Yeah, the idea that “letting tax cuts expire is not a tax increase” is laughable. One might as well claim that it’s not a tax cut unless you reduce taxes to a point lower than the lowest point that ever existing in history.
Well, I think it is really bad form/horrendous lazy for another poster to throw that out there and not back it up, but it happens to be a claim I think is generally accurate.
The tax bill was written by the same process that created the ACA repeal: Republican leaders picked a handful of Republicans to come up with a proposal that could get 50 votes in the Senate.
The hearings on both proposals were minimal. The markups - which is often where legislation changes the most - were moot. The process was so rushed that I guarantee you that not more than five members of Congress really understand the bill to any working level, and probably fewer than that.
And if you don’t agree with all of that, let me repeat this again: in the Senate, Republicans worked on a bill in committee and on the floor, to which Democrats were allowed to offer amendments to, but to no end because that bill was nothing more than a ruse.
At the very end of the process, Republicans offered their real plan as the final amendment, which had significant differences from the proposals that had been debated before. Once a majority vote on that amendment was achieved, the bill was passed within hours of Dems actually even seeing the “real” tax bill that was drafted behind closed doors - not in the committee process.
The rules of Congress clearly allow this to happen, but it’s pretty ballsy to say to the party that had almost no idea what they were voting against that they were participants in the process. I hardly call getting something jammed down your throat as being participants in the jamming process — more like recipients.
Not just Dems. The bill was written by leadership. Rank and file Republicans also did not get to participate, unless they were willing to pull some brinkmanship and threaten to vote no. Few are willing to do that with any plausibility, so they were shut out.
Thanks Ravenman. I appreciate your thoughtful response.
Does that square with what Orrin “bullcrap” Hatch had to say about the pass-through provision? In case you missed the controversy, from here:
It doesn’t sound like the provision was consistent through the process, but Hatch makes it sound as if it was right there, front and center, the whole time. So, did he earn his nickname once again or not?
Warren Buffett comments on the tax plan. It will save him less than a million dollars per year — for one thing, his tax rate is already less than a typical upper middle-class income tax rate — and when payroll taxes are included Buffett will now pay a much lower rate than his cleaning lady — but he has friends who will save “tens of millions of dollars annually.”
At the 3:30 mark he says “I look like somebody who deserves a [tax] cut!” (What greed. And at one point he openly admits that he’s found a way to avoid estate tax on over 99% of his wealth: he’s going to spend it for vaccinations in Africa and what-not. Is this the same chicanery that the multi-millionaires in Cabinet and Congress use?)
[off-topic] I was surprised to hear that Berkshire-Hathaway is #2 on the Fortune-500 list by revenue. (Walmart is #1 with more revenue than #2 and #3 added together.) #5, #6, #7 btw are all three in health-care: I guess the industry’s raping by Obamacare is exaggerated.
Everything I’ve read says that the provision was not in there until Hatch put it in. But it’s important to note that just as Democrats and most Republicans didn’t see the texts until the big reveals, reporters didn’t either. So it’s possible that the idea was floating around in various permutations of non-public drafts and that Hatch was simply confused about whether it had ever been part of any of the bills as they were brought up for a vote.
He was being facetious. Buffett’s point with the cleaning lady comparison is that it’s ridiculous that there should be a way for him to pay less in taxes than his cleaning lady pays.
I doubt it. If you leave no estate, you’ll pay no taxes on it. It’s perfectly legit to reduce the size of your eventual estate by giving money to charity.
Now if you give money to people (e.g. your offspring), that doesn’t meaningfully reduce your estate for Federal estate tax purposes, since we have a unified estate and gift tax system; it all gets taxed together. (Only a concern if you’re a multimillionaire in the first place, of course.)
Signed into law a few hours ago.
The problem I have with someone like Warren talking about the situation that he pays a lower tax rate than his cleaning lady or secretary or whoever. Clearly he is doing things to reduce his taxable income. No numbers were displayed and I did not write them down and they seemed to sort of talk around the numbers instead of showing specific examples.
But I think she said something like 19.5 million. According to the Interwebs, Berkshire Hathaway pays him $100,000 a year. Now, clearly he does not live like a person making $100k per year. I am guessing he lives in a nice place, drives a nice car, eats in nice restaurants, travels, etc. Maybe he has things set up so the company pays for things, or some other methods of not needing as much money salary to live like that. Then I must assume the 19.5 million is from dividends or other such things.
I am not sure how his taxes go, but he is clearly taking advantage of tax laws to pay less money. He said he would have saved almost 700k under the proposed tax bill (this was back in July, so probably a bit different numbers). But to pay an effective rate of 16% (I think that was the number he said) he would have to be using losses and other techniques to drop his taxes.
So, if he is doing things to drop his taxes and his cleaning lady cannot, then he is choosing to pay less in taxes (which I am fine with). I get that his arguement is that congress has written tax laws that allow him to do this, and they should not allow such (hence the minium required percentage). But he did not say “I could have paid less in taxes due to the loopholes.” He basically said “I did pay less due to the loopholes.”
My point is, it is real easy to complain that the loopholes exist and that they should not when you know they are not going to change them. What is harder is saying “I am so principled, that I will pay more than required. I will not use the loopholes”
He talks about giving all the money to charity. Why not give each of the 367,700 employees of Birkshire Hathaway 200k into their 401k portfolios? That would still leave a few billion for his family or charitable causes.
It also goes to show that even with the extreme amount of money we are talking about (77 billion), it is not life changing money when you spread it out even over an entire company.
I doubt he does his own taxes. He doesn’t even have to ignore the loopholes in order to apay more in taxes, the IRS will be more than happy to take any donations you care to give them.
Pint is, if you do not use the loopholes, you are stupid. If you deliberately play by more strict rules than your competitors, then you lose, they win, and they continue to play by the rules they were playing. It does society no good to, as an individual, pay more in taxes than your assessed share. To imply that someone is a hypocrite because they don’t pay more taxes than they are legally required to, while also saying that they should be paying more in taxes is to not understand the issue in the slightest. It does the country no good for him to pay more taxes if his peers are not also doing so.
Now, what his peers have done, is to lobby congress critters to increase the size and scope of the loopholes, allowing them to find more ways of reducing their share of funding the government.
Right, and that is why it is useless to complain about one person not paying more taxes than he has to. He could pay his entire net worth in taxes, and not make a dent in the budget. But, if his peers also chip in, they don’t have to give up as much individually in order to have more collectively.
Most people would be surprised:
If his cleaning lady lives in Nebraska and pays any federal income tax at all she must be the highest paid cleaning lady the state. If she does pay some income tax this year, it’s unlikely she’ll pay any under the new law unless she’s been following Buffet’s investment advice, and then she should count her blessings. 
How much do you think that people have to make before they start paying federal income taxes?
If she is making $30,000, then she is paying about $2000 in federal taxes.
Even 20k you pay $800 in federal taxes.
As far as highest paid in the state, I don’t know about that. She’d have to be in the top 10% to be breaking $30,000, to be sure, but she’s also the cleaning lady of one of the richest people in the world, so I don’t think that that is all that invalid of an assumption. That’s an effective tax rate of 6.6%, and a marginal rate of 12%.
Once you add in payroll taxes, that takes it to effective rate of 14%, and marginal of 19% (21% and 26% respectively if she is self employed, or we are counting the employer’s contribution).
Those numbers are certainly higher than what many in the top 1% are paying.
I think Buffett takes advantage of the carried-interest tax loophole. It treats certain income as capital gains instead of normal income, and it benefits extremely wealthy people who make their money in private equity.
That’s net taxable income, not gross. 45% of housesholds in the US pay no federal income tax, so if she’s making more than 45% of the households in the US, she’s doing quite well cleaning houses in Nebraska. It could very be that she’s married and her husband makes enough money so they pay some. Or, Buffet pays her way above the going rate, in which case she’s not much of an example of a “cleaning lady” in this context.
Re: the cleaning lady I don’t recall if WB was including payroll taxes or not.
The figures I used were for a gross pay of $30,000. Net is less after deductions. This was a fairly random calculator that I picked, if yu have one that is more valid, I am happy to play with it instead.
That 45% does also include retirees, families of military service members serving abroad, people with a bunch of kids to deduct, the people that make so little that they do not pay any taxes, and the people that make so much they find ways of not paying them at all.
She may be in the “bunch of kids to deduct” group, and therefore, pays less in taxes, but I used figures for single and no kids.
If your adjusted income after deductions is greater than $12,000, you will have a federal tax liability.
She doesn’t need to be making more than 45% of americans (which would only put her in the $40k’s anyway) to be paying more taxes than 45% of americans.
FICA is a different item, and it’s a sort of fee-for-service type thing since you generally get back something related to how much you put in. If anyone wants to eliminate FICA, and ease the cleaning lady’s tax burden, I’m all in!! I’m happy to finance my own retirement with the money I would normally put into it.
Me too. I’d even be satisfied with an opt-out provision.
Well, I was only half-serious since getting rid of FICA isn’t in the cards. But if the Democrats want to campaign on folding it into the general fund, and tax folks for it like we do for income tax, they can certainly do that. The only problem is, they’d end up losing seats in Congress by doing so. FICA is the way it is for a reason, and we don’t (and shouldn’t, IMO) design our federal income tax around that historical fact.