Warren Buffett: Will somebody please raise my taxes?
posted at 6:59 pm on August 15, 2011 by Allahpundit
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot…
I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off…
Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent…
[F]or those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
Stephen Moore tackled Buffett’s argument last month that the rich pay less in taxes percentage-wise than the middle class (they don’t), but let’s lay that aside. And let’s lay aside the fact that capital gains are subject to double taxation and that the very rich produce lots of revenue for Uncle Sam when they die thanks to the estate tax. For the sake of argument, if we took Buffett’s advice, how much extra revenue are we potentially talking about here? According to the Journal, letting the Bush tax cuts lapse on households making over $1 million annually would mean additional revenue to the feds of $40-50 billion per year, or … three percent of the deficit. Every bit helps, and if you’re a liberal that’s proof positive of just how little is being asked of House Republicans in exchange for deeper spending cuts, but it’s also a testament to how unserious Democrats are about tax hikes as a budget solution. Taxing the rich won’t solve everything; it’ll barely help solve anything. It’s part of the Democrats’ list demands chiefly for political reasons, so that they have some sort of class-warfare victory to tout to their base when they bargain with the GOP, not because it’ll contribute anything significant towards closing the gaping deficit. In fact, in the clip below, Buffett actually suggests lowering rates on middle-class taxpayers to offset the hikes on the very rich. But why do that if the goal is to maximize revenue? And if the answer is “because it’ll stimulate growth and that will maximize revenue,” then why not apply that logic to the very rich too?
Exit question via Timothy Carney: Does Buffett have a financial interest in making this argument?
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