I think Warren Buffett is a billionare playing with hundreds of others in a million dollar poker game. He is just asking to raise the anti because he knows that will eliminate some of the less heeled competition.
which competition is he trying to eliminate?
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What is he supposed to say? "My net worth increased last year just like many of yours and I paid no taxes on this just like you didn't because in the United States we have never had to pay taxes on unrealized gains"
He could have at least talked about his net worth increasing, and the fact that he doesn't generate a lot of income, which is probably why his tax rate is so low.
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Buffet is avoiding having an estate, not avoiding estate taxes. I think he would be happiest if nobody paid estate taxes ;-). He believes the transfer of excessive wealth between generations of a family is unethical. He wants his kids to have enough money that they can 'do what they want (for work), but not enough to do nothing'.
Well, I actually tend to agree on an ethical level, but that isn't the point here. He still wants an increase in the estate tax rate, and yet he avoids paying estate taxes. As much as I admire him for pledging to donate his wealth to the Gates Foundation, at some point it seems a bit hypocritical for him to advocate raising tax rates that he never has to pay.
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He is a fascinating man. And far more compassionate and generous than any of god-bothers that like to preach to the rest of us.
Without a doubt. Secretly I want him to keep his wealth, or as much of it as possible, because I know for a fact that he does a lot more good with it than the US government does. But I think we're beyond that already.
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Fair taxes wont solve anything?
Fair taxes across the board for individuals will benefit individuals immensely and make things a lot more fair. You still have to deal with a whole slew of other taxes though, many of them more complicated than the individual rates.
I'm not an expert at all, but I do know that the solution is a lot more broad and will involve a lot more sacrifice than just the rich paying more.
Actually, according to Buffett himself (whether you believe him is another issue, I suppose), he doesn't employ a personal accountant and doesn't take advantage of tax shelters available to him.
He doesn't have too.
Question is, does his company?
A quote from Buffet himself.
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When asked why the conglomerate structure seemed to work so well for him, he remarkably — and surprisingly, to me — explained the structure is efficient and comes in handy around April 15. “We’ve got this ability in terms of moving money around into various opportunities” without tax consequences, he said, describing how he can invest the profits from one business into another without being taxed.
I don't want to delve too much into this thread because i'm still reeling from Calgaryborn's performance in the US Debt thread. However, I agree that the tax system has to change but the logic used for some of it hurts my eyes. But a few points because, well, i can't resist
1) People can't argue on one hand that taxing the top bracket won't bring in enough money to solve anything, but then argue on the other hand that they need more taxpayers / raise the floor (which I read as reducing the number that don't pay federal taxes).
The top 5% in the US pull in 58.7% of the AGI; the bottom 50% pull in 2.7%. I don't know what people think is going to happen by telling a poor family that they now need to pay *some* taxes... just how much can we raise from those earning 2.7% of the nation's wealth?
2) To the person arguing that the poor in the US aren't poor because they have refrigerators and air conditioning... super weak point. A refrigerator costs about 8 days worth of food for a family of 4, which is not expensive. Further, it's a prudent purchase because it extends the families ability to eat cheaply. Yes, these things may be frivolous in rural Africa where the refrigerator may cost more than an annual food budget... but in north america, it's downright cheap and outright prudent and fiscally conservative to own.
3) I think people arguing for "fair taxes" and similar items are misplacing the point of friction. Those taxes are not really opposed by the bottom earners (since they have little to no voice) but rather opposed by the earners at the top and larger corporations... the reason is simple: those entities pay less than what the fair tax would ask of them.
4) The claims that households meaningfully benefit from low capital gains because of the high percentage of stock ownership (60% of households?) are weak. The vast majority of families that own stocks do not receive meaningful distributions as their accounts are just small. The capital gains are only meaningful at the upper end of the income spectrum. In 2007, median retirement savings for all households (roughly 50% don't have any!) was 45K... if you get a great annual 5% dividend from that, it's a whopping 2250 per year... whether you lose 15% of that to capital gains or 20% of that is not meaningful for you. Therefore, the capital gains rate is predictably a non-event for at least 75% of households.
None of this is to absolve families for not having savings and/or advocating that large swaths of american families should not pay taxes. However, much of the arguments centered around stock holdings / tax rates are really just cloaks for high income earners to advocate in their interest. It is what it is.
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Two points, when goverments contract in a contracting economy it has the effect of amplifieing the contraction, thus taking a recession into a depression.
The problem is not what goverments do during a recession, it is what they due during a boom, goverments, under a Keynsian system need to contract during periods of growth and then expand during recessions to slow the contracting effect.
Second point, I believe individuals and business are taxed seperatly therefore in increase on income tax should have no effect what so ever on business, it is also very simple to ensure this, that the tea party morons and their very smrt very rich shepherds don't call for this is a clear sign they don't care or believe tax increases for the over 250,000 will affect small businesses at all.
First point- Has that been proved in history? The only depression I've read about appears to have been lengthened and deepened by high taxation and government spending. The only thing that righted that ship was a World War.
Second point- I've read and heard most small businesses in the States operates under their owners individual tax accounts. There must be some disadvantage to running your business through its own tax accounts.
3) I think people arguing for "fair taxes" and similar items are misplacing the point of friction. Those taxes are not really opposed by the bottom earners (since they have little to no voice) but rather opposed by the earners at the top and larger corporations... the reason is simple: those entities pay less than what the fair tax would ask of them.
Careful. One might think I'm a socialist commie lover for proposing the fair tax.
But I do so for that exact reason. It would get the top-level owners, both the individuals and the corporations to pay more. And because it is fair across the board, they couldn't find ways to exploit it to pay less.
Fair is fair. No reason everyone can't pay the same rate. Its progressive taxation at its best. Without the progressive rates though.
First point- Has that been proved in history? The only depression I've read about appears to have been lengthened and deepened by high taxation and government spending. The only thing that righted that ship was a World War.
Second point- I've read and heard most small businesses in the States operates under their owners individual tax accounts. There must be some disadvantage to running your business through its own tax accounts.
You need to go back and read your history again, the initial US goverment response (and every other goverment as well) in early thirties when the market crashed was to cut back massively on goverment spending, under Hoover (hence the term 'Hooverville' for the camps of homeless that lived by the railway tracks) it is considered a large reason the recession deepend into a depression, in the end this approach was so destructive to the US it enabled the election of FDR and caused the 'New Deal' which helped somewhat, but you are right in saying that the only thing that effectively stopped this centuries greatest depression was the largest infusion of goverment cash and economic interference in the free market in US history, the second world war.
Income taxes in those days were all but non existent and a non factor either way
Second Point. It is perfectly possible to write out a tax law that targets individual income rather than business income, the only hardship this would cause small business would be forcing their accountants to file seperatly.
Last edited by afc wimbledon; 08-16-2011 at 06:52 PM.
Again, I never said that he should be taxed on his net worth. My point is that he can add $3 billion to his net worth year by year, but not get taxed on it because the US doesn't tax stocks until a dividend is paid, or until some stock is sold. Which is fine, but he doesn't mention it. He's talking about increasing the estate tax, which he avoids paying because of his amazing donation to the Gates Foundation.
Why would he mention it? It is totally irrelevant and nonsensical. That would be like him starting off with this line
"Now I don't pay a $40 tax on every piece of bacon I eat, even the stuff I bought that was imported from an internationally ran pig farm"
I love the idea that if someone donates a large amount of money, to save another large amount of money, you somehow think they have come out ahead...
Let me keep this simple for you. I owe $1000 in tax. Instead, I pay $2000 to some random charity and they give me a tax write off of $1000 so now I owe nothing. Man what a scam, I avoided paying $1000 in taxes, I am so much better off now.
Unless of course you are claiming that he is donating $1000 and then getting $2000 in direct write offs.
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When asked why the conglomerate structure seemed to work so well for him, he remarkably — and surprisingly, to me — explained the structure is efficient and comes in handy around April 15. “We’ve got this ability in terms of moving money around into various opportunities” without tax consequences, he said, describing how he can invest the profits from one business into another without being taxed.
If that wasn't the case, taxes would be discouraging capital flow. Fluidity helps move capital to where it's most productive - it's a tax that distorts the economy hampers productivity. If you hold one company and it re-invests, you don't get taxed until you sell for money that you can actually spend on products, at which point it becomes income and gets taxed. If you're doing the same thing but moving your money between companies, why does that need to be any different? All it does is allows better allocation of capital.
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Originally Posted by afc wimbledon
when goverments contract in a contracting economy it has the effect of amplifieing the contraction, thus taking a recession into a depression.
The problem is not what goverments do during a recession, it is what they due during a boom, goverments, under a Keynsian system need to contract during periods of growth and then expand during recessions to slow the contracting effect.
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Originally Posted by Calgaryborn
Has that been proved in history? The only depression I've read about appears to have been lengthened and deepened by high taxation and government spending. The only thing that righted that ship was a World War.
If you're raising taxes during a recession to pay for your stimulus spending, you're doing it wrong. You're supposed to pay for your stimulus spending by running surpluses. Then you can run deficits in recessions without accruing debt long-term. And If Keynesian economics aren't "proven", then supply-side economics are completely disproven.
You need to go back and read your history again, the initial US goverment response (and every other goverment as well) in early thirties when the market crashed was to cut back massively on goverment spending, under Hoover (hence the term 'Hooverville' for the camps of homeless that lived by the railway tracks) it is considered a large reason the recession deepend into a depression...
Also see Ireland.
They revealed austerity measures in November and their 10 year bond rates were 8%. In between then and now, rates further spiked to 14% in July and have now settled at 10%. The market doesn't seem to have confidence in troubled nations adopting austerity measures.
(CNSNews.com) – Taxing millionaires and billionaires more – a position advocated by billionaire Warren Buffett and President Barack Obama – won’t make much of a dent in the national debt or the record federal budget deficits, a new study finds.
“Even taking every last penny from every individual making more than $10 million per year would only reduce the nation's deficit by 12 percent and the debt by 2 percent,” the non-partisan Tax Foundation’s David Logan writes.
Taxing millionaires at an effective tax rate of 50 percent would raise only $120 billion more, according to Tax Foundation calculations based on IRS data.
Taxing those who make $10 million or more at an even higher rate, as Buffett advised, would also do little to reduce the deficit and debt. Tax Foundation calculations indicate that taxing these individuals at an effective rate of 100 percent would only net the government $186 billion, reducing the deficit by 12 percent and the debt by an additional 2 percent.
In fact, the only way for the government to solve its fiscal issues with revenue would be to confiscate every single dollar from every single American making $200,000 or more per year, the study said.
I know, he never said it would 'solve' the problem. Point still is that raising the individual tax rate on anyone, rich or really rich, won't fix the revenue/spending issue. I would imagine that if someone ran the numbers on broadening the tax base, they would come to the same conclusion.
Effectively closing the corporate taxation loopholes and simplifying the overall taxes applied against 'businesses' and individuals, perhaps with something as crazy as a 'flat tax', along with some massive, massive cuts to all sectors of government spending, including entitlements, seems to be the only viable solution.
Of course, it does make us feel better if we say tax the rich more. They can afford it, right?
I know, he never said it would 'solve' the problem. Point still is that raising the individual tax rate on anyone, rich or really rich, won't fix the revenue/spending issue. I would imagine that if someone ran the numbers on broadening the tax base, they would come to the same conclusion.
Wow, we're really scraping the bottom of the "analysis" barrel with that one.
1) Nobody is claiming that taxing the rich will solve all the problems, so the article is beheading that straw man... again.
2) So now 8% of the debt in one year is not a meaningful reduction?? I'm certainly not advocating a 50% tax level, but you have to be extra stupid to think that an 8% reduction is not meaningful.
3) If we take his point that an 8% annual reduction in the debt is not meaningful, then the only thing we can do is to abolish, overnight, either military spending, medicare, or social security. Which is just a ridiculous position to corner yourself into.
Just dumb all around. No wonder we can't solve anything in the US... this is what passes as "analysis."
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My favourite part is how Fox and others have said that $700B is not that much when taxing the super rich, but when doing budget cuts for $1M, it's a huge deal.
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