them water and temperature moderation, and 1,000 other things that are essential to provide for functioning commerce, citizens wouldn't be making so much money as they do. And I'd wager that effect is worth a lot more than 30%.
Exhibit A would be the lack of societal collapse during the 90s, when government spending per-capita and as a percentage of GDP was significantly lower than today.
If we're going to cite the 90s, let's not forget that taxes were a good bit higher then as well. In fact, right at the end there, we had a budget surplus.
Yes, and I agree we need to raise taxes (putting me in a very small minority of libertarians). But as to the question of how much government needs to spend in order to have a functioning society, the clear answer is "much less than it spends today".
Maybe. It depends on what we as a society want our government to spend money on. Considering our current demands in this country (no cuts to entitlements), I think it requires at least that much.
This guy kills me. He's more than welcome to write a big check to the US government. Until he does, you'll all forgive me when I consider him somewhat less than sincere in his desire to see more of his income go to the IRS.
Funny. Buffett certainly didn't mind a little coddling in 2008. He was arguably one of the largest individual beneficiaries of bailouts which shifted ungodly amounts of toxic debt from failed private institutions to taxpayers. See http://blogs.reuters.com/rolfe-winkler/2009/08/04/buffetts-b....
The whole financial system and everybody that depends on it was a beneficiary of the bailouts. If everything collapsed, everybody would have suffered. Buffett just happens to own a bigger slice of the market than almost anyone, so of course he benefited significantly. But singling him out, especially since he's stayed away from wall street's games and made extraordinary efforts to keep things above board for decades, is totally unfair.
"The whole financial system and everybody that depends on it was a beneficiary of the bailouts. If everything collapsed, everybody would have suffered."
A narrative convenient for powerful banks that was created by powerful banks and allied politicians. People have suffered and continue to suffer because of the crimes these institutions have committed. Propping up their corpses only helps the criminals who created the situation. Clearing out bad businesses so that new ones can take their place is a central pillar of capitalism. If you really believe a bunch of billionaires who claim the world's going to end if they lose their billions, well, you're gullible at best. Far from forestalling suffering, the continued operation of these entities and their influence on legislation perpetuates it. Their collapse is the best thing we could hope for, even if it causes short term turbulence.
That all sounds very good, but I'm sorry to say that without a banking system, everything in our society stops working, and the small guy would get hurt a lot more than billionaires.
Without a banking system? The idea is to have a banking system that works and follows the law and doesn't require trillions in handouts to stay solvent, not no banking system.
The entire US financial system is based on credit and liquidity. Clearly something had to be done. Do I agree that the bailout was the best way to do that? No. But a timely bad plan was better than an untimely good one.
By the way, the argument that nothing needed to be done is opposed to practically every economics departments' opinion in the country. Maybe you know more about economics than we all guessed, but I think it's time you show a PhD instead of arm-chairing here.
The something that clearly needed to be done was to make the perpetrators pay for the damages of their crimes, not the victims. If the US financial system collapsed, there would be a deflationary shock and the short term high unemployment associated with an economic realignment, but the country would be much healthier financially in the long term. Instead the crisis is simply being dragged out, with the inevitable day of reckoning certain to be much worse because of it.
The amount of money the US has pumped into its corrupt financial system is enough to put its entire population on welfare for years. A sane approach would have been to let the banks fail, let the markets tank, and ease the transition as needed with bottom-up debt relief and aid.
You should do your research before making statements like "especially since he's stayed away from wall street's games and made extraordinary efforts to keep things above board for decades."
Buffett didn't sit idly by while his holdings were threatened. He lobbied for, and supported, bailouts.
Not content with bailouts of companies he owned large stakes in, he made sweetheart deals to invest in Goldman Sachs and GE knowing what was going to happen. Have you ever explored those?
If his GS and GE investments aren't convincing enough, here are a few choice examples of the Oracle of Omaha's hypocrisy:
2. Buffett once famously warned that derivatives were deadly, but when it came time to put his money where his mouth was, he lobbied against proposed derivatives regulations that would have cost Berkshire billions (see http://www.independent.co.uk/news/business/news/buffett-lobb...).
Bottom line: whatever one may have once thought about Warren Buffett, his actions over the past several years make it clear he is no investor, he is a corporatist. And quite a successful one at that.
I've done my research about Buffet. I've read 2 biographies, a compilation of his annual letters, some of his early partnership letters, and most of his op-eds and TV interviews. The people who criticize Buffett usually don't know much about him and it shows in how they paint him in the stereotypical tycoon brush.
I sincerely believe that he was in favor of the bailouts because he thought that it was the least bad option at the time. Without more liquidity in the system, things could have turned out much worse than they did.
Sweetheart deals in GS and GE? Buffett had lots of cash and they needed it, so he made deals that were very profitable to BErkshire and they took it because they didn't have a choice. I'm sure he expected the government to step in because it was obvious to him that they didn't have a choice, but I don't think he had inside information.
Buffett has explained his derivative investments in recent annual letters, and his explanation made perfect sense. I'm sure you can find it, it was probably in the 2009 one ±1 year.
Both Buffett and Munger have been very critical of rating agencies and accountants, but I'm sure they've also defended both against criticism that they think is unfair. It's not because you're wrong that you're wrong in all ways, always in bad faith, and about everything.
I only had time to skim the first article (getting late here), but I agree with Buffett's reasoning on the TARP issue. If the banks DID pay back their debt, then why should they be the ones taxed? He's not saying that industries shouldn't be taxed to cover losses, he's saying that the government should go after specific industries (like the auto industry) that aren't performing as well as they should be. Chase, if I remember correctly, was very good about repaying their loans on time. Now why should they be punished for that?
Oh, and Warren Buffett plans on donating the vast majority of his wealth away upon his death, so I usually give him the benefit of the doubt and believe that his suggestions are intended to improve the economy as a whole rather than build up wealth. What's it matter to him if he makes or loses another billion when he's giving it away in the end? Nah, I think he's a good guy.
Yet he is the only one who amongst the super rich in America who is talking about raising taxes. He is doing this specifically because of the positive impact it would have on finances for the country, despite the fact that this would have a disproportionate/fair share effect on his tax payments.
None of the positions you linked are inherently contradictory. Especially in the derivatives trading I have the feeling you have no idea what you're talking about. Going back and requiring existing derivatives contracts could cost a huge amount of money and time that wasn't taken into account when they were first bought. Applying the regulation to future contracts is a perfectly reasonable suggestion (especially since the vast majority of derivatives contracts are short term).
btw, When Berkshire acquired Gen Re (a massive reissurer), they closed down its derivatives book. It cost Berkshire hundreds of millions and took years, but they closed that book because they couldn't understand these derivatives.
The ones that Buffet has invested in are way more straightforward, don't pose any systemic risk, and have very different collateral requirements than the toxic stuff.
Prehaps they all benefited, but it seems as if the bailouts benefited the most irresponsible people far more than the rest of society.
The banks should have been allowed to fail. The only reason capitalism works is by providing a huge incentive to do things right. Bailouts like these will convince companies they can get away with the same thing in the future.
People talk as if shareholders in companies like AIG and Citi escape scot free. Citi is down 93% and AIG is down 98%.
The point was that you didn't have a domino effect that took down the whole world economy (no industry that is bigger than a corner store can function without a banking system). Throwing out the baby with the bathwater just so you can punish some people is counterproductive.
Given how much of everything moves based on short-term credit, it is unlikely anybody would have been able to step in before the economy imploded. The credit crunch was not about being able to get funds to build a new building, it was about being able to get funds to ensure the shipment of raw parts was sent (taken recursively through the entire supply chain all the way to your local retail outlet).
If that had seized, it would have been far worse than the bailouts.
Unfortunately, there should have been at least civil penalties (and probably criminal pentalies) associated with building and hiding enough toxic assets to tank the banking system. The real travesty was not the bailout, it was that there were no negative consequences (relatively speaking) to the people who caused it (which is a tough question to answer, but not enough effort was made, IMO).
I don't think you understand how everything is plugged into the credit markets and banking systems. I suggest you read Sorkin's book a as starting point.
Our deficit is $14.6 trillion. TARP, which cost ~$80 billion (with still more to be paid back), is a rounding error in that deficit. Changing tax rates would have a much bigger impact on the deficit.
I was thinking about the cumulative 10-year deficit. I swear I've heard the number $14.6 trillion somewhere, but maybe I'm thinking of the debt. At any rate, I wasn't that far off. From the link you gave:
By 2021, the budget deficit would be about double the baseline projection, and with cumulative deficits totaling nearly $12 trillion over the 2012–2021 period, debt held by the public would reach 97 percent of GDP, the highest level since 1946.
Adding in this year's deficit, it comes out to $13.5 trillion.
TARP is a rounding error all right--compared to the $16 trillion the Federal Reserve has provided to private banks behind the scenes. TARP was just political theater.
No. This thread is a font of misinformation. The Federal Reserve lent $16 trillion in total transactions at the primary credit interest rate to banks over years worth of time. This number is clearly cited to provoke populist rage but is completely ridiculous when analyzed intellectually.
Look, consider this analogous situation. You're having trouble meeting your short term debts but had a solid line of income so you come to me and say, "I need $10 for lunch today but I can pay you from my paycheck at the of the day." I know you have a job and confirm your paycheck so I say, "OK. I'll lend you the money." So Monday comes and goes and you pay me back. Now, times are tough so you have to do this for a full 2 weeks before you can get back on your feet. During this time I lent you $10 on Monday, got payed back on Monday, $10 on Tuesday, etc. At the end of the two weeks would it be accurate to say I lent out $100? No, because I only really lent out $10 at a time. In fact, I really just lent out the same $10 ten times.
This is exactly the same situation. The $16 trillion is in total amount of money lent but it doesn't actually reflect any amount of money lent at any given time.
What on earth are you talking about? Where did I or the article claim anything about amounts lent at any given time? A total of ~$16 trillion was secretly lent to failing financial institutions at extremely low rates over 3 years. That's just a fact and it's an enormous sum that dwarfs programs like TARP regardless of how the transactions were divided. If it provokes populist rage, maybe that's because it should.
If it provokes populist rage, maybe that's because it should.
I will no longer argue this with you as it is clear you are not interested in logic. I am not interested in clouding a debate with emotion so I'm done.
Sometimes emotion can be a logical response to events. If you feel disgust at the actions of a murderer or thief, there is nothing logically 'cloudy' about that--it's a justified reaction. You allege that simply stating a numerical figure that represents the sum of the Fed's loans over a 3 year period is 'designed to provoke populist rage'. My point is that if just printing this number leads to strong emotional responses, it's worth considering if those responses are justified. So you see, I'm not actually bringing my own emotions into the discussion, just countering your assertion that reporting the sum amount of the Fed's activities is somehow 'designed' to create anger. So it seems you're the one getting emotional here and taking your ball and going home. I'm just stating my thoughts. But anyway, c'est la vie... thanks for the discussion.
99%+ of his wealth is in Berkshire, though, so the better Berkshire does, the more billions will go to Gates and a few other foundations (mostly run by his kids).
"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. "
If you really want to see something get passed, you're better off putting the cutoffs at $5mil and $25mil(maybe even slightly higher). The $1mil cutoff sounds nice in a soundbite and it polls well, but it's not hard to find sympathetic faces(small businesses and large family farms) who would get caught up in that. His cutoffs would end up hurting the the "upper middle class" and the "lower rich" more than the "super rich".
And if you want "shared sacrifice", you should be talking about a consumption tax.
What this country needs most is a firm federal spending cap at 20% of GDP. There would be less opposition to raising taxes and balancing the budget if the measuring stick for spending wasn't tax revenues but the GDP.
Buffet is talking about "Taxable Income" meaning a small business or family farm would have to be making 1 Million in profits for it's owners before they would actually be effected by such an increase in rates.
Consumption tax would likely put an undue burden on the poor because where as the rich invest and save a large portion of their income the poor spend close to 100% of what they make on things like food and housing.
"Buffet is talking about "Taxable Income" meaning a small business or family farm would have to be making 1 Million in profits for it's owners before they would actually be effected by such an increase in rates."
I understand perfectly... go ahead, put the cutoff at 1Mil and you're going to lose politically.
"Consumption tax would likely put an undue burden on the poor"
I don't care... I'm mocking the idea of "shared sacrifice"... the poor pay almost no taxes.
How on earth does consumption tax have anything to do with "shared sacrifice"? Consumption tax wrecks the purchasing power of the poor (who spend pretty much 100% of their income on taxed goods) and doesn't have any effect on the purchasing power of the super rich (who typically only spend a minor portion of their income on consumer goods).
Once I realized that you could take all the money from the rich, stop all defense spending, and still have a massive budget problem? These sorts of things stopped being an issue for me.
Seriously folks, it's a red herring, an issue created to make sure that one party has something to fight the other party over. If you want to sack the rich, have at it. Just don't pretend that by taking that position you are doing anything at all for the national treasury. Or poor folks, for that matter.
In the larger picture, many technologists view the state as something of the past. Tens of thousands of people make their money simply because computers are hooked to each other over wires. It has very little to do with national budgets or policy (yes, you can throw out a bunch of silly nonsense about national broadband policies and such, but let's get real: this economic activity takes place in all sorts of various scenarios.)
So if you are the type to sit around pining away your day, thinking about all those super-rich folks and how good they have it, I'm sure this will be a fun article for you. If, however, you are concerned with public policy -- and the fact that in the US, at least, the majority of people do not even pay an income tax, yet vote on the rates for the rich minorities (gee, wonder how that will turn out?) then this is all so much posturing.
I don't feel a need to slam Buffett. He's a patriotic citizen who means well. Smarter guy than me in a lot of areas. I'm just not sure that this article has anywhere near enough merit to have 500+ points on HN. It offers no solutions, only rehashed populist tripe. If you want to set the income tax at 95% of all money made over a million bucks? Have at it. It's not important.
I would appeal to simple reasoning: everybody has known that the U.S. is on an unsustainable spending curve due to entitlements for the last decade or more. The only thing that changes is how politicians choose to spin it from year to year. If you create a system where politicians get elected promising to spend money that doesn't exist, then such a system will outgrow any amount of revenue you can throw at it. If you somehow changed the rates right now and squeezed enough out of the economy to make it all balance? Ten years from now some new bunch of guys will be running on a platform to provide SUVs in every driveway or something equivalently intellectually sexy and emotionally attractive. It's simply too enticing not to.
But you asked for something solid, so here's the result of some random Googling. Note that it's a little unfair for this author to use the current year's deficit in this calculation, but then again with growth rates where they are it's only a decade or so until such spending will be commonplace even in a frugal environment.
There are about 400 billionaires with a total net worth of around $1.3 Trillion.
Seriously, this entire discussion all boils down to how honest you can be about how the system is broken, not which party is to blame, how much the rich should pay, whether or not we need more or less government, or any of that. All of that nonsense is just bullshit to keep you coming out to vote.
I'd also point you to a graph of total debt as a percentage of GDP. http://www.usgovernmentspending.com/federal_debt_chart.html Even if you argue that the last year or two is somehow "special" (A common theme when its your guys spending the money) It's plainly clear that the trajectory leads to default in a very short amount of time.
'everybody has known that the U.S. is on an unsustainable spending curve due to entitlements'
I wouldn't agree with that. I would say that the problem is fighting two un-funded wars coupled with a decrease in revenues caused by the Bush Tax Cuts. Long term we have issues with popular entitlements such as SS and Medicare. But our immediate problems are generally due to the drop in revenues from the Bush era and an massive increase in military spending.
The entire net worth (not income) of all billionaires in the United States may be about $1.3 trillion[1]. Therefore, if you took all of the money currently held from all U.S. billionaires, you would decrease the national debt by about 10%, or cover the deficit for just one year. A high (say, 90%) income tax rate would presumably bring in even less.
Yes. Also note that the super rich, as Buffett points out, make money by investing, not by regular income. The purpose and art of investing is to place money in the best spot. So if you took all the money they had, you'd be a trillion or two ahead, a huge amount of investing would stop, and there would be no more money from them in the pipeline. If, instead of sacking wealth you stuck with income only (perhaps with progressive rates), somebody would simply do the math and put the funds in tax-free bonds or something.
Money, especially money of this scale, works for people. It will find the best spot to stay untouched and continue to work. You don't pay an accounting firm and tax lawyers in the six or seven figures for nothing. In fact, many argue that the way you get rich is to be a better steward of money than the other guy. If you took 100 people, gave them each a million bucks, in a year only one of them would probably have kept it and increased it. Odds are that was the guy who was already rich to start with -- who already had good habits and wise spending strategies.
I mean honestly, there's a wee bit of irrationality in Buffett's position. You don't get wealthy by putting your money in places where it disappears, so why would somebody who was super frugal and managed to plan where each and every penny went leave his money in a spot were it would decrease drastically if he didn't have to? Buffett's going to haggle and fight tooth and nail over some small sub-percentage points on a huge acquisition and then not manage his own money so that it works optimally? Huh?
Ah, the poor little rich minorities. We've simply got to protect them from everything. They "create jobs" or something, after all.
Though, that's actually wrong, too. 98% of small business tax filers earn less than US$250,000 a year, yet account for 64% of the job creation (or "net new jobs") in the last 15 years and employ over half of the working US population [1].
I'm sorry, but the rich are not bothering with a <$250k a year business if they're already rich, unless they're serial entrepreneur, hyper-multitaskers juggling multitudes of them at once. And, aside from Elon Musk, how many do you know that are willing to do that?
This whole mess is the placation of the rich because they'll "move" if we don't give them everything. The question is, what country would they move to? I mean, I'm sure Singapore is nice and all; but it's hot as hell there, and don't they have Universal Healthcare with government-mandated price controls, which is supposedly every rich man's nightmare according to Fox News?
Russia is nice, too, I suppose. If and only if you're former politburo or an officer, or just a jackbooted mafioso thug (or willing to take any or all of those on without Uncle Sam backing you up).
Hong Kong is part of a communist country that only recently has conveniently added capitalism to their repertoire. If that doesn't work out for them, how soon would they "nationalize" all of that island and it's hard-won successes contained therein?
Of course, others have noted Somalia, Mexico, and various developing countries. Take your pick.
"If you want to set the income tax at 95% of all money made over a million bucks? Have at it. It's not important."
If it's not important, why all the falsities about "taking everything from the rich" and stopping all defense spending and it not mattering? It would matter a shitload, no offense. DoD + discretionary spending (which the military swallows almost all of) is almost 40% of the entire budget.
What's left is Medicare and SS, which in 2000 was well-funded and flush with +2 Trillion in the kitty. The tax breaks of 2001 and 2003 and the wars of roughly the same time erased nearly all that and left IOUs. Now, you're blaming those programs for our downfall.
So, yeah, you're right, it's not about taxes, it's about those "poor people" who "do not even pay an income tax".
If Buffet finds it so wrong that he pays so little tax, I am sure the IRS wouldn't mind if he paid more.
Personally I would adjust Social Security to the expected life time (and re-adjust it every year); get out of Iraq, Afghanistan and Libya; half the army (you got nukes, you don't need that big an Army to defend yourself) and stop the war on drugs.
Services provided by the government are public goods. It's blindingly obvious that a single person cannot pay for those public goods. Just Buffett's own contributions, no matter how much he donates, will not be enough to solve our budget issue. It's called shared sacrifice because it's meaningless unless everyone participates.
It's like the neighborhood park (i.e. medicare/social security): Everyone wants one, but nobody wants to pay for it. In steps the neighborhood's rich kid (Buffett), who suggests that all the rich kids pitch in to pay for the park. If that happened, everyone would be made better off, but one kid alone isn't enough.
This is a very canonical problem of public services provisioning and funding. It's completely naive to sit back and suggest Buffett tackle the issue himself, because we all know that's ridiculous.
Open your eyes. The problem is not Buffett's to solve. But he recognizes that there is a problem.
Apologies for the harsh tone, but it baffles me how members of Hacker News can think so naively. The attacks on Buffett are utterly unfair and unjustified. We should all have an open mind and try to understand the proposal.