The Buffett rule

[IBMer]

If you work, you pay FICA and Medicare. However, I said income taxes. The "bottom 50%" certainly pay taxes. I should list sales taxes and property taxes while I am at it. Taxes on gasoline. Taxes on cigarettes.

Income taxes, not really.

Michael

I assure you that I pay Federal Income tax every year. Do not confuse those that are able to use EIC with everyone in the bottom 50 percent.

 

[rudder]

Raising taxes means lower revenue. Lower revenue means small government. See how that works?

So you have lower revenue... how do you pay all those Americans relying on the federal government for extra income? Borrow from China? That demographic won't shrink with higher taxes.

 

[child of wonder]

I would support this type of initiative.

In fact, I'd like to see it more broad so that we have a far, far simpler tax code, lower overall tax rates, and the elimination of all these stupid tax loopholes, deductions, and credits.

 

[werepossum]

Raising taxes on everyone isn't a good idea in this economy. Deep spending cuts that hit this year or next are also a bad idea. Raising taxes on upper incomes won't have that much effect on it one way or other.

In any event, even if the economy were healthier, an across the board increase would be politically very difficult to pull off.

- wolf

I think this is probably true. Lower tax rates mean more ability to spend, but not necessarily a reason to spend more. Higher tax rates mean less ability to spend, and in this economic uncertainty spending savings is probably going to be less attractive overall than simply cutting back lifestyle. Deep spending cuts mean fewer dollars and thus probably fewer jobs. And increased spending simply reminds everyone of the mess we're in, with national debt greater than GDP, and encourages people to spend less to be more prepared for the coming crash. Stability is probably the best course. Once the economy picks up and government actually cuts spending (which should happen shortly after the Great War between the unicorns and the flying pigs) will be the time to end the Bush tax cuts for everyone and maybe begin paying down our massive debt.

 

[werepossum]

Outsourcing drives me fucking crazy - and it's not because of the politics. It's the fact that I have an incentive to play these stupid games and these are the consequences.

What drives me even more nuts is that although the corporate tax rate in the US 35%, the effective tax rate for all US corporations is 25% (or around there) due to deductions, etc. The corporate tax rate in AU is 30%. If we just lowered the US corporate tax rate to 25% and got rid of all the special deductions, the government would lose no revenue. And now since the 25% is lower than the 30% I would recommend to the board to source the income to the US so that we pay US income taxes! Not only that, I would have the privilege of firing our lawyers and tax accountants. My life would be improved personally, and we'd hire competent US developers that are on the same schedule as I am!

Agreed. Even better, eliminate the corporate tax and tax all disbursements as wage income, along with taxing all money taken out of the country.

The current US "tax world-wide income" is really stupid. As i have said before, I am the CFO of a multi-national company and I deal with those laws all the time. They trap billions that were earned overseas outside of the USA where the cash is not invested in the USA. However, that is a different topic.

I do agree with the President that by simple math more revenue is needed. Unless Washington is willing to take major action to eliminate entitlement spending, we need to pay for it. I want to eliminate it ASAP and my plan of raising taxes on everyone is guaranteed to piss a lot of people off.

I have not see a credible proposal of why increasing taxes on dividends makes sense. Lower rates compensate for the fact that it was already taxed and encourages companies to pay them and circulate money that otherwise would just sit on their balance sheet. The average company invests excess cash in the safest money market funds they can find. Very low return and little economic stimulation.

Like I suggested above, if you want to target it, then you need a tax that says first $100K of dividend income = 15%, the rest at 20% or something like that.

Same for capital gains except for a sub-rule that protects owner/founders. Like if you own more than 30% of the company always 15% otherwise first $100K at 15% the rest at 20% or something like that.

The above are actual proposals. So far Obama has only been running his mouth off but not suggesting how.

Michael

This probably makes economic sense as low capital gains rates encourage investment in otherwise marginal investments. But - does it really make sense to encourage investment in marginal investments?

Also, increasingly I find it hard to morally justify tax a man who must earn his bread with his own labor at a higher rate than a man whose money earns his bread for him. Just doesn't seem right.

 

[Genx87]

I for the life of me cant figure out why the United States govt believes they are entitled to taxes on money earned in a foriegn country. Change that rule and make it easier for capital to come back to our shores. There is absolutely no reason why any corporation would bring that money back. Unless they enjoy being taxed twice.

 

[Doc Savage Fan]

http://mynorthwest.com/178/549000/FACT-CHECK-Are-rich-taxed-less-than-secretaries

WASHINGTON (AP) - President Barack Obama makes it sound as if there are millionaires all over America paying taxes at lower rates than their secretaries.

"Middle-class families shouldn't pay higher taxes than millionaires and billionaires," Obama said Monday. "That's pretty straightforward. It's hard to argue against that."

The data tell a different story. On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.

There may be individual millionaires who pay taxes at rates lower than middle-income workers. In 2009, 1,470 households filed tax returns with incomes above $1 million yet paid no federal income tax, according to the Internal Revenue Service. That, however, was less than 1 percent of the nearly 237,000 returns with incomes above $1 million.

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.

Obama's claim hinges on the fact that, for high-income families and individuals, investment income is often taxed at a lower rate than wages. The top tax rate for dividends and capital gains is 15 percent. The top marginal tax rate for wages is 35 percent, though that is reserved for taxable income above $379,150.

With tax rates that high, why do so many people pay at lower rates? Because the tax code is riddled with more than $1 trillion in deductions, exemptions and credits, and they benefit people at every income level, according to data from the nonpartisan Joint Committee on Taxation, Congress' official scorekeeper on revenue issues.

The Tax Policy Center estimates that 46 percent of households, mostly low- and medium-income households, will pay no federal income taxes this year. Most, however, will pay other taxes, including Social Security payroll taxes.

"People who are doing quite well and worry about low-income people not paying any taxes bemoan the fact that they get so many tax breaks that they are zeroed out," said Roberton Williams, a senior fellow at the Tax Policy Center. "People at the bottom of the distribution say, but all of those rich guys are getting bigger tax breaks than we're getting, which is also the case."

Treasury Secretary Timothy Geithner was pressed at a White House briefing on the number of millionaires who pay taxes at a lower rate than middle-income families. He demurred, saying that people who make most of their money in wages pay taxes at a higher rate, while those who get most of their income from investments pay at lower rates.

"So it really depends on what is your profession, where's the source of your income, what's the specific circumstances you face, and the averages won't really capture that," Geithner said.

 

[ElFenix]

It was whatever the marginal rate was up until either 2001 or 2003 IIRC. That would have been 39%. I could be wrong though.

1997 tax law changed it from 28% to 20%
http://en.wikipedia.org/wiki/Taxpayer_Relief_Act_of_1997

according to the wikipedia article they'd been at 28% since being raised in 1986 from 20%. there had previously been large exclusions on gains depending on how long the asset was held, effectively reducing the tax rate even if the marginal rate applied.

 

[highland145]

Come on Doc. They still have another 70.9% that they can give and they'll still be rich.

 

[chucky2]

Just curious:

What if someone made a comfortable salary, say $80k gross per year. They put in 15% pre-tax into their retirement. After 40 years working, lets say they've got $3M in their 401(k). If they were to go cash it out all at once, what would they pay for their tax rate on that $3M under the Buffet plan vs. current plan?

Chuck

 

[blackangst1]

How much did slaves pay in income taxes? Did they consume more in services than they paid for in taxes? I guess they were 'moochers'. The poor pay in a lot of ways.

At least slaves had to put in a hard days work for their keep...

 

[jayzds]

Talk about class warfare....

Anyways, this fallacy is getting really old. What you really should be saying is people with 2 or more children making less than 40k a year don't pay taxes. Because those are the only people getting a refund back that covers their tax expenses. I certainly pay taxes and I am in the bottom 50 percent.

Actually in 2010 you can make $50,000 with 2 kids and pay no federal tax with the standard deduction, or you can make $60,000 with 3 kids and still get a refund.

I should add this is MFJ...

 

[Doc Savage Fan]

Come on Doc. They still have another 70.9% that they can give and they'll still be rich.

Just reporting the facts which seem a tad sparse these days.

 

[highland145]

Just reporting the facts which seem a tad sparse these days.

Who needs facts when we have opinions.

 

[Ausm]

The poor don't pay income taxes and, other than consuming more services than they pay for, so are moot in this conversation.

Michael

Depends what your definition of poor is...

 

[Ausm]

Talk about class warfare....

Anyways, this fallacy is getting really old. What you really should be saying is people with 2 or more children making less than 40k a year don't pay taxes. Because those are the only people getting a refund back that covers their tax expenses. I certainly pay taxes and I am in the bottom 50 percent.

The Republicans have been on a "Class Warfare" Jihad since Ronnie Raygun introduced his trickle on Economic theory.

 

[manly]

That's just flat out incorrect. Just days after his last comments, there were stories everywhere about the army of lawyers he has working to make sure he pays as little as possible.

You can fool some liberals all the time, or all liberals some of the time, or all the liberals all the time.

Save234

then cite your references.

Don't confuse Berkshire Hathaway's corporate back taxes with Buffett's personal tax return. There's tons of noise this week over the "Buffett Rule" but I don't see prior "stories everywhere" about an army of lawyers reducing his personal income tax liability. It's not that complicated, he gets to pay 15% on virtually all his income, legally.

 

[Fern]

The Buffett rule

There is no "Buffet Rule".

Both Geithner and Carner have said Obama will not be releasing any details, no written proposal to Congress. Nothing but a crass political campaign ploy.

"We're not going to give the Congress a detailed proposal for how to meet that principle because we think there are a bunch of different ways to do that," said Treasury Secretary Timothy Geithner, adding that the details of the rule would depend on the rest of the structure of a revamped tax code.

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/09/20/bloomberg_articlesLRUA140YHQ0X.DTL

Even though Obama will provide no details, the media are running with it. I hear Obama speak of Buffett -type millionaires and billionaires yet some in the media report the tax increase will start at $200k/$250K (single/MFJ). To stand on the stump and rail about millionaires and billionaires yet hit people starting at $200K/$250K is rank demagoguery.

This thing has NO chance of passing.

Obama has previously said raising taxes in a recession is bad policy. What changed? Nothing, he isn't remotely serious.

Obama "Jobs Plan" was based on tax cuts. He then turns around and says pay for the tax cuts with tax increases? This admin has never shown any coherent policy, here's just another example.

In past times the Dems used to claim that the Repubs unfairly tried to paint them as 'tax raisers'. What's changed? It's not only the Repubs who have shifted positions as many here claim. (Can say the same about Repubs and their claim of scare tactics vis-a-vis SS/Medicare.)

Looks like Obama's math is dubious. Somebody did a calc to see how much revenue would be raised if those making at least $1 million were forced to pay a minimum of 35%. It would raise only $37 billion, not much help considering we run about $1.4 trillion in deficit, or Obama proposes to cut about $4 trillion of debt. Ten years of $37B is $370B, or less than 10% of his target number. No damn wonder Obama won't come up with any details.

http://www.theatlantic.com/business...tt-rule-wouldnt-bring-in-much-revenue/245404/

Looks like a very unserious proposal pitched for campaign purposes to his base which has a strong emotional (not logical as re: the economy) obsession with more taxes on the rich. Doesn't merit serious discussion IMO.

Fern

 

[Fern]

then cite your references.

Don't confuse Berkshire Hathaway's corporate back taxes with Buffett's personal tax return. There's tons of noise this week over the "Buffett Rule" but I don't see prior "stories everywhere" about an army of lawyers reducing his personal income tax liability. It's not that complicated, he gets to pay 15% on virtually all his income, legally.

Buffett pays 35% on his $250K of wage income, and therefore maxes out on SS.

He's the one who decided to pay himself a base salary of only $100K. Under IRS/tax law you're supposed to pay a FMV to the execs. You think other Buffett-level execs receive only $100K in base pay? I know they don't. How he gets away with it IDK. He should be paying FMV which would increase the tax rate he complains about.

Fern

 

[JSt0rm]

At least slaves had to put in a hard days work for their keep...

Back in the good ol' days eh??

 

[Engineer]

Actually in 2010 you can make $50,000 with 2 kids and pay no federal tax with the standard deduction, or you can make $60,000 with 3 kids and still get a refund.

I should add this is MFJ...

How do you figure?

4 deduction x $3,650 each
1 deduction of $11,600 (standard deduction)

$26,200 in deductions leaves $23,800 in taxable income.

2 x $1,000 (assuming your children are 16 or under) = $2,000 tax credit

Taxes: $2,720 - $2,000 credit = $720 in tax liability.

 

[ElFenix]

How do you figure?

4 deduction x $3,650 each
1 deduction of $11,600 (standard deduction)

$26,200 in deductions leaves $23,800 in taxable income.

2 x $1,000 (assuming your children are 16 or under) = $2,000 tax credit

Taxes: $2,720 - $2,000 credit = $720 in tax liability.

i'm tired of subsidizing breeders

 

[Engineer]

i'm tired of subsidizing breeders

Work less.

 

[JS80]

Work less.

Or breed more. Until you hit AMT. Then you bend over.

 

[ElFenix]

Work less.

uh, you do see how many posts i make, don't you? :whiste: