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

[rkbabang]

Yes, it seems a Republican can never cut a budget, and a Democrat can never end a war.

[rkbabang]

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. 

 

The Tea Party started out with the extreme anti-government types (like myself) then came the Ron Paul people (who are pretty close to being of the same mind, although still think politics can solve problems), next came the religious nuts who took it over, and due to their numbers, took it mainstream making it a Republican thing.  The same type of thing happened with the "occupy" movement.  It started with the extreme anti-government/anti-corporate left, but was then co-opted by the Elizabeth Warren's of the world which brought in the mainstream left-wing and making it a Democrat thing.  Two cases of the mainstream parties seeing which direction the parade is heading then getting out in front and pretending to lead it.  Unfortunately this happens before the public even hears about it or knows what is going on.  It works every time.

[Rabbitisrich]

 

 

  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.

 

I didn't read the article, so I may be off base, but the writer may have referred to the '93 budget under a Democrat majority.

[Tim Eriksen]

...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!

 

Do you really need me to note every error in the article?  Not going to happen.  I have better things to do, and I know that it would likely be lost on you.  That you cannot see the errors in statements like "Only 5 (five) current Presidents have governed with a surplus.  They were all Democrats!" The truth is 1 not 5.  It was Clinton, under a a Republican Congress benefiting from lower defense spending due to the end of the Cold War, and a revenue spike from the telecom/internet bubble.

 

It is not the charts that are often incorrect, it is the assumption about the chart.  It assumes a direct relationship between the party of the President and the economy, but ignores Congress, State Government.  If you cannot see that the article is not objective, then we cannot have a rational conversation.  The charts imply that Presidents control government spending and the economy.  Only those who are ignorant of our political system believe that. 

 

 

 

 

[Tim Eriksen]

 

  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.

 

I didn't read the article, so I may be off base, but the writer may have referred to the '93 budget under a Democrat majority.

 

That would just show that the writer is a poor writer too.  To reference legislation from six years prior to balancing the budget is irrelevant.  Regardless Presidents don't balance budgets.  It is primarily Congress that does.  President's send Congress a budget proposal that they can either work from or ignore.  Ultimately it is Congress that writes the budget.  Thus the writer's whole analysis is based on a flawed premise. 

[Parsad]

 

  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.

 

I didn't read the article, so I may be off base, but the writer may have referred to the '93 budget under a Democrat majority.

 

That would just show that the writer is a poor writer too.  To reference legislation from six years prior to balancing the budget is irrelevant.  Regardless Presidents don't balance budgets.  It is primarily Congress that does.  President's send Congress a budget proposal that they can either work from or ignore.  Ultimately it is Congress that writes the budget.  Thus the writer's whole analysis is based on a flawed premise.

 

I think you are deconstructing the article too finely.  The President and his administration create and submit the proposal to Congress...where it may be adjusted, passed or voted down.  It also has to go through the Senate.  But are you also going to give credit to the secretary and staff who had to type it up, the courier who delivered it, as well as the economists who came up with the numbers?  Every time a budget is passed, a deficit or surplus reported on, it is almost always universally attributed to the President and his/her administration.  To say anything else is just deflection.  Cheers!

[benchmark]

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.

 

Completely agree that both sides are full of it. However, I don't think defense spending is the only reason. Revenue needs to be raised (by cutting deductions or a flat tax), as well cut spending (all able-citizens needs to work for their food stamps,no more freebie).

[Tim Eriksen]

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%.

 

You are correct that there is one Republican President - Eisenhower.  All three of his balanced budgets were under Democratic controlled Congress.  There are two Democrat Presidents (Truman and Clinton).  Truman had three budget surplus years (two of which were under Republican Congressional control the third was Democrat) and Clinton had two (both under a Republican Congress). 

 

By President it is 5-3 Democrats.  By Congressional control it is 4-4.  I would also note Republicans have balanced the budget when in control of Congress 4 out of 12 years since WW2.  When Democrats are in control it has been 4 out of 46 years. 

 

I am not trying to be harsh, but to say that "liberals actually have more balanced budgets" is to either purposely mislead or to be ignorant of the truth. 

[Parsad]

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%.

 

You are correct that there is one Republican President - Eisenhower.  All three of his balanced budgets were under Democratic controlled Congress.  There are two Democrat Presidents (Truman and Clinton).  Truman had three budget surplus years (two of which were under Republican Congressional control the third was Democrat) and Clinton had two (both under a Republican Congress). 

 

By President it is 5-3 Democrats.  By Congressional control it is 4-4.  I would also note Republicans have balanced the budget when in control of Congress 4 out of 12 years since WW2.  When Democrats are in control it has been 4 out of 46 years. 

 

I am not trying to be harsh, but to say that "liberals actually have more balanced budgets" is to either purposely mislead or to be ignorant of the truth.

 

Are Republicans going to give credit then to Democrats for the Reagan era, as much of his presidency was under a democratically-controlled House?  Of course not.  You attribute it to Reagan...the great communicator!  You can't have it both ways.  Cheers!

[hyten1]

i hope no one here think that ONE PARTY is ALWAYS the good one and other the bad (which every party you are for).

 

 

I am going to bring this up to illustrate the thought process that i have gone through, please ignore it since is not really relavent to the econmoic discussion we are having.

 

But to illustrate EVERYTHING is usually not black and WHITE. I truely think if you think your brand of economic theory is the ultimate and only solution (raise taxes, supply side whatever) is simply wrong.

 

For example, the idea of for and against abortion.

 

For me personally when i was younger (i am not that old right now) I always thought "The woman should have the right to decide when she should abort, especially when kids born to a family that doesn't want him/her the statistics are not so great etc etc. ... "

 

But as i gotten older and have had a few kids. The answer to the abortion question is not quite so simply.

 

I mean the baby AFTER ALL IS A HUMAN being, I assume no one agrees to the FACT the mother can decide to abort at any point in time (to illustrate a point at 9 month pregenant).

 

So the question come down to not sure much as "Its the womans body she can decide what she wants to do". Its more like at what point does the cells consider a human being balance that idea with the woman having the right to decide to abort.

 

The abortion issue is never as clear cut as people make it out to be and BOTH side have their points. The solution is usually somewhere in the middle

 

In regards to raising tax on the rich or not, honestly I have my thought, but typing it out would be too long, the sort point is

 

1) First I am always warey of government (not saying we don't need them etc) but I am always skeptical

2) Gov has the tendency to get larger (its the nature of things), politician make a lot of promises

3) lets make sure we spend the money wisely before asking other to pay more

4) not saying we don't raise taxes, but i like to make sure the money are well spend before giving someone more money.

 

 

Also i always hear the argument, "Oh during so and so years the tax are higher so, its no be deal", this idea has so many flaws.

 

i hope no one thinks the only thing going on that is affecting the market is taxes (not considering what else is going on)

 

hy

 

[hyten1]

here is gov spend as percentage of gdp

 

http://www.usgovernmentspending.com/us_20th_century_chart.html

 

not the question is at what point is it too high, to illustrate the gov tend to get larger it in its nature

[ERICOPOLY]

I like this one last comment by Buffett in that article:

 

In the meantime, maybe you’ll run into someone with a terrific investment idea, who won’t go forward with it because of the tax he would owe when it succeeds. Send him my way. Let me unburden him.

 

It's funny because Warren would probably invest in the idea through Berkshire where the dividend rate would only be 14% roughly (held in insurance subs).

 

 

[rkbabang]

 

Completely agree that both sides are full of it. However, I don't think defense spending is the only reason. Revenue needs to be raised (by cutting deductions or a flat tax), as well cut spending (all able-citizens needs to work for their food stamps,no more freebie).

 

Yes in the long run something will need to be done about so-called "entitlements" too, but right now cutting food stamps isn't going to get us anywhere if we are spending $900+ Billion (and growing) on our military adventurism.  That is something that could be cut drastically and immediately, as there is no one storming our beaches at the moment.  It is called "defense" spending after all, it should be for "defense".  If I get a list of ex-cons in a nearby city, grab my gun, and start hunting them down one by one on the basis that they may someday be a threat to me, no one would say I was acting in "defense".  When I shoot one in the middle of the night while he's climbing my staircase wearing a mask that is a different story all together and takes much less time and resources to prepare for and accomplish.  Our "defense" budget should be a tiny fraction of what it is.  If it was cut in half, then in half again, it would still be largest defense budget in the world.  We have 80 Million armed civilians and a ton of nuclear weapons what country would be insane enough to attack the United States even if we didn't have the largest defense spending?  It is insanity to the extreme.  And it will bankrupt us long before entitlements do.  Not to mention cause death, destruction and utter chaos in the world, making things like terrorism more likely, not less, for generations to come.  If you kill one person and you don't also kill his entire family, you will have problems for generations.  This is the reason the mob (the other group of violent criminals who force their victims, in geographic areas in which they claim, to pay protection money) sometimes does just that. The U.S. is creating life long enemies by the thousands every year and the current president, who's first campaign was anti-war, has stepped up the killing since he was first elected.

 

The next biggest budget items are healthcare and social security and, just like the military, neither one will even be mentioned by the political class, (unless it is promises of more, more, more), so the conservatives pick on the food stamp ladies and the liberals pick on "the rich".  Not that anyone should get something for nothing or (if there is going to be taxation) anyone should get away without paying an equal percentage, but those things are the least of the problems. 

 

[rranjan]

I don't have any opinion about tax rates but I have strong opinion about everyone paying similar rates. Arguing that taxing rich does not solve this problem because it is only 10% of deficit is very weird logic. Covering 10% or even 1% should not be a point of discussion. Why even for a minute ultra rich needs favorable treatment as compared to working class. That should be fixed quickly. Argument about not fixing it till XYZ happens baffles me.  Do we want a two separate class in US?

[Tim Eriksen]

 

Are Republicans going to give credit then to Democrats for the Reagan era, as much of his presidency was under a democratically-controlled House?  Of course not.  You attribute it to Reagan...the great communicator!  You can't have it both ways.  Cheers!

 

Reagan wanted lower taxes and lower spending, other than defense.  Congress refused.  Reagan went to the American people to get them to push their Congressperson.  Congress still refused to cut spending but did strike a deal with Reagan to lower taxes.  The economy grew as did the deficit.  Are you saying you want Democrats to take ownership of the deficit or the growth?  You can't have it both ways.  Cheers!   

[Parsad]

 

Are Republicans going to give credit then to Democrats for the Reagan era, as much of his presidency was under a democratically-controlled House?  Of course not.  You attribute it to Reagan...the great communicator!  You can't have it both ways.  Cheers!

 

Reagan wanted lower taxes and lower spending, other than defense.  Congress refused.  Reagan went to the American people to get them to push their Congressperson.  Congress still refused to cut spending but did strike a deal with Reagan to lower taxes.  The economy grew as did the deficit.  Are you saying you want Democrats to take ownership of the deficit or the growth?  You can't have it both ways.  Cheers! 

 

You're the one who wants it both ways...I'm not attributing any administration's success or failure to congress or the senate, but to their own administration.  You want Clinton's success attributed to a republican-house, but not the other way around.  Don't try and fit the facts to your own argument. 

 

The facts are the facts when viewed using a specific window or criteria...democratic presidents and their administrations have been more fiscally responsible than republicans.  Whether they were good negotiators and compromised, cow-towed to the opposite party's control, or showed backbone to have their agenda passed...the numbers are the numbers.  Cheers! 

[hyten1]

I always find this train of thought as idiotic:

 

"in the past years the tax rate was higher, so it should be ok to raise them since during clinton years the economy was doing great"

 

the same thought can be made against raising taxes by using gov spend as a percentage of gdp.

 

"Since during boom years america was growing and everyone was prosperous, the gov spend only 10 or 15% of GDP, so why can't we go back to spending only 10 or 15% gdp today since during those time the economy was great, you can argue even better than the late 90's, for example the 50's"

 

both are idiotic, but i hear the first one all the time by people who want to raise taxes, web's article is no exception

[rkbabang]

I don't have any opinion about tax rates but I have strong opinion about everyone paying similar rates. Arguing that taxing rich does not solve this problem because it is only 10% of deficit is very weird logic. Covering 10% or even 1% should not be a point of discussion. Why even for a minute ultra rich needs favorable treatment as compared to working class. That should be fixed quickly. Argument about not fixing it till XYZ happens baffles me.  Do we want a two separate class in US?

 

Yes I am against a graduated income tax as well.  50+% of Americans pay no federal income tax yet they vote.  This is completely wrong.    There should be no tax brackets.  Just one standard deduction which is the accepted poverty line.  You deduct that amount from your income (income, dividends, capital gains) and pay x%.  End of story, no deductions or tax breaks for anyone except the extreme poor who are below the standard deduction and thus pay no tax.  The entire U.S. tax code should be repealed and replaced with one paragraph.  Also no withholding.  Make people see the money they pay, so they think about whether or not they are getting their money's worth.

 

[hyten1]

i think people should call it what it is, raising taxes on the so call rich (why so much talk on this topic when we both know this won't solve the problem) as "Getting Even".

 

i agree just because it'll only raise 10% or whatever the % is we should not ignore it, but so much time/media/talk in on this topic, when we know this won't solve the issue, if its not "getting even" what is it?

 

the 80/20 rule we all know, the big problem is the spending, not revenue.

 

 

[wknecht]

I like this one last comment by Buffett in that article:

 

In the meantime, maybe you’ll run into someone with a terrific investment idea, who won’t go forward with it because of the tax he would owe when it succeeds. Send him my way. Let me unburden him.

 

It's funny because Warren would probably invest in the idea through Berkshire where the dividend rate would only be 14% roughly (held in insurance subs).

 

From BRK's perspective it would be. But from shareholder's perspective the capital gains (from BRK retaining the dividends) will be taxed again (but potentially deferred). That would take the rate for most shareholders to 27% = 1-(1-14%)*(1-15%) using the long term capital gains rate.

[Tim Eriksen]

I don't have any opinion about tax rates but I have strong opinion about everyone paying similar rates. Arguing that taxing rich does not solve this problem because it is only 10% of deficit is very weird logic. Covering 10% or even 1% should not be a point of discussion. Why even for a minute ultra rich needs favorable treatment as compared to working class. That should be fixed quickly. Argument about not fixing it till XYZ happens baffles me.  Do we want a two separate class in US?

 

This has been discussed previously in other posts about Buffett and tax rates.  The rich do not pay a lower rate on average than the middle class.  Buffett has to allocate both halves of payroll taxes to the individual, ignore untaxed medical benefits, ignore the return of those payroll taxes at retirement, ignore that dividends and capital gains are already taxed (or likely will be) at the corporate level, and include all deductions to lower the actual income of the middle class for his analysis to work.  It is sloppy IMO.     

[Myth465]

These are the same arguments battered around whenever Buffett post an article. Nothing to see here....

[Parsad]

These are the same arguments battered around whenever Buffett post an article. Nothing to see here....

 

You're right Myth...that guy is a trouble-maker!  ;D  Cheers!

[ERICOPOLY]

I like this one last comment by Buffett in that article:

 

In the meantime, maybe you’ll run into someone with a terrific investment idea, who won’t go forward with it because of the tax he would owe when it succeeds. Send him my way. Let me unburden him.

 

It's funny because Warren would probably invest in the idea through Berkshire where the dividend rate would only be 14% roughly (held in insurance subs).

 

From BRK's perspective it would be. But from shareholder's perspective the capital gains (from BRK retaining the dividends) will be taxed again (but potentially deferred). That would take the rate for most shareholders to 27% = 1-(1-14%)*(1-15%) using the long term capital gains rate.

 

For the sake of Warren's shares (and for many wealthy families who invest in Berkshire) there will be no such capital gains tax ever due (held until death).

 

 

 

 

[vinod1]

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!

 

As much as I like and admire Buffett I do not think he deserves much credit for job creation. He can be credited maybe in an indirect manner as a result of improving capital market efficiency.

 

All Buffett did was extract profits based on superb investing acumen in identifying monopolies and competitively advantaged businesses that allowed those businesses to charge more from customers. It is neither wrong nor immoral but I do not see a great benefit to society as a result of this activity of charging more from consumers. BNSF, Geico, General Re, See's, etc all would have gone on creating jobs whether or not Buffett has invested in them or brought it under Berkshire's umbrella just as with Coke, Amex, PG, JNJ, etc. 

 

You might argue that Buffett has saved jobs at Geico and Salmon Brothers by preventing them from going bankrupt but that business would have been picked up by other insurers and investment banks. So I do not really see all that benefit to society as a result of Buffett's activities via Berkshire.

 

His contribution to charity is of course a different story and he is a role model in many respects.

 

Vinod