The Buffett Piece in the NY Times

[cchoukal]

I'm surprised that no one has posted this yet. Maybe it didn't show up on the radar of the seemingly conservative crowd here.

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html

One of the things I found most interesting was the penultimate paragraph wherein he describes the number of people making 1 million and 10 million. I would've thought the numbers would've been higher.

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[Idiopathic]

too bad everyones already made up their mind on what they think we should do.

 

[RT2MD]

I'm surprised that no one has posted this yet. Maybe it didn't show up on the radar of the seemingly conservative crowd here.

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html

One of the things I found most interesting was the penultimate paragraph wherein he describes the number of people making 1 million and 10 million. I would've thought the numbers would've been higher.

Yeah, I thought about posting this as well. I found it rather interesting.

 

[periopdoc]

My favorite part is all the *****s who are saying, "Since Warren Buffett feels so bad he should just go ahead and donate X dollars to the US Government."


Are they really that dense?


- pod

 

[RT2MD]

My favorite part is all the *****s who are saying, "Since Warren Buffett feels so bad he should just go ahead and donate X dollars to the US Government."


Are they really that dense?


- pod

I was actually talking to some people in my class about this piece earlier... one of them said that exact same quote...

 

[MTGas2B]

I find it interesting to read the historical maringal tax rates throughout the 20th century. During the 50-70s rates for the top tier were as high as the 90% range. http://www.taxfoundation.org/publications/show/151.html

Hard to complain about our current tax rates when looked at in historical perspective. I'm certainly not advocating for rates like that, but given our country's financial situation raising revenue through modest tax increase (like pre-Bush II or even Reagan rates) would still keep taxes pretty darn cheap by historical standards. The only modernization effort needed would be updating the income thresholds.

 

[Jeff05]

I find it interesting to read the historical maringal tax rates throughout the 20th century. During the 50-70s rates for the top tier were as high as the 90% range. http://www.taxfoundation.org/publications/show/151.html

Hard to complain about our current tax rates when looked at in historical perspective. I'm certainly not advocating for rates like that, but given our country's financial situation raising revenue through modest tax increase (like pre-Bush II or even Reagan rates) would still keep taxes pretty darn cheap by historical standards. The only modernization effort needed would be updating the income thresholds.

Inflation adjusted those high tax rates were being exacted on people earning what amounts to 7 figure salaries today. These people were also guaranteed quality schools, retirement, healthcare, etc. I am not planning on ANY of these to be provided by the government.

Increasing taxes is not necessary - unless a small bump in cap gains taxes for ultra wealthy. Massive spending cuts and austerity measures are needed. Sorry grandma - time to move in with your daughter. Sorry grandpa no more PEG/Trach/demented nursing home/100 hospitalizations on our tab. Sorry 25 year old welfare mom - you have a mandatory work program if you continue to receive benefits. Had 9 kids who had food/healthcare/education/etc paid for by tax payers? Great - all must enter into volunteer government service programs for x# of years after 18 to PAY BACK society.

No more free rides. Can't have 50% of population not pay any tax on salary.

We must enter a depression and restructure the economy under dire circumstances. Otherwise, I think the stagnation/entitlement overreach spiral will persist indefinitely.

 

[MTGas2B]

Inflation adjusted those high tax rates were being exacted on people earning what amounts to 7 figure salaries today. These people were also guaranteed quality schools, retirement, healthcare, etc. I am not planning on ANY of these to be provided by the government.

Increasing taxes is not necessary - unless a small bump in cap gains taxes for ultra wealthy. Massive spending cuts and austerity measures are needed. Sorry grandma - time to move in with your daughter. Sorry grandpa no more PEG/Trach/demented nursing home/100 hospitalizations on our tab. Sorry 25 year old welfare mom - you have a mandatory work program if you continue to receive benefits. Had 9 kids who had food/healthcare/education/etc paid for by tax payers? Great - all must enter into volunteer government service programs for x# of years after 18 to PAY BACK society.

No more free rides. Can't have 50% of population not pay any tax on salary.

We must enter a depression and restructure the economy under dire circumstances. Otherwise, I think the stagnation/entitlement overreach spiral will persist indefinitely.

I say both are necessary, no way around it, and agree with your point on adjusting income thresholds for the marginal rates.

The only modernization effort needed would be updating the income thresholds.

 

[pgg]

Sorry grandma - time to move in with your daughter.

For 1000s of years this has been the way human society has worked.

Only in the last century has the western world adopted this expensive concept of a government payroll for independently living senior citizens, and limitlessly expensive assisted living and skilled nursing facilities.

Admittedly, much of that is because people live so much longer now, many with chronic diseases that would have bumped off 1900 era grandmas decades before she hit 70.

I'm certainly not the only one here who's opined that an enormous downward recalibration in the American standard of living is coming - at least materially. I don't really doubt this at all any more. I do wonder what social and cultural changes will accompany it, e.g. will we see a lot more parents and grandparents downsizing into their kids' households.

Surely having one less 70" 3D HDTV and one more crotchety old in-law in the living room will make some people miserable, but it would work out in the end.


As for taxes - most high earners would be OK with higher taxes, if there was some tangible sense of shared sacrifice with everyone. I'd barely notice a 3% tax hike on the top end, but honestly - what's the point if it's just sucked up by continued increases in spending?

We need both increased revenue and reduced spending. The people who think we can't or shouldn't abruptly balance the budget this way because it would trigger a depression are missing the point. The "depression vs no depression" branch on the decision tree was passed long ago. Unless someone invents seawater-fueled cold fusion in the interim, there's no dodging the pain. I'd rather face it sooner than later.

 

[sevoflurane]

We need both increased revenue and reduced spending.

This. We've dug our own hole... this is the best solution to try and get a hand up on solid ground.

And... the stock market is down another 4+% AGAIN.

 

[dhb]

Unless someone invents seawater-fueled cold fusion in the interim, there's no dodging the pain.

with fresh pure water as a by-product

 

[vector2]

For 1000s of years this has been the way human society has worked.

Only in the last century has the western world adopted this expensive concept of a government payroll for independently living senior citizens, and limitlessly expensive assisted living and skilled nursing facilities.

Admittedly, much of that is because people live so much longer now, many with chronic diseases that would have bumped off 1900 era grandmas decades before she hit 70.

One thing I wonder about- were it not for this mass moving-out of the elderly from their children's homes over the past 60 years, could the US really have sustained the massive levels of productivity/GDP growth we have had compared to those 30 hr/wk, retire at age 55 Europeans? Caring for the elderly can be an astounding undertaking in terms of dollars and man-hours...

http://www.gallup.com/poll/148682/caregivers-look-elderly-parent-invest-lot-time.aspx

 

[bogatyr]

Counter to Buffett's piece:

http://online.wsj.com/article/SB10001424053111903918104576504650932556900.html

 

[lord_jeebus]

I think that very high marginal rates at very high levels (> 3 million/yr) could have the added benefits for the culture of US corporate management.

In the past, my impression is that companies were run by individuals who had been with the company for decades, if not their entire careers, and those individuals ran their companies with an emphasis on long-term stability. If you wanted to get rich in the 50's, you'd be paying a 90% marginal rate on your CEO income past a certain level, so it was important to be able to maintain your job for a long time to build a fortune.

Today, companies are mismanaged by CEOs that hop from company to company, extracting their fortunes and then running away before the long-term effects of their policies can hit them directly. Because taxes are low, it doesn't matter if your job isn't stable - you can make a great fortune in a single year. The smart thing to do when taxes are low is to create great gains on paper, lay off employees to skew short-term profit up, and cut costs in ways that will affect the brand years later, after you're gone. Instead of requiring your company to be successful to accumulate a fortune, under a generous tax system it is only necessary to briefly appear to be successful.

 

[epidural man]

Counter to Buffett's piece:

http://online.wsj.com/article/SB10001424053111903918104576504650932556900.html

I'm confused by this article - or at least I don't get the authors argument.

So Warren Buffet says in his article..."look, I think me and my rich buddies should pay more taxes cuz X is the amount I paid."

And this author comes back with an argument that says "Warren Buffet told us he paid X, but he actually paid MORE than X, so he is wrong about wanting his rich buddies to pay more taxes - because this will make it harder for other people to become extremely wealthy" (actually line was...We only wish that, having already made himself rich, he weren't so intent on making it harder for others to become rich too...)

Riddle me this. How can putting more tax burdeon on someone that makes over 10million/year hurt my chances from becoming rich? Or anyones?

 

[pgg]

Riddle me this. How can putting more tax burdeon on someone that makes over 10million/year hurt my chances from becoming rich? Or anyones?

I'm not one to want to punish success - but there's a part of me that wonders if a 90% tax rate on income over, say 5-10 million, would be a good thing.

There's something simply wrong about CEOs and upper management taking home 10s of millions in pay and bonuses while wages for the corporation's employees have been stagnant.

By any objective measure, the gap between the ultra rich and the middle class is getting wider. This is undesirable for a whole bunch of reasons, but I don't know how to reverse it.

 

[urge]

I'm surprised that no one has posted this yet. Maybe it didn't show up on the radar of the seemingly conservative crowd here.

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html

One of the things I found most interesting was the penultimate paragraph wherein he describes the number of people making 1 million and 10 million. I would've thought the numbers would've been higher.

Whatever. The guy is a crook. You are an idiot if you believe anything he says. The average profesional is paying the higher taxes ever, yet he wants to increase them more.

This article explains it better than me:

http://www.washingtontimes.com/news/2011/aug/18/calling-buffetts-bluff/?page=all#pagebreak

"In other words, despite claims that taxes are at their lowest levels in 50 years, today's high-earning couple pays over 80 percent more in federal taxes than their 1950 counterpart!" Mr. Schiff wrote.
How can this be when federal income tax rates ranged from 17.4 percent in the bottom bracket and 91 percent in the top bracket versus 10 percent and 35 percent today? A few of the big reasons: larger inflation-adjusted standard exemption in the 1950s; no alternative minimum tax; payroll tax of just 3 percent compared with 15.3 percent today (temporarily 13.3 percent); and a top income tax rate that kicks in at $371,150 versus $400,000 in 1950 (approximately $4 million adjusted for inflation).

 

[Asp]

I think the best argument for progressive taxation at the higher income brackets is that no one creates that much value.

If I make 100 million dollars, either I create 100 million dollars of real added value to the economy, or I'm transferring 100 millions dollars of value made by other people to myself. Which do you think is more likely?

 

[epidural man]

Whatever. The guy is a crook. You are an idiot if you believe anything he says. The average profesional is paying the higher taxes ever, yet he wants to increase them more.

This article explains it better than me:

http://www.washingtontimes.com/news/2011/aug/18/calling-buffetts-bluff/?page=all#pagebreak

I am perplexed by your post - and by the article you linked.

Maybe I don't understand Buffet's arguement. Teach me if I am wrong.

But from my reading, Buffet is saying - Tax me more, and tax my rich friends more.

It seems you are saying Buffet is a lier. But are you argueing then that Buffet isn't really asking for more taxation because he is a lier? Or are you saying, because Buffet is a lier, we shouldn't listen to him and since he argues for more taxes on the rich, we should argue for less taxes on the rich?

And the article seemed to just be Buffet bashing - which is fine, but it doesn't really explain to me why we shouldn't tax the rich more - or did I miss it?

 

[urge]

I am perplexed by your post - and by the article you linked.

Maybe I don't understand Buffet's arguement. Teach me if I am wrong.

But from my reading, Buffet is saying - Tax me more, and tax my rich friends more.

It seems you are saying Buffet is a lier. But are you argueing then that Buffet isn't really asking for more taxation because he is a lier? Or are you saying, because Buffet is a lier, we shouldn't listen to him and since he argues for more taxes on the rich, we should argue for less taxes on the rich?

And the article seemed to just be Buffet bashing - which is fine, but it doesn't really explain to me why we shouldn't tax the rich more - or did I miss it?

I don't know if he is a lier or not. I imagine he as a bed in which he lies every night. I guess he is a lier then. So am I.

My point is we shouldn't listen to him since he is direct beneficiary form all the bailouts that have bankrupted the government and are making idiots think we need to raise taxes to pay for all the debt that was created so that Buffet can continue to be rich.

One, the federal government could take every single penny of wealth from Uncle Warren and his 400 billionaire friends - confiscate all of the stocks, bonds, real estate and other investments they own - and leave them paupers. The haul would total $1.3 trillion.
The government could take every penny of income from every household that earns $250,000 or more and end up with $1.4 trillion.

Yes you missed why we shouldn't raise taxes. The article says it. Even if you tax everybody making more than 250k to death, that will amount to less than 3 trillion which the government will plow thru in less than a year. Raising taxes will do nothing. Actually it would. I would make a lot more poor people which will then make the situation worse.

All he is trying to do is create a diversion from a real solution which includes stopping the wars, the continuing bailouts, and the ridiculous hand outs.

 

[epidural man]

I don't know if he is a lier or not. I imagine he as a bed in which he lies every night. I guess he is a lier then. So am I.

Touche...

Yes you missed why we shouldn't raise taxes. The article says it. Even if you tax everybody making more than 250k to death, that will amount to less than 3 trillion which the government will plow thru in less than a year. Raising taxes will do nothing. Actually it would. I would make a lot more poor people which will then make the situation worse.

All he is trying to do is create a diversion from a real solution which includes stopping the wars, the continuing bailouts, and the ridiculous hand outs.

Well I certainly agree with you that spending needs to be cut - and I also get the point that raising taxes on the rich will certainly NOT solve the problem (as the article points out).

I'm just not sure why anyone would disagree that raising the riches taxes is a bad idea. It certainly is a BAD idea if that is ALL you do, thinking that will solve the problem.

And I hear ya...stop the wars and bailouts. I just think that the two article's rebuttals posted are red hearings in a way - because I don't think that warren buffett is arguing NOT to stop bailouts or wars, nor arguing that taxing the rich will solve the problems. He simply is just saying, hey - tax us more, we have plenty of money.

 

[vector2]

Some graphs for thought:

Net worth and financial wealth distribution in the U.S. in 2007

Wealth distribution by type of asset, 2007: investment assets

Wealth distribution by type of asset, 2007: other assets

CEOs' average pay, production workers' average pay, the S&P 500 Index, corporate profits, and the federal minimum wage, 1990-2005 (all figures adjusted for inflation)

 

[Mr Mom]

I find it interesting to read the historical maringal tax rates throughout the 20th century. During the 50-70s rates for the top tier were as high as the 90% range. http://www.taxfoundation.org/publications/show/151.html

Hard to complain about our current tax rates when looked at in historical perspective. I'm certainly not advocating for rates like that, but given our country's financial situation raising revenue through modest tax increase (like pre-Bush II or even Reagan rates) would still keep taxes pretty darn cheap by historical standards. The only modernization effort needed would be updating the income thresholds.

The 90% tax rate is completely misleading. At that time, people were allowed to deduct EVERYTHING. Companies paid for perks like housing, and it wasn't taxable. People deducted 100% of meals, entertainment, etc. If you took your family on vacation and removed a splinter from your toe, it was deductible. The threshold for those that actually paid 90% was extremely small.

 

[CambieMD]

I'm not one to want to punish success - but there's a part of me that wonders if a 90% tax rate on income over, say 5-10 million, would be a good thing.

There's something simply wrong about CEOs and upper management taking home 10s of millions in pay and bonuses while wages for the corporation's employees have been stagnant.

By any objective measure, the gap between the ultra rich and the middle class is getting wider. This is undesirable for a whole bunch of reasons, but I don't know how to reverse it.

We can argue whether or not taxes should be used to increase revenue. The above statement is very true. The cuts to government spending are on the backs of the middle class. The cuts to education will not effect the rich. They are insulated. A one-sided approach will not be beneficial to this country over the long term.


Cambie

 

[notbobtrustme]

No more free rides. Can't have 50% of population not pay any tax on salary.

People throw this statistic around but they don't really understand what it means. As a whole, wages for the bottom 98% of earners have decreased since the '70s when inflation is taken into account. The biggest increase in household income is due to women working, not wages increasing.

In 1980, 52% of all jobs in America were "middle class jobs", while today, only 42% are middle class jobs. Again, in 1980, less than 30% of all jobs were low-income jobs, now, that number is >40%. This is despite the massive increase in education. The average income of the bottom 90% of Americans is 31k (http://growth.newamerica.net/sites/...cydocs/26-04-11 Middle Class Under Stress.pdf http://www.washingtonpost.com/wp-srv/special/business/income-inequality/).

The wealthiest 1% of Americans control >40% of the wealth, >50% of the stocks. (http://www.vanityfair.com/society/features/2011/05/top-one-percent-201105?currentPage=all http://www.businessinsider.com/fact...tocks-and-bonds-the-top-1-owns-more-than-50-3).

Only the top 5% of earners actually earned more when adjusted for inflation (http://www.dailyfinance.com/story/are-the-rich-getting-richer-the-data-says-yes/19356546/)


The problem isn't that people aren't paying taxes. The problem is that people's wages haven't increased enough to warrant paying taxes. We have a massive inequality gap, one that rivals ancient Rome or the Gilded Age of the late 19th and early 20th century. The United States has been systematically destroying the middle class since the 1970s and we are finally reaping the "rewards". We've had 3 decades of horrible fiscal and economic policy in the form of "trickle down" Reagonomics. We are teetering on the edge of financial collapse because a system that benefits only a tiny percentage of people is inherently unsustainable.

In the past, this inequality was solved by sending profiteers, black marketers and exploiters to the guillotine and gallows. We may yet see a return to that solution if things get worse.

 

[bogatyr]

The problem isn't that people aren't paying taxes. The problem is that people's wages haven't increased enough to warrant paying taxes. We have a massive inequality gap, one that rivals ancient Rome or the Gilded Age of the late 19th and early 20th century. The United States has been systematically destroying the middle class since the 1970s and we are finally reaping the "rewards". We've had 3 decades of horrible fiscal and economic policy in the form of "trickle down" Reagonomics. We are teetering on the edge of financial collapse because a system that benefits only a tiny percentage of people is inherently unsustainable.

In the past, this inequality was solved by sending profiteers, black marketers and exploiters to the guillotine and gallows. We may yet see a return to that solution if things get worse.

What is this massive inequality? That the ultrawealthy drive Bentleys and the poor people have to drive Kias? That the rich have 80" plasma TVs and the poor have to make do with 40" LCDs? That the aristocrats have iPhones and iPads and the downtrodded have to decide to buy either one or the other? That the 1% can afford yoga classes while the the proletariat becomes massively obese?

The past 30 years has brought unprecedented prosperity that has benefited everyone in society. Who cares if some have a lot more than others?

 

[notbobtrustme]

What is this massive inequality? That the ultrawealthy drive Bentleys and the poor people have to drive Kias? That the rich have 80" plasma TVs and the poor have to make do with 40" LCDs? That the aristocrats have iPhones and iPads and the downtrodded have to decide to buy either one or the other? That the 1% can afford yoga classes while the the proletariat becomes massively obese?

The past 30 years has brought unprecedented prosperity that has benefited everyone in society. Who cares if some have a lot more than others?

All that stuff was bought on credit, which is why the American middle class is so overleveraged. The average American is carrying between 10k and 20k of added credit card debt, that's basically inflating everyone's wages by a massive amount. When the bill comes due, then the credit market crashes, which is exactly what we saw in the 2008.

 

[hoyden]

***yawning***

for the jumpy medical students with a burning desire to redistribute somebody's else money - it might be beneficial to learn who loved a term
plutocracy the most and why

 

[GoodmanBrown]

***yawning***

for the jumpy medical students with a burning desire to redistribute somebody's else money - it might be beneficial to learn who loved a term
plutocracy the most and why