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Thread: Warren Buffett on taxes
08-15-2011, 09:59 AM #1
Warren Buffett on taxes
Interesting op-ed piece by Warren Buffett:
08-15-2011, 10:11 AM #2
Warren Buffet is an idiot, what made this country great was the free market and no taxes so the rich could create jobs. If he wants to give his hard earned money away to the government fine...but keep your meat hooks off my hard earned money, I earned it myself without any one else's help. Besides I am more efficient than people in the government. Even including the advertising and CEO salaries all private enterprise is more efficient. The invisible hand of the market will fix it all.
/conservative arguments that will follow...I think I got them all.
08-15-2011, 10:31 AM #3
08-15-2011, 10:31 AM #4
"I am more efficient than people in the government."
Which Interstate highway did you build?
Quick Karl liked this post
08-15-2011, 10:47 AM #5
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08-15-2011, 10:48 AM #6
Here's an interesting take on the other side of this argument;
Warren Buffett's Very Strange Tax Argument - Forbes
I am not quite sure where I personally stand, but it is a very interesting counter to Buffett's article. Personally I would like to see our government take a comprehensive look at our entire tax system compared to the rest of the world and do a wholesale overhaul that makes us highly competitive, and focuses on creating wealth. Just my own opinion.
08-15-2011, 10:51 AM #7
Please also note that Buffet is "talking his book".
Buffet owns big stakes in insurance companies, which make a lot of money selling insurance policies that have complex tax deferral or even tax elimination properties. So higher marginal taxes could be expected to drive people to buy his products. It's no different from H&R Block arguing the tax code should be more complex.
08-15-2011, 10:52 AM #8
Oldnewguy liked this post
08-15-2011, 11:05 AM #9
"Have you ever seen how grossly inefficient Cal Trans is?"
Doesn't matter; it's there. Sure, lots could be better than it is but there is way better, for the most part, than not there. I suppose all roads & transportation could be private...wouldn't mind a toll booth in front of my house, but sure wouldn't like stopping at the next one, and the next, and the next, and the next, and the next, and the next, and the next, and the next, and the next, and the next, and the next. Somehow, I think a government does a better job at infrastructure than any one of us could.
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08-15-2011, 11:15 AM #10
the forbes article linked acts as if corporations actually PAY the nominal 35% corporate tax.
of course, they dont.
see the numerous articles about the ACTUAL tax rate paid by US corporations- which is nowhere near 35% in most of the top 200 or so corporations- many, like GE, pay zero.
So while that Forbes rebuttal sounds good on paper, its actually pretty meaningless when you consider the reality of what real US corporations pay.
We currently have the one of the LOWEST combined tax rates, and individual, corporate, and other taxes, of virtually any country worth considering.
I am of the understanding that our tax rate is around 20% or our GDP, which puts us down around Djibouti in terms of being competitive with the rest of the world.
Many foreign companies already invest here, because our taxes are so low and our market so big.
Lowering our tax rates has NOT created jobs, and it HAS bankrupted us.
08-15-2011, 11:30 AM #11
First of all, no matter how many jobs we create good ol' uncle sam is always going to spend this once great country into a never ending black hole. Do any of you really think we will get out of debt someday? Uncle sam is more communist than he is republic, come on wake up folks. I hate to sound like nothing but a govt. hater (which i am) but people need to open their eyes to the ride we are on and I don't give a damn that it is better than any other place on planet earth either, still doesn't make it right!!!
History always repeats itself, do not forget that fact...
08-15-2011, 11:31 AM #12
People dumb enough to vote for Bush and Bachman aren't going to be able to understand the nuances of tax policy.
They understand that Bush likes to go to his ranch and clear brush. That's how deeply they think.
Rich people and big corps are richer than they've ever been in history. So we need to lower their taxes so they can be competitive?
08-15-2011, 11:36 AM #13
and the inequity of tax payments made by many individuals
of his peers.
Many corporations pay zero taxes, zip, nada, nothing. Tax
creativity rules. The Forbes read is more spin for the top
tier to justify their 'right' to pay lower rates than John Doe
who runs a machine somewhere and makes $60.k a year.
08-15-2011, 11:55 AM #14
Republic and Communist are wholly unrelated terms.
History does repeat itself...the concentration of wealth will lead to a revolt.
08-15-2011, 12:03 PM #15
"do a wholesale overhaul that makes us highly competitive, and focuses on creating wealth."
Wealth for whom?
Pardon me but am I the only one here who sees red whenever the term "wealth
creation" is bandied about?
All I can think of when I hear about "creating wealth" is some rich guy figuring out how
to get more of his hooks into my money.
Like figuring out how he can pay less taxes to create wealth for him.
Like figuring out how to fiddle the banking laws to create more wealth for him.
Like figuring out how to keep all his money in an overseas account so the IRS can't find it.
Like figuring out where my pension used to be, so he can root around in the ashes and
see if there's any leftover scraps of 'wealth' he could snuffle up.
For my liking, the tax code is not about creating wealth. It's getting citizens (and I
guess corporations are people too now!) to pay for the services they use.
Sorry. Rant off.
08-15-2011, 12:56 PM #16
First, the great conservative shift towards reduced taxes was under Reagan:
"Instead, I discovered that to balance the budget we would need huge spending cuts too - more than a $100 billion per year. The fabled revenue feedback of the Laffer curve had thus slid into the grave of fiscal mythology forty days after the supply side banner had been hoisted up at the GOP convention.
These dramatic changes in both my comprehension of budget estimating and the true fiscal math of the supply-side program occurred almost overnight."
The Triumph of Politics, The Inside Story of the Reagan Revolution, 1987
Soon, friction came from both sides - Republicans also - on budget cuts. The resulting deficits where historical and the real GNP growth no where near what they predicted:
Real GNP Growth
Quarter..........Supply side/Monetarist Prediction.........Actual GNP Growth
Under Reagan, the U.S. National debt went from $997 billion to $2.85 trillion.
“Specifically, when income is equitably distributed, there is little question as to its ultimate disposition. It is spent or it is saved, invested and thus spent. There are no large pools of funds that are held in idleness because no one, or not many, have sufficient income to support such accumulations.
The United States in recent times has had both an unequal and an increasingly unequal distribution of income. Paul Krugman has estimated that in the 1980s “70 percent of the rise in average family income [went] to the top 1 percent of families....The 1 percent of families with the highest incomes received about 12 percent of overall pretax income, while the wealthiest 1 percent of families had some 39 percent of net worth.”
The counterpart of this concentration of income and wealth was a damaging unreliability as to its use. In established and orthodox economics, savings are invested and spent no less reliably than the money that goes to the supermarket. In real life, if money goes to individuals in very large chunks, it may be neither spent nor invested. It may be held in liquid form; some of it, as in the 1980s, may be absorbed by functionless debt creation, such as that which financed the mergers and acquisitions and the leveraged buyouts....
The poor spend what they receive in good times and bad. So, on the whole, do those with middle class incomes. The rich have a choice. When they neither spend nor invest, a new equilibrium is set by the reduced demand....
There is, as I've said, a social case for equitably distributed income, but the latter, to repeat, is also functionally necessary for the effective operation of the modern market economy. That the recession cum depression of the 1990s came first to the United States and spread out to the world from here should surprise no one;
as to widely distributed and therefore reliably expended income – the first essential of modern capitalism – we are far from the best case.”
John Kenneth Galbraith
A Journey Through Economic Time, 1994
Not that we didn't try this before:
Take the Kennedy tax breaks. In the 1965 annual report of the International Monetary Fund, only one year after the Kennedy tax breaks went into effect, the IMF warned that the large outflow of investment from the U.S., especially into Europe, was becoming a serious problem. Corporate America was taking some of their tax break profits and investing them in higher interest paying banks in Europe to the point that even our small trade surplus (back when we still had tariffs) didn't compensate. By 1971 the investment deficit had accumulated to $58 billion and was creating inflation in Europe. Nations like Germany and France started cashing in their dollars for gold and threatened to drain us of our gold reserves. On August 15, 1971 Nixon had to close the gold window in violation of our Constitution. Not exactly the happy-ever-after ending that the conservative investment fairy tale predicts.
08-15-2011, 01:04 PM #17
Warren Buffett is talking out of both sides of his mouth. Sure, he says "tax me". But almost all of his wealth has never triggered a taxable event. There are no federal income taxes on appreciation of capital.
The government has a tax on the appreciation of capital when you die, the estate tax. However, Warren thinks he is to good to pay that. He instead gives his wealth, in the form of unappreciated stock, to a foundation (the Bill and Melinda Gates Foundation, among others). The foundation then plans to spend that money in Africa. In other words, this is a transfer of massive amounts of money outside of the United States without ever paying one red cent of taxes on it.
08-15-2011, 01:40 PM #18
But, as Buffett notes, we give the low capital gains rate (15%) to hedge funds and short-term traders who really don't deserve it. Indeed, the short-term thinking and reward system of our economy is one of the reasons manufacturing (and we as a country) are in trouble.
I would agree with a couple posters that Buffett's companies have used the tax system to their advantage. It's just interesting to hear him say, perhaps as he gets older and wants to clear his legacy, that it just doesn't make sense to have so many loopholes and/or lower rates for the ultra rich.
It's sad to me that people will defend tax breaks for hedge funds and short term traders when the net effect has been to strip away American competitiveness.
08-15-2011, 01:54 PM #19
08-15-2011, 02:01 PM #20
I like Warren Buffet but I have a real problem when he complains that he's not "forced" to pay more taxes.
The ultra rich always abuse the system, then once they've made there billions and there life is coming to an end they want to leave a legacy.
So while he argues that his taxes should be higher his lobbyists and accountant are hard at work cheating the system.
Instead of giving to charities he could give his money to the goverment but where's the legacy in that.
Obama had a chance at real reform but blew it with the goverment Health insurance act which is important too since the goverment needs to get into the insurance industry so they can funnel money away just like they do with SS.
Wish California could split from the union but since we are the biggest economy in the US and 8th largest in the world I don't think that will happen.