From the Huffington Post:
WASHINGTON — President Barack Obama is expected to seek a new base tax rate for the wealthy to ensure that millionaires pay at least at the same percentage as middle income taxpayers.
A White House official said the proposal would be included in the president’s proposal for long term deficit reduction that he will announce Monday. The official spoke anonymously because the plan has not been officially announced.
Obama is going to call it the “Buffett Rule” for Warren Buffett, the billionaire investor who has complained that rich people like him pay a smaller share of their income in federal taxes than middle-class taxpayers.
Buffett wrote in a New York Times op-ed piece last month that he and his rich friends “have been coddled long enough by a billionaire-friendly Congress.”
The measure would be in addition to $447 billion in new tax revenue that Obama is seeking to pay for his short-term spending and tax cutting plan to jump start the economy.
House Speaker John Boehner said Thursday he would oppose tax increasesto reduce the deficit. Boehner has urged Congress’ deficit “supercommittee” to lay the groundwork for a broad overhaul of the U.S. tax code.
The panel has almost unlimited authority to recommend changes in federal spending and taxes and is working against a deadline of Nov. 23.
Boehner said the panel has “only one option, spending cuts and entitlement reforms,” a reference to government benefit programs such as Social Security, Medicare and Medicaid.
It’s about time. Most of us are tired of hearing how everything is going to come off the packs of those receiving Social Security, Medicare and Medicaid in order to protect the rich. If the rich are job producers? Where are the jobs? Oh, no one will create them because the economy is “skittish?” I repeat, where are the jobs? I suppose the ” job producers” aren’t really job producers. They are just people who want to keep their part of the pie and let the middle class shoulder the cost.
Any middle class person who falls for this like of bull puckey deserves to be taxed. However, leave me out out of it. And while we are on the subject of pet peeves, how about those entitlements? You know–the Social Security and Medicare that you and your employer have paid in to for decades. Entitlements my a$$! Touch my “entitlements,” lost your job! Is this where I say pry my SS check out of my cold dead hands? You get the picture. Fear the Boomers!
Warren Buffett’s op-ed click here.
There was an interesting article on Newsmax.com 16 August 2011 by Christopher Ruddy on Warren Buffett. Ruddy admires Buffett’s investment skills and has applauded Buffett’s decision to give much of his fortune to charity. Ruddy is himself a shareholder in Berkshire Hathaway and, I believe, is publishing or offering a recent investment how-to book by Buffett.
Ruddy says Buffett should get the “Rascal of a Lifetime Award.” He points to Buffett’s claim that the wealthy like himself are not paying enough taxes and that those taxes must be increased. Buffett, who is worth an estimated $50 billion, often jokes that he is paying less taxes than his own secretary.
The secret is that Buffett only draws a very minimal salary from his company, Berkshire Hathaway. The company pays no dividends to shareholders like Buffett. It acts as an effective holding company for Buffett’s vast investment portfolio and earns about $7 billion per annum in dividend income from stocks the company holds.
Due to a special exemption (read: loophole), Berkshire Hathaway benefits from the fact that 90% of the dividend money is exempt from any corporate tax. Buffett is able to take all the tax-free cash and reinvest it, buying more stock or whole companies. Buffett has been doing this for decades. The upshot is that, if taxes are raised on the wealthy in the manner curently being discussed, it will likely not affect the super-rich like Buffett who have corporate shells around their assets and avoid making dividend or other cash payments directly to themselves.
According to Ruddy, what you do NOT hear Buffett calling for is the following:
(1) Closing this corporate loophole so that firms like Berkshire Hathaway are treated like investment holding companies with taxable dividends being paid out each year.
or
(2) A “net asset tax” requiring people like Buffett to pay an annual tax on the value of their assets.
Sounds to me like Warren Buffett is a crafty old goat.
That would be a major change to our tax system if we were forced to pay taxes on equities owned rather than dividends and capital gains on sales. I guess I don’t understand why Buffett is such a sly rascal.
This is one of the most interesting debates happening right now. It’s one of the few places where I have really been listening to people and ideas being floated around, from Cain’s 999 plan to flat tax, to different tax brackets, etc. So far, what makes the most sense to me: broaden the base, lower the rates, eliminate loopholes. Here’s the part that will make one sick of both parties: none of these things is likely to happen.
Why do we want loopholes to vanish? I have no problem with a ceiling on say, house interest deductions, But doing away with the whole thing would kill a recovering housing market. I also don’t have a problem with capital gains tax rate. Again, this can be capped off. Your first million, fine. After that you pay as ordinary income. Same goes for inheritance. That is already up in the millions.
Here’s the problem…..you can’t put the left in charge, because they say things like “where are the jobs?”, which has practically nothing to do the issue of changing tax rules. You can’t put the right in charge, because they’ll sit on their thumbs and just do nothing. That’s our choice: do nothing or do the wrong thing. Here is where the tea party is actually missing the boat: They’re against lots of things, but they’re not FOR anything.
I guess that was aimed at me. Slowpoke, I am not the one who has been saying that we can’t raise the tax rates on millionaires because they are the jobs creators. If that is being used as an excuse, is it not fair to ask where these jobs have been all along? I think that is a very fair question.
But, you are being fair. You are socking to it both right and left. I don’t see why we can’t protect the middle class and aim the boosts in tax rate to the very wealthy.
It would be very easy to leave capital gains alone until you get up in the million dollars worth of capital gains. Then up the rate once a million is hit…or whatever arbitrary figure someone thinks of.
I’m afraid I’ve stumbled across the crux of the problem. It takes no brains at all to chant “Yes We Can” or “Taxed Enough Already”. It actually takes turning the brain on and thinking to find a real solution and push for it. And now I’m not referring to politicians, but the voting populace generally.
It isn’t just you saying it, Moon. Lots of lefties use the “where are the jobs” line to justify higher tax rates for the wealthy. Buffet is the prime example of why it’s not the tax rates, it’s the 1000 loopholes the rich can use to get around those tax rates. To me, it’s a problem of execution. You have the rich who create jobs, and the rich who do not directly create jobs. What will wind up happening is the rich who create jobs will get nailed, and the rich who do not create jobs will just use the loopholes to continue not paying. Again, it is very simple….what poor person has ever hired you, me or anyone. Here’s the bottom line, if you engage in class warfare, the “rich” will simply pull out of the economy and protect what’s theirs, plain and simple. That’s why jobs will not come back until Obama and his entire administration is voted out or resigns in disgrace. You don’t have to believe me, just sit back and watch it happen! And yes, the right sucks too…they’ll mis-use the “jobs creator” argument to protect their own selfish desires. That’s why I’m saying if the TEA party really wanted to make a difference, they’d be FOR solutions, rather than just saying “no tax increases, period” It is quite frustrating, and I think it all comes down to the largest part of the electorate being too lazy to engage their noodles and think for themselves.
If they (the rich) were going to create jobs, they would have done so. We keep talking about what they do. Well, they aren’t doing it.
Obama has no reason to resign in disgrace. That is just silly. He has done nothing disgraceful.
There are all sorts of ways to get around taxing those who create jobs. Tax credits for job creators spring to mind. No one is suggesting that poor people create jobs. I will be the first person to say that too many people are weaseling out of paying any federal tax.
The tax rate is lower than iit has been in decades. You have wars and social programs without funding. This ‘spend less’ is a ridiculous mantra.
Warren Buffet can shill all day long for higher taxes because he doesn’t pay them: http://www.nypost.com/p/news/opinion/editorials/warren_buffett_hypocrite_E3BsmJmeQVE38q2Woq9yjJ#ixzz1WRoIlYSf
He already said he didn’t, Cato.
While ideologically I’m against tax increases of any kind I do find it interesting that 40-50% of people don’t pay any taxes and we’re focused on the top 1% who already do.
Minus of course Buffet who wouldn’t pay this new tax anyways.
I’m now an ardent supporter of a VAT on everything. No one can escape paying the VAT.
Now would be a polically opportune moment to re-propose Steve Forbe’s flat tax with few, if any, deductions. It would greatly broaden the tax base, increase revenue, eliminate deductions that allow avoidance of any payments, and would add clarity /predictability to long-term costs. Such a measure would likely have broad appeal, except to liberals who want a very progressive tax code.
@Slowpoke Rodriguez
I think I would get really hosed on a flat rate tax.
Emma, what is the difference in VAT and national sales tax?
ARe you all dried out yet?
@Kelly3406
What would that do to the housing market to get rid of the mortagage interest deduction? That is very popular and if done away with, would ruin any incentive for home ownership.
What examples do you have that liberals want a very progressive tax code?
Buffet rules.
Government policies that allowed unqualified applicants to get loans were a big driver of the Housing crash. As far as I can tell, none of these policies were changed. If a potential buyer is getting into the market only because of the deduction, then that buyer is not likely to be a very good candidate.
The mortgage deduction has outlived its usefulness. If all deductions are targeted (not just that one), then elimination of the mortgage deduction would probably be acceptable to most people. With historically low mortgage rates and and housing values, the housing market will turn around with or without the deduction as more people get jobs and the risk of layoff decreases.
The use of tax policy to encourage certain behaviors tends to backfire over the long run.
The “Buffet Rule” would be hike the tax rate on the rich so that they don’t have to pay it. I’m not sure how that would help.
Will you agree that redistribution of wealth (…. for equitable distribution of resources and social justice) is a goal of liberals? A progressive tax rate is one of the mechanisms used to achieve this redistribution. The idea is that high earners can afford to pay a higher rate and so a progressive tax code should be used to reduce “unjust” disparities in income.
@Moon-howler They are both the same thing.
Humidity levels are finally down in my house, and no moldy smell. The basement looks like a demolition zone, though. It will be quite awhile before we get it all renovated.
I would disagree somewhat with the Poke. I believe there are many Tea Party people like myself who feel that the time has come — in effect, the jobs crisis is now so great and prolonged — that it is high time for both progressives and conservatives to tone down the ideological rhetoric, put their heads together, and come up with something which actually works. The unemployment stats are no longer just stats to be played around with by the partisan pundits and the book-learned economists from academia. Those stats represent a heavy human cost, and the prolongation of that problem puts us into a psychological situation not too dissimilar from that of the Great Depression — that situation being the potential for imposing deep and bitter psychological scars on the souls of those who cannot find a way to put a roof over the head of and food on the table for those they love.
We can no longer afford to let partisan politics get in the way of a solution. In effect, we in the Tea Party cannot focus simply on defeating the POTUS in 2012 and installing an administration with different ideas and methods. That could prolong the jobs crisis as long as another two years. We need to start on this thing NOW. We in NoVa live in a sort of bubble because federal spending has allowed us to escape some of the worst aspects of the current recession. Out there in the hinterland is a great deal more desperation, in my opinion. We ignore it at our peril.
Like Marinm I am ideologically opposed to raising taxes purely as a revenue measure. However, I am not opposed to bringing into an enhanced revenue stream the individual and corporate super-rich like Buffet and General Electric by closing the most egregious of the loopholes. It is absolutely maddening to me that someone like Buffet can be worth $50 billion and admit that he pays less taxes than his secretary. I am angry that, after all these years of not paying a fair share to help the common cause, he somehow thinks that giving a part of his fortune to charity makes amends for the years of non-participation. I am equally angry that GE can pay no taxes and then decide to invest billions in China instead of our own country.
I would say that we have to be careful in this not to kill off the desire to invest. That would be a big mistake. I do not mind that Buffet is super-rich, but I do not think that he would suffer if he was just a tad less super-rich and the rest of us did not have to decide whether to gut our military or our social programs or perhaps both in an effort to preserve the national fiscal status.
What I am afraid of is that, if we do not adjust with regard to many of the corporate and individual loopholes helping the rich to stay rich by protecting their assets, we will wind up trying to resolve our problems just through a simplistic tax increase. Since the super-rich would remain theoretically super-rich and protected, I am afraid that our tax reach, in order to be effective at all, would have to descend further and further down into the ranks of those also considered somehow to be “rich.” Eventually, you will reach the level of the real non-governmental job creators of our era, small businesses, where the gross revenue stream may put them ostensibly into the eligible category but the actually profits (and the risk and effort factors) tell quite another story. In my humble opinion, if we make that mistake, we might as well hang it up for a long, long time.
Wolverine, I don’t think you sound very tea-party-ish. I think you bring up some important points, some I agree with. GE makes everyone universally angry I think.
I don’t think Buffett said he paid less in taxes than his secretary. I think he said his tax rate was less. I am guessing he is combining earnings and capital gains to get that 18% and that most of his income is from capital gains to come up with that stat. He has to be getting a boat-load of money in dividends also. Unless someone knows a secret I don’t know, those are taxed as earnings.
Hmm, I’m having a hard time seeing where we’re disagreeing, Wolverine…..but if you say so! I think there is a dark, black wave of trend underneath the jobless situation. I think part of it is we’re dealing with the effects of a very fundamental change in the economy that we may not be ready to deal with. It’s too big for a blog post, but we’re seeing that any job tied to mass manufacturing is simply going away, and they’re not coming back. We should have been focusing much more heavily on science and technology at least a decade ago in order to stay competitive. Unfortunately, we’ve been busy dumbing down our best and brightest in an effort to try to keep everyone equal (no winners, no losers). Anyway, now it’s too late to make the transition without a lot of pain, and by pain I mean out of work folks. So now we have a population not ready for the economic transition that’s happening around us, a totally screwed up government, tax and regulations that are working against our prosperity, etc. I’m not trying to sound overly-pessimistic, but I think we need to understand the problems before we can correct them with any success. Actually, just to prove I’m not being too pessimistic, I see things that really turn me on in education. I’ve been following the Khan Academy for around a year now, and I am seeing innovation in areas where we desperately need it, and I believe that’s super-cool!!
@pokie The warnings went out several decades ago. They said that people in the US needed to prepare for a global market and that we would cease to be a manufacturing industrial country and that we would become service-based. People fought the change, pretty much like they did learning to use the metric system for pretty much the same reasons. I can even remember re-education programs that were like grants people could get for re-training. I don’t know who crapped out, the American worker or the Amierican industrial complex. Some of it could be demographics. The wrong people live near the wrong places and now don’t have the mobility to get up and move.
I totally disagree with you about dumbing down the best and the brightest. They are always going to rise to the top and people from all over the world come to the United States to be educated. You have been reading too much right wing bull Sh!! if you think there are no winners or losers. That is not to say that things are perfect in public school. Most of us would have lots of suggestions for change. However, your best and brightest are still rising to the top instead of all the clamor otherwise.
I will throw this out–curriculum should be jobs driven and not politically driven. What moron came up with the social studies curriculum? Why are we studying fife and drum stuff when we should be learning where every country in the world is? Kids in school 100 years ago knew more about where things were located than kids nowadays. How many of us can name the provinces of Canada (much less identify them) or the states of Mexico? How about the countries of Central America? South America? These are places in our own hemisphere. It isn’t taught and it isn’t learned. In Europe you would be considered a total ignoramous dumb ass if you didn’t know the countries and regions on your own continent. Americans wallow in their ignorance and boast about it. This election cycle more than punctuates this point. Some of them are bringing the idea that its cool to be a dumb ass to a new level.
Furthermore, educators can’t even agree on best practices. People think because THEY learned cursive or long division that it serves the needs of today’s students. Not so. Other than signing your name, why does a kid need to know cursive? Kids should know the basic concepts of division, multiplication and that they are repeat subtraction and addition. I personally think every human on earth should know the multiplication tables. (not saying I am right, its just a strong opinion.) but….why spend the time on multiple step m ultiplication and division when anyone can go buy a 2 dollar calculator that will do all of this for you. 100 years ago kids weren’t allowed to use erasers for fear of growing dependent on them. Well…seems silly to me to spend all that instructional time on basic processes when the shift should have been to applications years ago.
Much of the relearning that needs to take place doesn’t involve a college education, just technical training.
Off my soap box now…
To expand on what I just postulated about our economy and the kind of training I think our young people need (and aren’t necessarily getting), I should add that unions came to power fighting for worker’s rights in a very different environment than today. Unions are fighting, but for workers whose jobs are simply being phased out. And while the economy changes shape and structure, the unions have not innovated to deal with it….so now they’re essentially a hinderance to the economy. I couldn’t agree more with worker’s rights, but the biggest weapon the workers had (unions) are now like bringing a civil-war era musket onto a modern battlefield.
@Moon-howler
This was not directed at me but I wanted to toss my hat in.
“What examples do you have that liberals want a very progressive tax code?”
A progressive tax code is when the poor are taxed less than the rich. It’s our current system. At certain salary levels the rate increases. A regressive tax code would be where the poor are taxed less than the rich. You could make the argument that the ‘wino tax’ that you’ve used as an example tends to be regressive as the ‘poor’ (in general) consume more alcohol than the rich (again in general).
I heard a good example today from someone elder than me about the Buffet plan.
At a casino with video poker machines the payouts are changed to encourage people to play different machines and/or to provide the casino with a certain profit. They almost never touch the jackpot. They also almost never touch the bottom tier payouts. What they do touch is the stuff in the middle (where most payouts happen).
There is a lot more in the middle than there is on the margins……….
I’m not going to advocate for the poor being taxed but when we say 40% of our population is immune and we have ‘revenue’ issues… Maybe we’ve got to examine the system itself.
@marin, I don’t think most people like that such a large percent of people do not pay federal taxes. Having said that, I must question pinning a liberal label on our tax code at present. In fact, I think I will how will laughter. Is it because you don’t like it that you decided it was liberal? If it was a liberal tax code, then why have all the conservatives allowed it to go unchallenged?
As for winos consuming more alcohol, or rather the poor, I don’t think there are any facts and figures here. My guess would be that the wealthy consume every bit as much alcohol and that theirs cost a great deal more.
I just don’t like the labels.
@Wolverine #1
I agree with Wolverine. Closing the loopholes would be more effective than raising tax rates, but Buffett would fight that measure tooth-and-nail. It would take real money out of his pocket.
I’m against taxes on dividends anyway because they represent double taxation. Corporations pay corporate income tax (in the US the rate is among the highest in the world already). Dividends are what’s paid from the companies’ after tax profit; the part that is not reinvested. When investors pay any tax on dividends they are paying additional taxes on the same already over-taxed corporate earnings.
I would at least like for dividends to be taxed at capital gains rate, at least up to the first million in dividends. That would make sure it missed me by a mile. 😈
@Moon-howler
I didn’t make the labels (progressive and regressive). Someone smarter than me did. I just pointed out that the ‘progressive’ system increases (tax) as a person becomes more successful.
I’m all for a consumption tax. You don’t like taxes – you just don’t buy things.
I don’t mind progressive and regressive. I meant calling anything left of marinm ‘liberal.’
We already have a Buffet Rule – it is called AMT – Alternative Minimum Tax – the current version was created in 1982, there was a minimum tax brought in in 1969. It was created because many millionaires were not paying taxes at all – sound familiar? The problem with AMT is that it was not tied to inflation, and affects more middle class individuals than high income earners. Congress, instead of fixing it, just band aid’s it till next year – every year – sound familiar?
People should also not get a refund larger than what they paid into Fed taxes. But so many people are not paying taxes because of this economy – http://www.slate.com/id/2302131/ – and the Bush tax cuts.
CEO and executive pay is something that WE should be looking at – a CEO announces lay offs, and he gets a bonus, he runs a company into the ground, he gets a bonus and stock options, he gets a company into bankruptcy, and he gets a retention bonus – then he gets a raise. Was Richard Fuld worth a salary of $457 million? Sandy Weil $361 million? SHould the CEO be paid a good salary – yes, should he get perks – yes – but excessive salary and perks – No. Most of them are not worth the money paid to them.
I do think Founders and Inventors of a company are worth whatever amount they are paid – such as Steve Jobs and Bill Gates.
@Pat, I don’t resent Gates and Jobs getting big bucks. They invented their product and built the companies. I don’t mind Zuckerman being a 26 year old millionaire. But I do resent Anthem CEO making 10 million dollars. The salaries are too high for the none inventors.
OK, now we get to the hard part…..classification and qualification. Who deserves to keep their money? Who deserves to lose it? Who doesn’t deserve their money? On a gut level, I agree that any Health insurance CEO losing their money will put a smile on my face, but things get real tricky when we start making judgement calls like this.
@MoonHowler
I will defend the case of pinning our current progressive tax system with a liberal label, of course, it will hinge on which definition of liberal you choose to use, classic liberalism or modern liberalism. Since we live in modern times, I will use the modern definition. You stated above that calling it as such would make you howl with laughter, but you never stated a case as to why it makes you giggle so. You simply call out Marvinm stating that it must be because he doesn’t agree with it, while making no substantive arguments yourself.
So let’s look at it. One of the common calls of modern liberalism is the redistribution of wealth. A progressive tax code, in which the “wealthy” pay a larger portion of the burden for social programs that are most often consumed primarily by the “poor/less wealthy” is the definition of redistribution of wealth. If you would like, I could post scores and scores of quotes, comments, and edicts by the modern liberal party that states this as a goal, but frankly, it will consume too much of the post. Couple that with the fact that 47% of American’s pay NO tax within this code, you really start to see the redistributive effects of this code. Reminding you, redistribution of wealth has been the battle cry of the modern liberal for years.
In addition, our tax code was originally created to pay of the debts incurred by the civil war. To start, the modern tax code was structured in a way to only be sufficient in the paying down of those debts and to maintain the constitutional, legitimate form of government. In this case, I agree with the tax code and considering the low rates, have no issues. However, as the income tax theroy grew after the passage of the 16th ammendment, the tax code became a tool to fund welfare programs of “social justice” with government expansions like the Great Society and New Deal. At this point, the tax code was no longer a covenant to fund a legitimate government between the citizenry and fed, but became a tool for imposing social justice upon the nation. Now the tax code no longer funds the constitutional aspects of the fed, but became a funding source for such social engineering programs, buying off and rewarding specific constituencies, and it has continued to grow in scope. Again, I could post multitudes of quotes on how social justice has been a major tenet of modern liberal thinking, but I think you know this already.
Fascinating conversation, Moon. Glad you posted this thread.
Bear with me on this one. Ok, when folks discuss illegal immigrants, even though they are breaking our laws, they say don’t blame them blame the broken immigration system. However, when discussing the wealthy, and the perceived level of tax payment, they blame the law abiding wealthy tax payer and not the tax system rules that they are following. You can’t have it both ways! For the president to attack a certain group of citizens, the ones paying most of his and congress’s salary, is unacceptable. Attack the tax laws if you must, but as long as no one has broken any laws, then leave the wealthy alone.
@Moon-howler
“What moron came up with the social studies curriculum? Why are we studying fife and drum stuff when we should be learning where every country in the world is? Kids in school 100 years ago knew more about where things were located than kids nowadays.”
I agree with you in part. However, we DO need to be studying the “fife and drum stuff” because we need to study our history and WHY we are the way we are. We also need to study geography and world history.
However, this country does a HORRIBLE job of it. In fact, the stuff I’m learning in US History at my college is the same stuff I learned in middle school, just at a faster pace. We just repeat the same crap over and over instead of building on what has already been taught. We need to teach these subjects like math.
As for needing basic skills, there are people in my math class that don’t have these skills, yet graduated. They are totally dependent upon calculators to do basic math problems and basic algebraic formulation. I thought that I was bad in math……now I see that its gotten worse over the years. I thought that I was going into remedial algebra, similar to what I did in 1981. Nope. Now its 7th grade math. My daughter in 6th grade is starting to do the things we are doing in a college class.
That said, J. Sargeant Reynolds College has idiotic requirements for a liberal arts assoc. degree. I’m on the Social Studies teacher prep path, yet they want me to learn Statistics and Pre-Calc. Even my math teacher was astounded at that.
Here’s a good reason why Obama wants the “Buffett” rule.
http://www.washingtonpost.com/opinions/return-of-the-real-obama/2011/09/22/gIQAf7dsoK_story.html?wprss=rss_opinions
In a 2008 debate, Charlie Gibson asked Barack Obama about his support for raising capital gains taxes, given the historical record of government losing net revenue as a result. Obama persevered: “Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.”
A most revealing window into our president’s political core: To impose a tax that actually impoverishes our communal bank account (the U.S. Treasury) is ridiculous. It is nothing but punitive. It benefits no one — not the rich, not the poor, not the government. For Obama, however, it brings fairness, which is priceless.