Buffett's latest Op-Ed in the NYT on taxes

[Evolveus]

Warren Buffett out with another NY Times op-ed on taxes: http://t.co/kaCMGTmw

[prevalou]

following his argumentation, France should be a paradise for investors!

[value-is-what-you-get]

following his argumentation, France should be a paradise for investors!

 

I disagree - following his argument French investors residing in France are as likely to pursue investment gains as investors residing in the US despite the higher tax rates.

[Guest rimm_never_sleeps]

following his argumentation, France should be a paradise for investors!

 

I don't believe France was mentioned. I do believe he referenced a more Prosperous period in America where the Ultra rich paid much higher rates. But I guess if you really really contort your thinking you may be able to conjur up references to....France.

[rkbabang]

As I say every time he writes on this topic.  If the federal treasury is the best use of his money, why has he not given them more over the years?  Why has he not left his entire fortune to it?  He does not put his money where his mouth is on this issue.  Actions speak louder than words.  He knows, as well as you and I know, that if the deadly force was taken out of the equation, (i.e. no one was forced to pay the U.S. government, but could choose to do so) there would be no U. S. Government.  If this is an organization so many people claim to love and think does so much good, how could that be?

[Guest rimm_never_sleeps]

unfortunately that would not solve the problem. this idea is a clever Norquist inspired talking point designed to confuse and filibuster the issue at hand. Be that as it may, it doesn't solve the problem. buffett lays out one way to solve the problem in this article.

[ERICOPOLY]

This part is interesting:

 

Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.

 

Towards the end of that period he shifted his focus to Berkshire Hathaway where that high 70% tax on dividends didn't apply.

 

That's kind of a key issue -- it sounds like the tax rates did affect his investment style.  He mentions the high 91% dividend tax rate didn't stop him from selling securities (at the relatively low 25% capital gains tax rate).  In other words, he was invested only for capital gains.  Does he expect everyone to do that?  Nobody holding to collect dividends, instead only trading on volatility?

 

[rkbabang]

Supposed someone gave little to nothing to charity yet constantly wrote articles about how people should not only give more, but be forced to give more.  I'd call him a hypocrite. 

 

To be taken seriously he should lead by example and give more of his wealth to the feds.  No I don't expect him to do so, because deep down he knows as well as anyone that it is money down the toilet and that giving to actual charities which actually at least try to do good for humanity is a much better use of his hard earned money than feeding the Bush/Obama war machine.  And in his younger years he correctly knew that the best thing he could do for society is reinvest it and build wealth.  Again his actions speak much louder than his words. 

 

Reducing the government deficit is not a solution to the problem. Congress will simply spend even more.  More programs to start, more countries to bomb, more graft to distribute.  More money = more power.  You are just kidding yourself.

[gfp]

ERIC, when Buffett talks about selling securities, he is referring to his work as a stock broker, not liquidating stock ownership positions. 

 

This part is interesting:

 

Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.

 

Towards the end of that period he shifted his focus to Berkshire Hathaway where that high 70% tax on dividends didn't apply.

 

That's kind of a key issue -- it sounds like the tax rates did affect his investment style.  He mentions the high 91% dividend tax rate didn't stop him from selling securities (at the relatively low 25% capital gains tax rate).  In other words, he was invested only for capital gains.  Does he expect everyone to do that?  Nobody holding to collect dividends, instead only trading on volatility?

[Guest rimm_never_sleeps]

this one is easy. he obviously thinks he will get more bang for his charitable buck by helping the Least fortunate among us. by and large they are not residents of the United States.

[ERICOPOLY]

ERIC, when Buffett talks about selling securities, he is referring to his work as a stock broker, not liquidating stock ownership positions. 

 

This part is interesting:

 

Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered.

 

Towards the end of that period he shifted his focus to Berkshire Hathaway where that high 70% tax on dividends didn't apply.

 

That's kind of a key issue -- it sounds like the tax rates did affect his investment style.  He mentions the high 91% dividend tax rate didn't stop him from selling securities (at the relatively low 25% capital gains tax rate).  In other words, he was invested only for capital gains.  Does he expect everyone to do that?  Nobody holding to collect dividends, instead only trading on volatility?

 

You are right.

 

Buffett is reaching though.  Trading is where capital gains comes into play.  He seems to be suggesting that the high tax on dividends would have cut into trading.  Perhaps it encouraged trading (trying to play volatility instead of patiently waiting for dividends).

 

EDIT:  For example, trading around the dividend-ex dates is more rewarding if the dividend tax rate dwarfs the capital gains tax rate. 

[fareastwarriors]

As I say every time he writes on this topic.  If the federal treasury is the best use of his money, why has he not given them more over the years?  Why has he not left his entire fortune to it?  He does not put his money where his mouth is on this issue.  Actions speak louder than words.  He knows, as well as you and I know, that if the deadly force was taken out of the equation, (i.e. no one was forced to pay the U.S. government, but could choose to do so) there would be no U. S. Government.  If this is an organization so many people claim to love and think does so much good, how could that be?

 

What is the solution? Just keep cutting taxes/programs?

 

[Palantir]

Buffett barely "invests" to begin with. Most of his investment activity is in the secondary markets, and not the type of capital creation that drives real investment back into the economy.

 

 

But that doesn't stop him from giving sanctimonious lectures to the rest of the world.

 

 

EDIT: The above isn't there to intentionally start a flamewar, I actually mean it. :)

[rkbabang]

I should also add that unlike those who many/most people come close to worshiping in DC, he is a good man who has done great things. He's created more jobs, built more wealth for more people, and helped more people than any politician ever has, or ever could.  And if he could have paid a zero percent tax rate his entire life he could have done even more. It is sad that he appears to not realize this.  He is humble to a fault.  I guess if that is the worse you can say about someone, that isn't too bad a thing.

[Tim Eriksen]

I should also add that unlike those who many/most people come close to worshiping in DC, he is a good man who has done great things. He's created more jobs, built more wealth for more people, and helped more people than any politician ever has, or ever could.  And if he could have paid a zero percent tax rate his entire life he could have done even more. It is sad that he appears to not realize this.  He is humble to a fault.  I guess if that is the worse you can say about someone, that isn't too bad a thing.

 

Sorry, but I think you give Buffett too much credit.  He is an incredible investor, but I would not call him a good man or humble.  He was not a particularly good husband or father, and those things count for much more than investing.  Nor would I call him humble.  I would argue that he lacks courage.  Our deficit problem is not due to the tax rate on the rich.  Buffett's tax proposals amount to about 10% of the gap.  He fails to take a stand on real spending or tax reform.  The truth of the matter is that the non-rich demand much more in services than they are willing to pay for.  You cannot tax the rich enough to fill the gap.  Either taxes must rise for all, or the role of government must be reduced (or some significant combination of the two).

 

His proposal for having spending reduced to 21% of GDP (and note he declines to suggest any cuts) and revenue rise to 18.5% (where he once again declines to offer any suggestions for the majority of the needed revenue increase) results in annual deficits of 2.5% of GDP.  In his mind if the economy is growing  at a similar rate then the deficit is sustainable.  To me, it is a foolish proposal.  He leaves little margin for error.  The occasional recession would result in huge deficits and result in debt rising faster than GDP.  Buffett is an incredible investor, but a lousy economist. 

 

 

[Parsad]

Buffett barely "invests" to begin with. Most of his investment activity is in the secondary markets, and not the type of capital creation that drives real investment back into the economy.

 

 

But that doesn't stop him from giving sanctimonious lectures to the rest of the world.

 

 

EDIT: The above isn't there to intentionally start a flamewar, I actually mean it. :)

 

You do realize Berkshire is made up mostly of operating businesses now at this stage?  That many of those businesses require enormous amounts of capital, which ultimately do employ tens of thousands, and probably hundreds of thousands over the next 10-15 years.  How is expansion in MAE or the largest order of private jets in history at Netjets, not as effective as anyone else at creating jobs and wealth for this country?  Berkshire is one of the largest public company employers in the world...that has a net wealth effect that trickles down ten fold.  Cheers!

[Tim Eriksen]

Buffett barely "invests" to begin with. Most of his investment activity is in the secondary markets, and not the type of capital creation that drives real investment back into the economy.

 

 

But that doesn't stop him from giving sanctimonious lectures to the rest of the world.

 

 

EDIT: The above isn't there to intentionally start a flamewar, I actually mean it. :)

 

You do realize Berkshire is made up mostly of operating businesses now at this stage?  That many of those businesses require enormous amounts of capital, which ultimately do employ tens of thousands, and probably hundreds of thousands over the next 10-15 years.  How is expansion in MAE or the largest order of private jets in history at Netjets, not as effective as anyone else at creating jobs and wealth for this country?  Berkshire is one of the largest public company employers in the world...that has a net wealth effect that trickles down ten fold.  Cheers!

 

And one of the biggest reasons for that is taxes!

[rkbabang]

You do realize Berkshire is made up mostly of operating businesses now at this stage?  That many of those businesses require enormous amounts of capital, which ultimately do employ tens of thousands, and probably hundreds of thousands over the next 10-15 years.  How is expansion in MAE or the largest order of private jets in history at Netjets, not as effective as anyone else at creating jobs and wealth for this country?  Berkshire is one of the largest public company employers in the world...that has a net wealth effect that trickles down ten fold.  Cheers!

 

+1

 

Yes all of that and more!  I just wish he'd leave politics to the scum that inhabit that unfortunate area of life.  There is no good to be done there.

[rkbabang]

 

Sorry, but I think you give Buffett too much credit.  He is an incredible investor, but I would not call him a good man or humble.  He was not a particularly good husband or father, and those things count for much more than investing.  Nor would I call him humble.  I would argue that he lacks courage.  Our deficit problem is not due to the tax rate on the rich.  Buffett's tax proposals amount to about 10% of the gap.  He fails to take a stand on real spending or tax reform.  The truth of the matter is that the non-rich demand much more in services than they are willing to pay for.  You cannot tax the rich enough to fill the gap.  Either taxes must rise for all, or the role of government must be reduced (or some significant combination of the two).

 

His proposal for having spending reduced to 21% of GDP (and note he declines to suggest any cuts) and revenue rise to 18.5% (where he once again declines to offer any suggestions for the majority of the needed revenue increase) results in annual deficits of 2.5% of GDP.  In his mind if the economy is growing  at a similar rate then the deficit is sustainable.  To me, it is a foolish proposal.  He leaves little margin for error.  The occasional recession would result in huge deficits and result in debt rising faster than GDP.  Buffett is an incredible investor, but a lousy economist. 

 

 

Oh boy.  I couldn't dissagree more.  Maybe he wasn't the perfect father or husband, but who is?  There are certainly worse.  Much worse.    The good one does by creating wealth on such a massive scale overwhelms almost any petty fault one has.  If Hitler was good to his family would that cancel out the evil he did for society as a whole?  Would it even matter in the least?  The same is true the other way around.  Even if he was the worst most abusive father/husband on the planet (which he most certainly was not) he would still have changed the lives of countless people for the better.  I wouldn't respect him as much if I knew he beat his kids to within an inch of their lives or sexually abused them or something, but he didn't do such things (as far as I know).  You don't give the man credit for the astronomical amount of wealth he has created.  And I am not talking about his own.  The wealth that has gone to others dwarfs the amount he has kept for himself.  And even most that which he built for himself will be donated to help others in the end.  He has done a net good for humanity far exceeding every king, dictator, prince, and elected official that has ever lived all put together.  Yet it is to these very thieves and parasites that he writes op-eds about giving more money and power to.    :(

[Parsad]

Buffett barely "invests" to begin with. Most of his investment activity is in the secondary markets, and not the type of capital creation that drives real investment back into the economy.

 

 

But that doesn't stop him from giving sanctimonious lectures to the rest of the world.

 

 

EDIT: The above isn't there to intentionally start a flamewar, I actually mean it. :)

 

You do realize Berkshire is made up mostly of operating businesses now at this stage?  That many of those businesses require enormous amounts of capital, which ultimately do employ tens of thousands, and probably hundreds of thousands over the next 10-15 years.  How is expansion in MAE or the largest order of private jets in history at Netjets, not as effective as anyone else at creating jobs and wealth for this country?  Berkshire is one of the largest public company employers in the world...that has a net wealth effect that trickles down ten fold.  Cheers!

 

And one of the biggest reasons for that is taxes!

 

If citizens are clamouring to pay down the national debt, that isn't going to happen by itself.  The funny thing is that conservatives always cry for reduced taxes to generate GDP through investment, yet liberals actually have more balanced budgets and higher GDP during their tenure historically.  Fiscal restraint is actually lost on the grand old party when you look at the numbers.

 

http://www.thepragmaticpundit.com/2012/05/democrats-v-republicans-debt-and.html

 

I don't see Apple firing anyone because taxes may go up!  That's old school rhetoric we always hear...they were the ones pushing for lower taxes for the last fifteen years, and they are the ones fighting any tax increases going forward.  Yet the actual per capita wealth of those who will be most likely to carry a larger tax burden if Obama has his way, were the ones who actually made out the best over the last 15 years as well.  Well, it's time to pay the piper!  Cheers!

[MVP444300]

Tax rates are not the problem its the spending.

 

Instead of asking for a tax rate increase on the wealthy I would ask that they receive less in benefits from the govt.  For example, anyone with an income of more than $250,000 (outside of SS) should not receive Social Security or Medicare benefits.  Why should someone as rich as Warren Buffett, Jack Welch, etc receive these entitlements?  Another way the wealthy could be asked to pay more of their fair share is by reducing the foreign aid for wealthy dictators overseas or what about reducing the number of bases we have overseas to cut defense spending.  Poor Americans should not pay for rich foreigners.  These are just a few examples of the rich helping with our deficit without having to raise taxes.  More money would be saved this way than can be gained by taxing. 

[Tim Eriksen]

If citizens are clamouring to pay down the national debt, that isn't going to happen by itself.  The funny thing is that conservatives always cry for reduced taxes to generate GDP through investment, yet liberals actually have more balanced budgets and higher GDP during their tenure historically.  Fiscal restraint is actually lost on the grand old party when you look at the numbers.

 

http://www.thepragmaticpundit.com/2012/05/democrats-v-republicans-debt-and.html

 

I don't see Apple firing anyone because taxes may go up!  That's old school rhetoric we always hear...they were the ones pushing for lower taxes for the last fifteen years, and they are the ones fighting any tax increases going forward.  Yet the actual per capita wealth of those who will be most likely to carry a larger tax burden if Obama has his way, were the ones who actually made out the best over the last 15 years as well.  Well, it's time to pay the piper!  Cheers!

 

Not sure what world you are living in, but the majority of citizens are not clamoring to pay down the national debt, nor eliminate the deficit (which is probably what you really meant).  While I agree too many conservatives see lower taxes as the solution to every problem, you give liberals too much credit.  We have had 8 balanced budgets since WW2 (not counting the years where SS surpluses were used to mask the deficit).  In 5 of those years we had Democrat Presidents and 3 were Republican presidents.  Hardly overwhelming evidence.  Two of the years were Clinton, who clearly governed as a moderate/conservative fiscally, and they were brought about by a Republican Congress.  If you compare by Congressional control versus Presidential you may get a very different result. 

 

Fiscal restraint is lost on both parties.  The reason for the rise of the Tea Party was that the Republicans lost their way.  They would argue that Bush spent like a Democrat.  When the liberal solution to a $1 trillion deficit is an $80 billion tax increase, it is hard to take them seriously as the party of fiscal restraint.

 

Also, linking to an article that is not credible does not support your argument.  The writer attributes the 2009 deficit to Bush.  Bush cannot be responsible for Obama's stimulus.  It also makes Bush fully responsible for TARP (yet liberals want to give Obama the credit for saving the economy and the auto bailout).  They need to pick one side or the other on that.  That budget was also enacted by a liberal Congress.  I find it interesting that Obama appears in charts where he looks favorable but not ones where he wouldn't.  My favorite lie in the article is when the writer says "President Clinton balanced the budget, giving the government a surplus.  Not one single Republican in either house voted for the balanced budget."  Since Republicans were the majority in both houses at the time, it is mathematically impossible to be true.

 

[rkbabang]

I'm sorry, but both the liberals and conservatives are completely out to lunch on this issue.  Liberals think that raising taxes on the rich will solve our problems and conservatives think that cutting a few social programs will solve everything.  But in both cases the numbers don't add up.  Both sides need to admit this, but neither ever will.  The elephant in the room is the defense spending.  Moral issues about bombing poor innocent people overseas and trying to create a world-wide empire aside, the U.S. just can't afford it.  The very same thing brought down Rome and will bring down the United States.  Don't talk to me about raising taxes a few $Billion here or there nor about cutting big bird or some poor woman's food stamps when we are spending $trillions trying to rule the world.    Sorry but both sides are full of Shi...ugh... crap.  It needed to be said, because nothing else really matters.

[ERICOPOLY]

We have had 8 balanced budgets since WW2 (not counting the years where SS surpluses were used to mask the deficit).  In 5 of those years we had Democrat Presidents and 3 were Republican presidents.

 

Republican "president".  Singular, not plural.

 

Eisenhower did it in 1956,1957, and 1960.

 

He raised the tax rate to 92%.

 

[Parsad]

...Also, linking to an article that is not credible does not support your argument.  The writer attributes the 2009 deficit to Bush.  Bush cannot be responsible for Obama's stimulus.  It also makes Bush fully responsible for TARP (yet liberals want to give Obama the credit for saving the economy and the auto bailout)...

 

So out of all of those charts and evidence, these are the only two issues you came up with?  Are you saying the rest of the charts and comments were correct?

 

Fiscal restraint is lost on both parties.  The reason for the rise of the Tea Party was that the Republicans lost their way.  They would argue that Bush spent like a Democrat.  When the liberal solution to a $1 trillion deficit is an $80 billion tax increase, it is hard to take them seriously as the party of fiscal restraint.

 

The Tea Party wasn't the problem.  It was the fringe that they attracted, who somehow devolved it into a sideshow carny act...with men telling women how they should treat their bodies...always a winning idea!  Ron Paul felt like an outsider in the new Tea Party. 

 

I think you have a better chance of the government doing the right thing now, with the fringe licking their wounds and on the outside, then if they were left to tear up the country from the inside.  Thank God...yes, I'm eliciting gratitude to an entity I don't believe in...simply because something or someone allowed the U.S. to step away from the possiblity that the freaks and nutjobs would be running the country!  Cheers!