I guess the solution couldn’t possibly be cuts that reduce our longer term spending.
No…Because we are talking about the rate of taxation on his actual income, i.e., as a percentage of his income, not as a percentage of his wealth. You are just throwing up a bunch of irrelevant fluff that you could save if we have a thread about instituting a wealth tax but is just irrelevant here.
The main reason that Buffett’s tax rate is low is because most of his income is long-term capital gains or qualified dividends, which are taxed at a 15% rate…and, yes, Obama is proposing changes to that.
So, you are saying that the Buffet Rule would increase taxes on Buffet? Surly not the $250k or greater income tax, which I thought was what was being discussed, so it must be some other part. Do you have a cite for that, because that’s contrary to my own understanding of the Buffet Rule proposal.
Sure. You may recall that he PPACA included more than $500 billion in cuts to Medicare, including both payments to providers through the IPAB and cuts to Medicare Advantage.
Not only proposed but passed and on its way to being implemented.
I reacted irritably to your post which was a complete misinterpretation of my post. If you wish to make amends, kindly reread the post to which yours was in response, figure out the point I was making, and indicate whether or not you agree with that point – not the point you wished I made or wished to argue against, but the point I actually made.
Please demonstrate how you reach this conclusion.
Bingo … And the other part of the issue is that our drive-by tax warrior for the plutocrats makes the incorrect claim that "The upper 1% (THE RICH) pay on average about 37% of all tax revenues while the upper 10% (THE WELL OFF) pay on average over 70% of all tax revenues. " What he is actually talking about is only federal personal income tax revenues. He is apparently unaware that there are other federal taxes, such as payroll taxes, and also lots of state and local taxes and that most of these other taxes are regressive…i.e., they take a larger percent of income from the poor than the rich.
Apparently, we are encountering someone who actually believes that the Wall Street Journal editorial page is a reliable source of factual information (and then he is confusing the cherry-picked facts to boot).
They also pay a higher percentage of the tax burden than their percentage of either wealth or income.
IMHO, that’s fair. The question isn’t whether, but how much more should they pay.
Also IMHO, everyone should have some skin in the game. If we’re raising taxes on anyone, we should raise taxes – at least a little – on everyone.
But I agree that the real problem is income inequality. I suspect that the main reason for income inequality is that the US middle class doesn’t have the productive capacity that it had in the 50’s 60’s and 70’s, compared with the rest of the world. Not that our capacity has gone down, but the capacity (and efficiency) of the rest of the world (especially Asia) has risen. This has little to do with politics, except perhaps foreign monitary policy (e.g., goading China into allowing their currency to rise to market levels.)
The Senate bill that Pelosi is trying to force a vote on in the House both raises the top two marginal income tax rates and also takes the tax rate on long-term capital gains and dividends from 15% to 20% (this is still lower than what it would be if we go over the cliff - for dividends in particular). So it would, in fact, increase taxes on Warren significantly.
It keeps all other income taxes at their current levels, and patches the AMT.
The so-called “Buffett Rule” is actually a bit different and would be part of a broader tax-reform plan. It’s almost like another version of the AMT, and just says that if your total income (whatever the source) is high enough then your effective tax rate can’t be below some threshold (I believe 30% is the number thrown around). As far as I know this has never been voted on in either chamber and is not part the current negotiations in any way.
First of all, I was not talking only about the Buffett rule but Obama’s full tax proposals. Second of all, the rise in the $250k+ rate is not part of the Buffett rule.
As for the Buffett Rule:
So, yes, the whole purpose of the Buffett rule is to not allow high income taxpayers to pay at a lower rate because, for example, a lot of their income is taxed at the lower capital gains rate.
In addition, in the campaign, Obama proposed increasing the maximum rate on capital gains to 20%:
I am not exactly clear how these two proposal interact or what exactly Obama has put on the table in his opening proposal in the fiscal cliff negotiations. I leave that as an exercise to the reader. (And, in preview, I see that the post right above this by Jas09 addresses this.)
Why even bring up Warren Buffett’s name then? I’ve got a cynical thought. I think it’s because he’s widely known to be worth something like $50 billion and that your average person will confuse wealth and income as well as realized and unrealized income.
Also, most of Buffett’s income is not long-term capital gains or qualified dividends taxed at 15%; the vast majority of it is unrealized mark-to-market gains not subject to any taxes. Warren Buffett will not be affected in a meaningful way by any of this. He is only being brought up to confuse your average American.
BTW, as a value investor, Buffet takes profits regularly, compared to a “buy and hold” investor who can be sitting on a mountain of unrealized gains. No doubt he has substantial unrelized gains. But he also has substantial realized gains – probably a much higher ratio than average, as an active value investor.
Why is everyone so freaked out about the idea of returning to tax rates that worked extremely well in the Clinton era, which very few people had real issues with, and which actually produced the best economy of the modern era and a budget surplus?
In the light of that truth, all the whining, wailing and gnashing of teeth is nothing more than the bitter complaints of teenage drama queens.
No one is going to go bankrupt, no one is going to flee the country, no one is going to shut down their business because of it. At least no one with more than 2 synapses in their heads.
As I have said before, the entire purpose of the temporary Bush tax cuts was to stimulate the economy and produce jobs. Since it has clearly FAILED at this, it is time to eliminate them.
Sure, tell me where I am off. Here’s what you responded to.
I read this as, he believes the high earners do pay their “fair share”. You respond with this.
I read this as you saying his statistics are misleading. You then say this.
I read this as you saying that in contrast to his previous misleading statistic, in real life the very rich really do pay a lower rate than the middle class. You then go on to explain why you think his statistics are misleading with this.
Therefore, to a simpleton like myself, this means that while the rich may pay a huge portion of the tax dollars (referenced in those misleading statistics from spactransient@gmail.com) this is only because they make so much money, and they really should pay a higher rate (since as you said, Buffett really does pay a lower rate than his secretary).
So now I respond essentially chastising you for criticizing spactransient@gmail.com for using misleading statistics when I feel your Warren Buffett point is one of the more misleading talking points used by politicians.
Where am I off base or misrepresenting you?
I interpret the back and forth like this.
spactransient@gmail.com: The rich really do pay a lot in taxes.
septimus: No, they don’t that’s misleading. They pay a lower rate than the middle class. They pay a large dollar amount of taxes not because they have high rates but because of income inequality. Income inequality is bad.
LonghornDave: I don’t think raising the tax rates on the wealthy fixes the trend of rising income inequality as rising income inequality is not just a result of the tax code.
septimus: You are stupid and think that everything has a single cause when real life is more complicated than that.
LonghornDave: I am confused; it seems like I left myself open to an entire world of causes for this problem by not even stating an opinion on what causes income inequality.
This summary is more sensical than your previous. Except that your way of saying that income inequality has multiple causes was to imply (with no justification) that I thought the oppposite. :smack:
You are talking about Berkshire Hathaway and not Warren Buffett as an individual. Buffett’s individual net worth is his ownership of Berkshire Hathaway that he has held and is sitting on a mountain of unrealized gains. Berkshire Hathaway does as you say and pays taxes at the corporate level. The Buffett talking points that Democrats use are based on his individual income tax returns.
The misleading aspect is that his income is whatever he wants it to be, timed however he wants it, and in whatever form he wants it. He could pay himself a higher salary for example (I think he only makes something like $100,000 as a salary). He could have Berkshire Hathaway pay out a special big dividend or increase the quarterly dividend. He can sell stock. He can use his stock as collateral for a loan. He is in a position that it does not matter what the tax rates are, he can get however much he wants and manipulate it in such a way as to pay the least. Therefore, he is not the example to use when trying to explain why rates should be increased (Mitt Romney would have been a better example to use).
And I guess the natural response is that not only are talking head politicians on both sides in universal agreement that the Fiscal Cliff will have negative effects, but essentially every economist as well. Most economists think the effect is something over 3% of GDP. This level of contraction in the economy would be comparable to what was experienced in 2008/2009.
Furthermore, it is the perfect opportunity to have a long-term discussion of the fiscal policy. It isn’t just returning tax rates to 1990s levels. You may recall that the long-term sustainability of social security and medicare were big issues even back then with the strong economy and balanced budget. It wasn’t just Republicans trying to be mean to poor people either. We are on an unsustainable path. This is not really in dispute. There is no way out of this except to reform spending and taxes.
It seems to me that Republicans are giving signals of breaking with their absurd no-tax pledges. They want to tie this to entitlement reform. This is actually a good thing. It is time for Obama to step up and put out a real proposal. The one delivered by Geithner really was a joke.
The simple fact is, just because you don’t like how Republicans are anti-gay and anti-abortion rights and pro tax cuts for the wealthy doesn’t mean they are wrong that there simply isn’t enough money to fund medicare in its current form.
But, most of that is due to the draconian spending cuts and the tax increases on the middle class. Almost none of it is due to the tax increases on the plutocrats. Allowing the tax cuts on the wealthy to rise back up to Clinton-era levels is not only the most painless way to cut the deficit in the sense of who it affects but is also about the least possible amount of economic hit you get for any combination of tax increases or spending cuts to enforce austerity (i.e., lower the deficit).
The simple facts are actually these:
(1) Social security is solvent for many years in the future and that solvency can be extended out much further by simple actions such as getting rid of the cap on income subject to the tax.
(2) Medicare is not what is unsustainable. The growth in medical costs as a whole is what is unsustainable. Just offloading those costs onto citizens does not make things more sustainable. In fact, the estimates are that health care costs for Americans would go up in net if the age for Medicare eligibility were to rise from 65 to 67. (This is presumably because Medicare is more cost-effective than private health insurance.) As that piece explains it, “Overall, according to independent assessments, the government would spend less on medical care, but the country as a whole would spend more, which is precisely the opposite of what public policy is supposed to be achieving right now.”
[QUOTE=jshore]
Allowing the tax cuts on the wealthy to rise back up to Clinton-era levels is not only the most painless way to cut the deficit in the sense of who it affects but is also about the least possible amount of economic hit you get for any combination of tax increases or spending cuts to enforce austerity (i.e., lower the deficit).
[/quote]
Come to think of it, that’s the interesting, no-brainer thing about the current situation: It is often claimed that there is a trade-off between equality and efficiency, i.e., you can have a fairer distribution or a larger pie for all but not both. And, surely, at some point that would become true. However, at the point that we are at currently, it is really a no trade-off issue: Increasing taxes on the wealthy is not only the fairest thing to do, it is also the best way to reduce the deficit without harming the economy. When the Republicans are saying that now is not the time to raise taxes on anyone, they are just blowing smoke: If they think it is not the time for austerity, then it is not the time for budget cuts either. It is simply not the time to worry about the deficit.
However, if you are going to worry about the deficit and enforce some measure of austerity then the way that seems likely to cause least pain to the economy is to raise taxes on the wealthy.
Straw man since I said nothing about medicare or entitlements. I happen to believe they are getting out of hand, but I don’t buy the line that President Obama is doing nothing about them. His proposals have included cuts. True that they probably aren’t enough, but instead of negotiating in good faith and accepting some tax increases and asking for deeper cuts, the Republicans are playing stupid and consistently refusing to define exactly what cuts they want, what deductions they want eliminated. Throwing out numbers with no basis behind them is not a real proposal. It’s playing to their base while ignoring the “reality based” world around them.
They’re also flat out LYING by screaming about Obama’s cuts while denying the specifics of their own desired cuts. The whole reason they don’t want to specify that they DO want to slash Social Security and Medicare is because they want Obama to do it so they can continue to milk that lie to America.
Eh, I think Ravenman covered it in post #6.