In other words, Obama’s plan isn’t math. It’s class warfare.
In his White House address Monday, Obama called on Congress to increase taxes by $1.5 trillion as part of a 10-year deficit reduction package totaling more than $3 trillion. He proposed that Congress overhaul the tax code and impose what he called the “Buffett rule,” named for billionaire investor Warren Buffett.
The rule says, “People making more than $1 million a year should not pay a smaller share of their income in taxes than middle-class families pay.”
“Warren Buffett’s secretary shouldn’t pay a higher tax rate than Warren Buffett. There is no justification for it,” Obama said. “It is wrong that in the United States of America, a teacher or a nurse or a construction worker who earns $50,000 should pay higher tax rates than somebody pulling in $50 million.”
Buffett wrote in a recent piece for The New York Times that the tax rate he paid last year was lower than that paid by any of the other 20 people in his office.
This year, households making more than $1 million will pay an average of 29.1 percent of their income in federal taxes, including income taxes and payroll taxes, according to the Tax Policy Center, a Washington think tank.
Households making between $50,000 and $75,000 will pay 15 percent of their income in federal taxes.
Lower-income households will pay less. For example, households making between $40,000 and $50,000 will pay an average of 12.5 percent of their income in federal taxes. Households making between $20,000 and $30,000 will pay 5.7 percent.
The latest IRS figures are a few years older — and limited to federal income taxes — but show much the same thing. In 2009, taxpayers who made $1 million or more paid on average 24.4 percent of their income in federal income taxes, according to the IRS.
Those making $100,000 to $125,000 paid on average 9.9 percent in federal income taxes. Those making $50,000 to $60,000 paid an average of 6.3 percent.
Common sense should tell us that, even if Buffett pays a lower tax rate than his secretary (which he probably doesn’t), he is paying more in actual dollars for the simple reason that 20% of, say, $50 million is more money than 25% of $100,000 or whatever he pays his secretary. The US has a progressive tax system, though, which means the rich pay higher rates than everyone else. It has been that way for decades, as President Obama and Warren Buffett either know or ought to know.
That the tax code is riddled with deductions for high earners, and based on how money is earned, might be a good argument for a flat tax. But Obama isn’t making that argument. He is arguing for higher taxes on some people, and for higher taxes on some industries, in the name of “fairness.” That’s class warfare.
I wish someone on the left would tell me exactly what percentage is a “Fair Share”. They keep saying everyone needs to pay their fair share, but they never say what that is. And should EVERYONE pay their fair share?
I know people that get refunded more than they actually put in. So they are getting a “refund” of part of my with holdings. Shouldn’t everyone have a fair share to pay? Nearly 50% of the population pays NO income tax. How did zero become a fair share?
Since they share in the use of the roads, and enjoy the safety and protection provided by the military, they share in the benefits of scientific research, and their children share in the funds provided to education, and they often enjoy food stamps etc.
What is their fair share?
I agree, what is a “fair share”? Is it a percentage of income, a dollar amount, what?
They will never say what a “fair share” is because to the average person the government getting a higher amount of your income than you do is NOT fair, regardless of how much you make.
Also, it makes me sick to my stomach to listen to a tax cheat like Timmy Geithner tell me I need to pay my “fair share”. What a crock.
As for Buffet, it’s time for him to…put up or shut up. If he wants to make his individual tax situation a matter of public policy, then produce his returns. I’ve always said he skirted the rules of 1)reasonable compensation (he likes to say he only pays himself a pittance thereby leaving money in his company and avoiding individual and medicare tax), 2)income allocated for personal use of company assets (I know, all those flights on the company jets were for business), and 3) the accumulated earnings tax (yeah, Berkshire shares got to be worth so much because they paid out dividends all these years). I won’t attack his estate planning (although another opportunity for him to make things right in his own eyes) that he avoided by leaving his wealth to the Gates Foundation, as I believe the estate tax is a horrendous idea in the first place.
Everything I mentioned above is codified in Title XXVI which encompasses the tax code. Its just never been applied to him, which just goes to show, if you are relieved of overly burdensome taxes you can become very successful.
When America was in deep debt after World War II, the top income tax rate was 90% under Republican President Dwight Eisenhower. At that time American corporations were not multi-national entities with the rights of citizens to spend unlimited money to influence elections or ship their jobs, factories and profits (beyond the reach of taxation) to Communist and 3rd world nations, with zero interest in human, civil or other worker, environmental or other safety protections. Back then, CEO’s made perhaps 40 times the average worker and not 400, or 1500 times as much. Now, these giant nationless, heartless multinational corporations and those that run them have a massively lower tax rate than under Eisenhower and have managed through a long term systemic application of increasing influence through money in Congress managed to carve out the lowest tax rates and the capital gains rates, which compose a lot, if not most of the income of many of the people in this oligarchic classes to pay significantly less than average citizens, while their corporations no longer have to pay taxes on many overseas profits based on (completely unethical laws, bought and and paid for through the influence of money in politics) and thus, much of the revenue is lost in this way.
40 Years of TRICKLE UP ECONOMICS, has created the GREATEST WEALTH DISPARITY in a century and it has also brought the global financial system to the brink of disaster with poverty reaching epidemic proportions, even as the Libertarians continue the mantra of the failed trickle down, voodoo economics; NO NEW TAXES, especially for the rich and super rich.
The so called “Job Creators” do not take their tax breaks and hire people, they put their money in bonds or gold or stocks and make money with their extra money. The cycle of greed causes hoarding and hoarding causes economic depression and the suffering of the vast majority of humans that are the real citizens of this once great nation.
I would suggest that your information is flawed. The difference between the middle class and richest members of the US has *decreased* in the last ten years. But, hey, what are facts and figures when you can stir up class warfare? You might want to at least read this, just in case someone else you try this on has read it, also, and calls you on it:
http://www.american.com/archive/2011/september/middle-class
Duffminster, you might want to read this to hear why those 90% marginal tax rates were a failure. You might be surprised who called for cutting those absurd rates and even more surprised to learn that as a result of those cuts, the economy boomed and tax revenues increased.
The sole purpose of the tax code should be to raise the necessary revenues to fund the legitimate functions of government. Economic favoritism, class warfare, and crony capitalism (or crony socialism) are not legitimate functions of the tax code. The key is to do the things that raise those necessary revenues most efficienty, not to punish “the rich” out of economic penis envy.
Let us suppose that Mr. Buffett actually does pay a lower rate then his Secretary. There is an easy way for him to remedy this and pay his fair share. He should simply file a basic 1040 and take the standard deduction. That way he can show how much better he is then those evil Republican billionaires are.
If you look at last years tax rates you can calculate that Buffet’s secretary had to have taxable wages of about $1,450,000.00 in order to pay the 33% rate that they are claiming. He might actually pay her that amount, but that is not anywhere near the amount you expect when you hear the job title of Secretary.
If the gov. wants to close the loophole that allows Buffet to pay only 17.4% in income tax, they should tax carried interest as ordinary income.
I just counted 7 different tax rates mentioned in this article (there are only 6 tax brackets) so obviously there is lots of confusion surrounding the rate people pay in taxes. Everyone’s confusion stems from the fact that our tax code is riddled with 172 different tax breaks that distort the amount of revenue the government collects. http://eng.am/pVgrfz
The only way to make things clearer is for Congress to man up and tackle tax reform. Most politicians agree that the most sensible way to reform the tax code is to get rid of all tax breaks, cut the number of tax brackets, and lower income tax rates.
A tax code with lower rates will help the government collect more revenue through increased tax compliance (http://eng.am/ndwf0l) while removing tax breaks will help the government cut in-direct spending (http://eng.am/pxo5XL).
Cutting spending and collecting more revenue through tax reform will help Congress manage the debt over the coming decade and allow our politicians to focus on job creation, not who pays what in taxes.
Mr. Buffet has every right to say what he feels, wants and needs. It’s his God given Right.
For those of us listening to all Mr. Buffet says, feels, wants and needs are required to analyze his actions.
After all Mr. Buffet, actions speak louder than words. Words and deeds in a macro and micro economic sense, i.e., how it affects Our US Constitution, Declaration of Independence and Bill of Rights, one could go as far to say all of the Federalist Papers, too, belie an individuals true intentions.
Reviewing Mr. Buffet’s ideas, in this back drop of Our Founding Fathers thoughts, his words and deeds one senses have a fundamental disconnect with American’s values.
Mr. Buffet is a Fabian Socialist (molding a world in his vision), A Progressive (Saul Alinsky’s tenets) and a Keynesian (command economy type).
Mr. Buffet is welcome to his thoughts, perusals et al, but We The People reject
We The Elite People’s brand of representative government (or lack thereof).
VAlue investing serves Mr. Buffet well, made him the “Oracle of Omaha.” But Mr. Buffet’s Value politics is diametrically opposite We The People’s feelings, wants and needs.