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

[Cardboard]

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

 

Completely untrue. I have never seen so many negatives or debates about what Warren is saying since he has entered this: tax the rich mantra.

 

When Warren talked about pensions being unfunded, the need to expense stock options, controlling the proliferation of nuclear materials and the trade deficit (remember Squanderville and Thriftville), I don't ever recall seeing such debates on this site or the predecessor. On the contrary, the vast majority held a thumbs up. The reason why it is not working this time around is that he is not proposing a clear cut solution to the problem, but a band-aid or one that looks awfully in line with the Democrats agenda and not with common sense as it used to be.

 

You know when I think that Warren stopped discussing bold and smart solutions? Once Obama put a medal around his neck. It seems to have acted as a dog's medal or a leash.

 

Cardboard

[rkbabang]

Just like how liberals stopped caring about war or civil rights the moment he was sworn into office. I don't like either party, but the Obama worship I see almost everywhere is both astonishing and troubling.  One of my libertarian friends asked me recently to think about the liberals I know and ask myself is there any abuse, any abuse at all, that would be unacceptable if done by Obama? And for the life of me I can't think of anything.  At first I said "short of loading people into cattle cars and bringing them to the camps to be gassed, nothing."  But then again, if Obama smiles into the camera and calls them terrorists, even that I fear would be a-okay.  As megalomanical as Obama is, I don't think even he realizes the true extent of his power.  If he did....my god...  The world has never had a God-King in an age of nuclear weapons before.

[MVP444300]

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

 

The number is actually much worse than the 41% when you take into account regulation.  Its probably closer to 60% of GDP.

 

http://www.usgovernmentspending.com/total_2011USpt_88ps5n

 

Total Government Spending

in the United States

-5yr -1yr  Fiscal Year 2011  +1yr +5yr

Federal Gross Spending    24% GDP  

Intergovernmental    -5% GDP  

State Direct Spending    10% GDP  

Local Direct Spending    11% GDP  

Total Spending    41% GDP

[MVP444300]

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).

 

To answer your question, and probably to the dismay of many here, total govt spending as a % of GDP shouldn't exceed more than 5% of GDP.    That is if it follows exact wording of what is in the constitution.  I personally think 5% of GDP is too much.  lol

[sswan11]

There's an article in 10/29/12 New Yorker magazine that the island of Sark in the UK Channel Islands is entirely tax-free. If I had $50 million, I might move there :) 

 

http://en.wikipedia.org/wiki/Sark

[Parsad]

Just like how liberals stopped caring about war or civil rights the moment he was sworn into office. I don't like either party, but the Obama worship I see almost everywhere is both astonishing and troubling.  One of my libertarian friends asked me recently to think about the liberals I know and ask myself is there any abuse, any abuse at all, that would be unacceptable if done by Obama? And for the life of me I can't think of anything.  At first I said "short of loading people into cattle cars and bringing them to the camps to be gassed, nothing."  But then again, if Obama smiles into the camera and calls them terrorists, even that I fear would be a-okay.  As megalomanical as Obama is, I don't think even he realizes the true extent of his power.  If he did....my god...  The world has never had a God-King in an age of nuclear weapons before.

 

The funny thing is, the rest of the world sees exactly how centre-right or right Obama is relative to how liberal he is portrayed in the U.S.  It's just an indication of how far right the "far right" movement has become. 

 

Obama is probably more conservative than our own Canadian "conservative" government.  And our "conservative" government sprung from a "Tea Party" like movement twenty years ago called the "Reform Party"...which was full of as many crazies as the "Tea Party!"  The liberals in Canada don't know how good they've got it with their "conservative" party.  Cheers!

[Myth465]

Cardboard - I can search here and see the same arguments on both sides being made by the same people all throughout the year, and late last year....

[Cardboard]

It is like I told you, search further. Go before the Obama era and you will see.

 

Cardboard

[Parsad]

It is like I told you, search further. Go before the Obama era and you will see.

 

Cardboard

 

It's got nothing to do with Obama, but the fact that the subject matter is extremely polarizing.  Under your line of thought, the argument could be made that Buffett's articles get more bad press because he supports a BLACK president?  If the anxiety is greater since Obama came into power and Buffett supported him, then using your theory, the race card would be as likely as what you are suggesting. 

 

Of course, neither theory is correct.  It's just that paying taxes has always been a polarizing subject, and this president and this congress are deadlocked on their specific agendas on how to proceed.  Buffett has blatantly made clear which side he supports, thus he gets more press...both good and bad...on the subject.  Cheers! 

[Myth465]

Cardboard if you say anything about taxes you will piss off somewhere between 50% - 100% of people. His only other option is to say nothing, and I think he has earned the right to air his opinion. I dont think he is trying to fix the deficit, but is trying to address inequality and equability, he even says as a start the rich should pay more, because inmo you cant start cutting without demanding those who have alot and have benefited alot give more. I tend to agree with him, but thats not worth much.

 

rkbabang - I dont agree with you 100%, but I respect your opinion because you do what few others who believe what you believe do - point to the real pork in the room, defense spending. Its the one thing we pay a bunch for, but receive little in return inmo. Very low return investments.

[JSArbitrage]

How anyone can support a tax scheme where the wealthiest pay less tax relative to their income than the middle class is beyond me.    You can argue until you are blue in the face but it defies logic.  Buffett is right: we need some kind of minimum tax for incomes over a million dollars.  I don't know if that's 30% or 50% or whatever but it needs to be done. 

[OracleofCarolina]

Buffett is on Charlie Rose tonight!

[fareastwarriors]

Buffett is on Charlie Rose tonight!

 

Can't wait thanks!

[Tim Eriksen]

 

The funny thing is, the rest of the world sees exactly how centre-right or right Obama is relative to how liberal he is portrayed in the U.S.  It's just an indication of how far right the "far right" movement has become. 

 

Obama is probably more conservative than our own Canadian "conservative" government.  And our "conservative" government sprung from a "Tea Party" like movement twenty years ago called the "Reform Party"...which was full of as many crazies as the "Tea Party!"  The liberals in Canada don't know how good they've got it with their "conservative" party.  Cheers!

 

I disagree with your perception of US politics.  Obama is not center-right in terms of the US (compared to Europe he is).  Romney was center-right and they certainly had differences in terms of social policies and role of government.  Obama is on the extreme left on abortion, left on gay marriage, left on civil rights, wants government spending at a higher % of GDP since WWII, etc.  He is certainly center-left in terms of the environment (global warming, offshore drilling, drilling on federal lands).  On wire tapping, Gitmo, and the wars he switched from left to center after being elected.  You could argue he is in the center on campaign finance, bailouts, and tax cuts, etc. but that is more pragmatism than his actual philosophy.

 

You seem to think the Tea Party and Republicans recently moved to the right.  If you study politics, the Democrats started moving left in WWII and then lurched in the 70's.  Republicans did move left under Nixon, but reversed that with Reagan.  I don't see a rightward move since then.  The Republicans have the same beliefs today as thirty years ago.  As I said before, Republicans were disappointed with Bush as he was too open to big government. He was the one who moved, not the core of the party. 

 

[Tim Eriksen]

How anyone can support a tax scheme where the wealthiest pay less tax relative to their income than the middle class is beyond me.    You can argue until you are blue in the face but it defies logic.  Buffett is right: we need some kind of minimum tax for incomes over a million dollars.  I don't know if that's 30% or 50% or whatever but it needs to be done.

 

Please look up a chart on effective income tax rates for income groups.  The wealthy pay twice the rate of the middle class, and the poor have a negative rate.  What skews the numbers (to make it appear that the middle class is taxed higher than the rich) is ignoring corporate taxes on dividend income and cap gains, and the improper treatment of payroll taxes.  Why should both halves (employer and employee) be attributed to the individual and ignore the benefit payments at retirement (as Buffett does)?  His approach is ridiculous.  Why not just use what they actually pay and factor in benefits? It was purposefully designed for individuals to get back what they pay in plus a modest return. 

 

Buffett's secretary, that he is so concerned about, will end up paying a lifetime rate in of 10% if you attribute the cost of both halves of payroll taxes to her and include her benefits, but only a 3% lifetime rate if you just attribute what she directly pays (employee portion).  Either way, that is well less than the rate Buffett will pay.  Why doesn't Buffett compare his taxes with his previous secretary who is of similar age?  Because he/she at age 80 would have a hugely negative rate since he/she would be getting Social Security and Medicare benefits.  Do the math.  Buffett's analysis is a joke and based on the conclusion he desires, not the facts.  The poor and middle class are not getting screwed.  Everyone has seen rates lowered. 

 

[Cardboard]

"How anyone can support a tax scheme where the wealthiest pay less tax relative to their income than the middle class is beyond me.    You can argue until you are blue in the face but it defies logic.  Buffett is right: we need some kind of minimum tax for incomes over a million dollars.  I don't know if that's 30% or 50% or whatever but it needs to be done. "

 

You don't need a new minimum tax to fix that or another complication in the tax code, you simply need to eliminate the capital gain rate. Make it normal income or maybe at a lower inclusion rate like we have in Canada to still compete with other countries. The tax code is already progressive, so the rich will pay more for sure.

 

However, since you are an investor and making capital gains (you are rich, but not as much as these guys), you should in fairness still see a similar adjustment at your own tax bracket. And, that gets exactly to my problem with this whole discussion. Why targeting only higher rates for people above X and Y. That is class warfare. Targeting a minority. That comes from the same guy who called them "fat cat bankers".

 

Everyone should contribute to the national effort and yes, I think that some of the "poor" should get a good kick you know where.

 

Cardboard

[nsa122]

One basic question: Why should my income determine my contribution to our government? 

[Parsad]

One basic question: Why should my income determine my contribution to our government?

 

Since a single mother of two surviving on $25K a year in income, would find it far more difficult to come up with $5K in taxes, than a single person making $100K and having to come up with $20K in taxes if you went solely by a flat tax.  Coming up with that $1000 in rent would be pretty damn hard.  A regressive tax regime is far from equitable!  Cheers!

[Tim Eriksen]

One basic question: Why should my income determine my contribution to our government?

 

Since a single mother of two surviving on $25K a month in income, would find it far more difficult to come up with $5K in taxes, than a single person making $100K and having to come up with $20K in taxes if you went solely by a flat tax.  Coming up with that $1000 in rent would be pretty damn hard.  A recessive tax regime is far from equitable!  Cheers!

 

I think you mean 25K a year, not month.  Not sure what you mean by "recessive tax."  The common term is regressive.  Regressive hits lower income more than higher income.  It can be via a head tax (same dollar amount per person) or decreasing rate such that the effective percentage is higher for the lower income payor.  Flat tax is same rate regardless of income.  It is generally not considered regressive or progressive.  Progressive is where one pays a higher rate as income increases. 

 

A big part of the tax debate revolves around the whole issue of "fairness." 

[nsa122]

I agree that a recessive tax regime is inequitable, just as inequitable as a progressive tax regime.  Rather, I propose a flat per capita fee: each person pays a per capita fee to support the government's mission (supposedly the provision of "public goods").  This would currently be on the order of $12,000 per capita per year in the US.  That would be "equitable", no?

My personal idea of equity is that financial support of government should be commensurate with voting rights.  If financial support of government varies from person to person, so should votes.  If votes are equal, each person's financial contribution should be too.  If you can't afford to support the government, that is fine, you can get essential government services for free, but I don't think you should get to vote. 

[Parsad]

One basic question: Why should my income determine my contribution to our government?

 

Since a single mother of two surviving on $25K a month in income, would find it far more difficult to come up with $5K in taxes, than a single person making $100K and having to come up with $20K in taxes if you went solely by a flat tax.  Coming up with that $1000 in rent would be pretty damn hard.  A recessive tax regime is far from equitable!  Cheers!

 

I think you mean 25K a year, not month.  Not sure what you mean by "recessive tax."  The common term is regressive.  Regressive hits lower income more than higher income.  It can be via a head tax (same dollar amount per person) or decreasing rate such that the effective percentage is higher for the lower income payor.  Flat tax is same rate regardless of income.  It is generally not considered regressive or progressive.  Progressive is where one pays a higher rate as income increases. 

 

A big part of the tax debate revolves around the whole issue of "fairness."

 

Typos...tough to type on my iPhone while standing amongst passengers on the Skytrain (subway).  Cheers!

[LC]

I agree that a recessive tax regime is inequitable, just as inequitable as a progressive tax regime.  Rather, I propose a flat per capita fee: each person pays a per capita fee to support the government's mission (supposedly the provision of "public goods").  This would currently be on the order of $12,000 per capita per year in the US.  That would be "equitable", no?

Hell no (pardon my french)! Tax should be levied based on utility. Let's say I own a courier service. I get a lot more utility from roads/bridges/tunnels/mass transit than an employee taking the bus to/from work. Therefore I should be liable for more of the upkeep of those services. Warren Buffett has utilized through his businesses many times over the services our government provides free of charge, and he should be liable for more than those who utilize less.

[rkbabang]

One basic question: Why should my income determine my contribution to our government? 

 

There is no good reason to do it that way as opposed to some other way other than it is politically popular.  In a market someone who wants a product or service pays for as much of it as he desires, no more no less.  When you introduce violence into the equation things no longer need to make sense they just need to be popular enough that people find it easier/safer to comply rather than to rebel.  If the same organization which is violently collecting the protection money can get ahold of its victims children starting at a young age for 15,000+ hours of "free education" over a period of 12-13 years in order to instill loyalty (patriotism) and obedience in them to continue the scam into the next generation, and the next, all the better.

[Tim Eriksen]

I agree that a recessive tax regime is inequitable, just as inequitable as a progressive tax regime.  Rather, I propose a flat per capita fee: each person pays a per capita fee to support the government's mission (supposedly the provision of "public goods").  This would currently be on the order of $12,000 per capita per year in the US.  That would be "equitable", no?

My personal idea of equity is that financial support of government should be commensurate with voting rights.  If financial support of government varies from person to person, so should votes.  If votes are equal, each person's financial contribution should be too.  If you can't afford to support the government, that is fine, you can get essential government services for free, but I don't think you should get to vote.

 

Your comment confuses me.  You state that you agree that a recessive (regressive) tax regime is inequitable.  Then you proposed a head tax, which is, by definition, a regressive tax.  A $12,000 per person tax would a bigger percentage for the poor than the rich.  You are contradicting yourself.

[nsa122]

I agree that transportation, given large disparities in citizens' utilization, should be supported by usage-based fees, determined by a free market, rather than uniform contributions.  I do not consider transportation to be a public good. 

http://marketurbanism.com/2011/02/22/urbanism-legend-public-good/

I would suggest if you can quantify any government service that is used by Warren Buffett disproportionately more than his neighbors, then that is an indication that those services should be provided by a private entity rather than government, and supported by user fees, rather than coerced contributions.  But even if you do identify a service that you believe must be provided by government, I don't understand slipping income into the equation as some sort of proxy for usage.

I don't believe it is the proper role of government to attempt to correct for the "ovarian lottery" or enforce fairness. 

I would suggest that a per capita fee is not regressive or progressive, because it does not vary based on income.  It is simply a fee, just like the price of any other good or service.  A per capita fee is "equitable" in that each person contributes equally.