Free Markets, Free People


The “Warren Buffet Tax “? The premise is false

President Obama has claimed that the “rich” aren’t paying “their fair share” and he likes to use Warren Buffet’s claim that Buffet pays less in income taxes than his secretary to infer that Buffet’s situation is the norm among our wealthier citizens.

Well it isn’t.  And, in fact, any number of news organizations have pointed that out today.

AP:

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

ABC News:

Treasury Secretary Geithner yesterday declined to answer a key question about the president’s proposed ‘Buffett Rule’:  How many millionaires and billionaires pay lower tax rates than middle-income families? The answer appears to be this:  not many. The nonpartisan Tax Policy Center has crunched the numbers and found that Warren Buffett and his secretary are the exception to the rule.  For the most part, the wealthy pay a significantly higher percentage of their income in taxes than middle-income workers.

The Wall Street Journal:

There’s one small problem: The entire Buffett Rule premise is false . . . . [N]early all millionaires still paid a rate that is more than twice the 8.9% average rate paid by those earning between $50,000 and $100,000, and more than three times the 7.2% average rate paid by those earning less than $50,000. The larger point is that the claim that CEOs are routinely paying lower tax rates than their secretaries is Omaha hokum.

And the WSJ calls it what it really is:

We rehearse all of this because it shows that the real point of Mr. Obama’s Buffett Rule and his latest deficit proposal isn’t tax justice or good tax policy. It is all about re-election politics.

Even NBC is on to the game:

[W]ith some 14 months until Election Day 2012, Obama’s speech yesterday essentially marked the end of the governing season and the beginning of the campaign. White House Communications Director Dan Pfeiffer admitted as much to the New York Times. ‘The popular narrative is that we sought compromise in a quixotic quest for independent votes. We sought out compromise because a failure to get funding of the government last spring and then an extension of the debt ceiling in August would have been very bad for the economy and for the country.’ Pfeiffer added, ‘We were in a position of legislative compromise by necessity. That phase is behind us.

If there is any transparency at all to this administration, it is this – their every move is obvious and it is clear this is being pushed out there for political reasons, not reasons having to do with what is best for the country.

~McQ

Twitter: @McQandO

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33 Responses to The “Warren Buffet Tax “? The premise is false

  • Mark Cuban has something to say along these lines.
    Bust your ass and get rich.
    Make a boatload of money. Pay your taxes. Lots of taxes. Hire people. Train people. Pay people. Spend money on rent, equipment, services. Pay more taxes.
    ,,,
    ,,,
    So be Patriotic. Go out there and get rich. Get so obnoxiously rich that when that tax bill comes , your first thought will be to choke on how big a check you have to write. Your 2nd thought will be “what a great problem to have”, and your 3rd should be a recognition that in paying your taxes you are helping to support millions of Americans that are not as fortunate as you.
    ,,,,,
    ,,,,,
    I’m not saying that the government’s use of tax money is the most efficient use of our hard-earned capital. It obviously is not. In a perfect world, there would be a better option. We don’t live in a perfect world. We don’t live in a perfect time. We live in a time where the government plays a big role in an effort to help lead us out this Great Recession. That’s reality.
    So I will repeat my point. Get out there and make a boatload of money. Enjoy the shit out your money. Pay your taxes.
    It’s the most Patriotic thing you can do.

    http://blogmaverick.com/2011/09/19/the-most-patriotic-thing-you-can-do-2/

    • a recognition that in paying your taxes you are helping to support millions of Americans that are not as fortunate as you.”
       

      And in the process, perpetuate the myth that your earnings were based on fate, luck, inheritance, the lottery, not hard work by implying it was simply ‘fortune’ that made you different than those earning less than you do.

      • It often is. Sorry, but luck plays a role in life. Bill Gates happened to come from a wealthy family that could send him to a private school that had access to computers before most schools even knew what there were. He happened to be at the right age, just as computers were starting to take off, and happened to be interested in computers instead of welding, say.
        Now, this doesn’t mean he doesn’t deserve his wealth or that he would not have worked hard in the 18th century and been a wealthy farmer, or worked hard in the 19th century and been a railroad engineer…he may have been a millionaire but probably not a billionaire – that takes the confluence of many factors, which sort of sounds like  luck to me. That said, being lucky without any drive, intelligence, etc., won’t work – so its true that people ‘earn’ it, but sometimes other factors act as force multipliers.
        I mean, no matter how hard Bill Gates’s son works, he may not be able to re-create a billion dollar semi-monopoly from scratch. same genes, same work ethic, even more access to wealth…but i wouldn’t bet the odds on him, would you?

        • But it was not ‘fortune’ that made Bill Gates do what he did.  I’ll not deny force multiplier (good use for the term!) effect, but his family wealth, his age, etc, didn’t make him do what he did.

          And you’re playing a liberal game – in that you’ve cited one example, and applied it across the board as the norm, which we both know it is not.  There are few Bill Gate’s, I know many doctors, lawyers, small business men, grocery store managers (yeah, they make a nice buck, actually), franchise holders for McDonalds, what have you, they worked hard for what they have, and do so every day, and it wasn’t just the force multipliers of fortune that got them there.

          So, I let it stand, I acknowledge the interplay of luck, but as you noted, it’s not a substitute for hard work, and I know too many people who worked hard for what they have, and some who have little, and from what I see, more often than not the ones who don’t have a lot are where they are because of choices they’ve made, not because the luck fairy was constantly zapping them with bad fortune.
           

          • You brought up a lot of points that I immediately thought of after I hit enter…but we could also consider people who are born very beautiful and become models, or just drug sales reps, or people who are tall and athletic who can become basketball stars, for which no amount of hard work can make up for.
            I suppose there is also “bad luck” like having the idea for a communication satellite years before it can become reality, and thus making that patent useless for money making…and so on and so forth.
            In the main, though, you are probably more correct…the average small business person uses more work than luck to get where they are at, not to mention doctors, lawyers, etc., and definitely most of the people who are totally screwed didn’t get zapped by the bad luck fairy!

        • I just want to be clear…I’m not saying “its all luck and therefore ‘fortunate’ people should be taxed heavily” – I’m saying luck and circumstances do play a part in our economic well-being. That’s why we have things like universal education to try to ‘level the playing field’ and such.

          • I’m not trying to tar ya with the liberal whacko brush H, sorry if it comes across that way sometimes.

            I’ve always been a believer it’s not so much having luck, as the ability to recognize lucky opportunity when you see it.

    • Fortunate?  So the people who don’[t save, don’t invest, don’t work hard, and don’t pay taxes are just unfortunate?

  • Some folks are framing the “Buffet Tax” as a minimum tax for millionaires.
    Frankly, I’ve always believe that everybody should have some skin in the game, so there should be a minimum $1 tax on everybody.  Call it a “census tax.”   If you don’t pay, you’re illegal.

    • ” If you don’t pay, you’re illegal.”
      And may qualify for a healthy tax credit!  So file today!

    • I didn’t see Obama speech (thank god), but apparently the WHite House is now framing this as a replacement for the old AMT (Alternative Minimum Tax), which has been slowly creeping into the tax returns of so many folks that it was never meant too, that every year for about the last decade, Congress has had to “band-aid” of the tax code to avoid being run down by angry taxpayers.

    • gotta get rid of all those refundable tax credits first.

  • Do these calculations include Social Security and Medicare?  Because until recently, the SS/M fund benefitted the general fund greatly. 

  • So when does Buffet get worried about being used by politicians and back tracks?
    Because right now, I want to end the tax subsidies for life insurance policies, and make Buffet eat some of his own political cooking.
    I also think taxing passive income would be more “fair” than taxing earned income…so, let’s start by getting rid of the tax-free muni bond system. It allows those who already have wealth to avoid taxes and it floats capital towards municipalities that probably shouldn’t be borrowing so much in the first place, but have a bunch of captive investors to squeeze.

  • I think Buffett’s time could be better spent getting a lower tax rate for his secretary, or maybe paying her more so that she too could get into his lower tax rate. A master business genius like him should know that would be more efficient, cutting out the middle man and the associated administrative costs.

  • The funny thing is that the president claims it is not about class warfare and that it is about the math.  Well do the math.  18% of $50,000 is less than 15% of $1,000,000.  So with the math argument being ridiculous that just leaves the class warfare argument.  The very same class warfare argument he has been pushing all along.

    • But the fight is not going well, and for good reason. For one thing, Obama suffers from what Maureen Dowd of the New York Times has identified as the “speech illusion.” This is the notion that he can swoop down from on high, deliver a speech, persuade millions, and move the political needle in favor of his legislation. And, naturally, make himself more popular.

      There might not be so much “speech illusion” had some where along the way Obama had given us all a rest.  It’s like the old (wannabe) country song “How can I miss you if you won’t go away”.  Obama just won’t go away or shut up.  Any droning will eventually grow wearisome, and Obama has been there for some time now.

    • I think there is a cynical angle to the libs argument on the “rich pay lower taxes”.  They are counting on the math illiteracy of the masses,  who are confusing rates paid and dollars paid.   The focus is one the 15% Cap Gain rate, vs, the marginal rates Joe Sixpack is paying.  It definitely class warfare, appealing to the 50% who pay little/no ferderal income taxes.  Obama has opened the door to a great discussion of the flat tax.

      • Of course they are counting on illiteracy of the masses when they talk about corporations paying their fair share.

  • I’m just amazed that MiniTru is covering this so thoroughly.

    What is the world coming to???

    • The flogging of the false Messiah towards the necessary crucifixion so Hillary may resurrect the Democratic party agenda in 2012.

      • Yeah, I guess so.  I suppose I should enjoy it.  The problem is that (A) it lets the democrats and liberalism generally off the hook; (B) it hides the intrinsic flaws in liberalism, and; (C) a Bad Luck Barry who knows he has nothing to lose is a Bad Luck Barry who may be even more destructive (if that’s possible).

        Maybe the idiot will take the hint and ROAD.  I’m willing for him to spend millions more taxpayer dollars on lavish vacations, golf, and White House parties if he’ll just shut up and stop trying to do things.

  • This is a dangerous idea.  It implies that those who are rich don’t deserve their money.  This country is  full of people who do nothing to support themselves. They have more & more children they can’t afford to support.  So those who do pay taxes have to subsidize America’s permanent underclass.
    The right thing, the moral thing, the just thing to do is AVOID taxes.  The America envisioned by Obama and most Democrats is not something I want to be a part of.  I’m not rich either.  I hope that if there is a tax hike more wealthy people will leave America and take their money with them.

  • Now, if Obama was serious about making sure “millionaires and billionaires” would pay at least, say, 30% in taxes on all income, he could impose some kind of millionaires ATM.
    However, doing so would mean that municipal bonds were no longer attractive at such low rates (you’ll wind up paying that Alternate Minimum Tax, defeating the whole purpose of holding low-rate but tax-free bonds in the first place) and the cost of investing in capital would go up as well.

    This, of course, would screw up states and municipalities, but Obama doesn’t really care about them .. they won’t get him re-elected.

  • Here is a fun one to pull on the economic illiterates of the left.
    Joe is a normal guy except for one thing.  He likes to watch ice melt. One day Joe wins a million dollars in the lottery.  He is super happy.  So much so that he is going to engage in his quirk on a grand scale.  He is going to buy a million dollars worth of ice just to watch it melt.  Should Joe be prevent from doing so as that million dollars would be better spent on some social good, for example, funding a soup kitchen?
    To a tee, they’ll almost always pick the soup kitchen.  Never mind that there is a Mike out there who sells ice and would love to see Joe buy a million dollars worth of it.  Never mind that there is a Frank out there that builds ice making machines and Frank is probably going to need a few extra to produce his million dollars worth of ice.  Never mind that Steve out there that works in the steel mill that make the metal that the ice machines are made of.  And so on and so forth.  If the left winger picks the soup kitchen, guess who is going to be in it?  Mike, Frank, and Steve.

    • Heh, to a T it’s none of their flucking business what Joe does with his million.

      And that’s what I REALLY like to tell them.