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Buffett: Stop coddling the super-rich

Babe_Ruth

Sultan of Swat
Staff member
V.I.P.
http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=2&src=tp

Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.

I didn’t refuse, nor did others. 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. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.
I know this story is a few days old, but I just came across it and I thought I would post it since we have discussions about this type of stuff on the forums from time to time.

What are your thoughts about the comments of the richest man in the World? it sounds like Buffett is willing to pay more taxes. He just wants the government to tell him to do so.
 
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CaptainObvious

Son of Liberty
V.I.P.
He's incorrect, tax rates aren't lower, they're pretty much the same since that time period. Besides, he's not taking into account taxes such as the Death Tax, amongst others.

I appreciate that he is willing to invest despite any increase in taxes and capital gains taxes. He's been savvy in his investments and it's worked out for him. Unfortunately for every Warren Buffet there are hundreds more who lost a lot in investment, and the risk/reward analysis changes the higher the tax implications are.

The problem is it's not just what the current tax rate is, it's the fear of what is going to happen in the future. Right now corporations and consumsers are literally sitting on hundreds of millions of dollars not wanting to spend, to get money flowing into the economy, because of the unkown. The administration and Congress aren't giving anyone much confidence to spend, with all the increase in federal spending and the unknown economic implications of things such as Obamacare.
 

Babe_Ruth

Sultan of Swat
Staff member
V.I.P.
I'm no expert by any means, but if you tax the rich more it will decrease the poverty level for the lower end, in my opinion.

That's why I'm sort of on board with Mr. Buffett's ideas shown in this article.
 

CaptainObvious

Son of Liberty
V.I.P.
I'm no expert by any means, but if you tax the rich more it will decrease the poverty level for the lower end, in my opinion.

That's why I'm sort of on board with Mr. Buffett's ideas shown in this article.
Not necessarily. The more they pay in taxes the less they spend in investment, or just spend as discretionary income. The less they spend the fewer jobs are needed.

To increase jobs we HAVE to encourage consumer spending. People need to feel comfortable buying a new car, a new house, go to the mall and buy clothes, eat out more, ALL these things the consumer needs to feel confident doing, to take away the fear that the economy isn't going to crash again tomorrow. And that includes the very wealthy. If they keep hoarding THEIR money because confidence is low, we're NEVER going to get out of this.
 

MenInTights

not a plastic bag
And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.
wut? Is he actually saying taxes stayed the same or increased from Jan 1, 1980 going forward?
Not only am I surprised that Buffet would base an argument on such faulty data, I'm surprised he would draw such a simple correlation between lower taxes and lower job creation. Not only is that not true in the past, its not even true in the 2000's. After Bush's tax cuts, we experienced near historically low unemployment numbers.
 

CaptainObvious

Son of Liberty
V.I.P.
During the Reagan administration the top marginal tax rate went as low as 28% if I'm not mistaken, so I don't understand the statement of tax rates being lower today than during the 80's.

The thing is, there is a difference between political decisions and economic decisions, and they usually don't coincide.

For example, a politician can advocate for saying raising minimum wage by $2/hour. Sounds great, right? This should give the poor more money and raise them out of poverty, right? Then why hasn't it?

Let's say I'm a solo practicioner and I have three legal assistants. I now have to pay each one of them an extra $2/hour, that translates to $48 more a day, almost $250 a week and $1000 more a month and $12,000 a year JUST in my salaries, which is a fixed cost to me. If I'm doing ok, not great but ok, I may not be able to afford an extra $12,000/year in wages. I could make one of the part-time or lay one of them off, which results in higher unemployment and less productivity for me. So politically it was a great idea, the politician is called a "champion of the little guy" and an "advocate for the poor" yet economically it was a poor decision.

Lastly, if raising more taxes lead to higher living standards for the poor, we would have seen that during the Eisenhower administration and there would have been no need for Johnson's "War on Poverty" a mere ten years later.

EDIT: The more I think about it, the more his statements make no sense. So the rich don't take into consideration in the reward/risk analysis that more of their reward would be going to taxes? So if they fail in their investment the failure is theirs. If they get a reward from their investment, more of that reward belongs to the government....and that isn't considered by investors??? How does that make sense?
 
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shelgarr

Registered Member
If he wants to pay more, why does he have to let the government decide how where to spend it. Meaning, why pay it in taxes? Can't Buffett allocate which programs he would wish to support. I'm sure many elderly would love his contributions to SS, Medicare, prescriptions, and home care.
 

C-Mach

Registered Member
If he wants to pay more, why does he have to let the government decide how where to spend it. Meaning, why pay it in taxes? Can't Buffett allocate which programs he would wish to support. I'm sure many elderly would love his contributions to SS, Medicare, prescriptions, and home care.
True, shelgarr. Why should he impose his will on others who will be more affected by tax increases? He should just do something on his own or just give his money to the government. It is his choice, after all.
 

Babe_Ruth

Sultan of Swat
Staff member
V.I.P.
I just finished reading this article, which kind of relates to this topic in hand.

Why poor people support tax breaks for the rich? – Boing Boing

Kind of sad reading this actually.

Something I found while reading about this stuff. This was actually said on The Jon Stewart show.

Three percent of the tax rate on the top income is equivalent to fifty percent of the income for the bottom 50% income earners
.
 

FirstGarden

Registered Member
To increase jobs we HAVE to encourage consumer spending. People need to feel comfortable buying a new car, a new house, go to the mall and buy clothes, eat out more, ALL these things the consumer needs to feel confident doing, to take away the fear that the economy isn't going to crash again tomorrow. And that includes the very wealthy. If they keep hoarding THEIR money because confidence is low, we're NEVER going to get out of this.
CO - I heard a lot of the investment goes overseas where they enjoy huge tax shelters. Any idea how much the wealthy invest overseas as opposed to here in the US?

I'm no business buff, but it would seem smart policy to incentivize investments in US companies that provide US jobs, perhaps with an emphasis on small & mid size businesses, particularly mid, where most job growth is said to occur.

Of course, there's always the golden rule - those with the gold, rule. hehe.
That likely affects policy more than anything else.

What are your thoughts on this?
 
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