Free Markets, Free People

Warren Buffet


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


Warren Buffet — Please! Tax me more!

The article today in the New York Times where Warren Buffet laments that he just gets off so easily at tax times is one of those hinkey pieces that establishes two premises that are, in fact, nonsense.

Premise one is the rich are not paying their fair share.  IRS statistics consistently tell us that it is the bottom 50% who aren’t paying any share and the so-called rich pay the lion’s share.   Buffet at least tries to push it toward “super-rich”, whatever that means.  However, it is just another version of the class warfare argument the left has been trying for years.  Bill Clinton has stood up and said “why aren’t they taxing people like me more?”  Barack Obama has done the same.  

Here’s what Buffet is pitching:

While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.

These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.

Buffet first goes right to the class aspect of it in the most emotional manner possible.  The implication, of course, is that the rich aren’t fighting … they don’t have too.  Obviously then the “poor and middle class” must.   They couldn’t do it for reasons other than they must, I guess.

And, of course, the other other narrative is that 15% is a “bargain” tax rate.   He attempts to make the point that the super-rich don’t do much work to earn their money.  Well here’s a clue for Mr. Buffet – the government doesn’t work at all for the 15% it takes.

Premise two is that if they’d just tax the rich more, all of our revenue problems would be over.   The fact is that’s not even close and a money man like Buffet knows that.  What it would do, though, is help dry up any revenue that is now being gotten from investments as the rich seek other ways to invest and protect their income.  Again, this should be Econ 101 stuff for a guy like Buffet. 

The government could tax the rich 100% next year and still have to borrow money.   But we know, given human nature, that there’d be no 2nd year at 100% because those with that sort of money would have found ways to protect it by then.   Meanwhile, the economy would be in reverse.

Finally, Buffet says:

I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.

Would someone who has Warren Buffet’s email please apprise him of the fact that a) he doesn’t speak for all the “rich” so he ought to confine his appeal to only himself and b) if he’s really serious about this, he doesn’t have to wait to have the government increase his taxes, he can voluntarily contribute any amount he wishes to the US Treasury to help pay down the debt or help their “fellow citizens” who are “truly suffering”.

Of course he do everyone a much greater favor if he’d take that money and instead invest in a business that’s got promise so they can expand and hire people.   Dollar for dollar that would do everyone more good than appealing to government to raise tax rates on those who actually do have the option of what I described.

But, of course, that doesn’t fit the liberal narrative and the one thing those like Buffet and George Soros have reliably done for some time is push that narrative.

~McQ

Twitter: @McQandO


Speak for yourself, Mr. Buffet

People who do what Warren Buffet is doing irritate the holy hell out of me.  They decide a) taxes are fine, b) they’re fine with paying more taxes and c) if they find them fine and feel they should be paying more taxes everyone in their financial situation should too.

Uh, no sir.

First, taxes are supposed to fund Constitutional government – i.e. the government allowed under the Constitution.  Taxation has evolved into a political means of controlling behavior and funding things the founders never even dreamed would be something which government would fund.

Secondly, taxes were supposed to be something everyone paid.  You shared the pain and you had skin in the game – a reason to follow government and ensure it wasn’t wasting the hard earned money you were coerced into giving it (don’t ever, ever believe the nonsense that taxes are “voluntary”). Somewhere that notion got warped into what we endure today.  Taxes are essentially considered government’s rightful cut of whatever you earn with which it can do pretty damn well what it pleases.  Oh, and for some favored “victims” of life, they don’t have to pay anything.  No skin in the game, no reason to oppose the government’s profligacy – how convenient.  Interestingly the left likes to refer to that as “progressive”.

Finally – for the Mr. Buffets of the world: If you’re feeling under-taxed, if you’re feeling you could give more and in fact are willing to give more, no one will stop you.  Got that Mr. Buffet?  -

No. One. Will. Stop. You.

Pick up your check book, write the check in whatever amount you think is right and send it to the Treasury Department.   Trust me, they won’t turn it down.

Other than that, quit trying to speak for other people and stay out of their lives (or quit encouraging government to take more).    We have a serious spending problem and all the extra taxes in the world aren’t going to change that.  Instead of trying to bully the rich into giving up even more of their money, beat up the politicians and demand they cut spending, cut  it now and cut it drastically?  Make spending equal revenue.

If they’d do that, you wouldn’t have to make silly statements about taxes and wanting to pay more, would you?

~McQ


Warren Buffet – Bank Levy Makes No Sense

Barack Obama was quite fond of quoting Buffet during the campaign. My guess is he’ll not be as willing to quote Buffet about his opposition to the President’s proposed bank tax:

“I don’t see any reason why they should be paying a special tax,” said Buffett, the chairman and chief executive officer of Berkshire Hathaway Inc., in an interview on Bloomberg Television today. Supporters of the plan to tax the banks “are trying to punish people,” he said. “I don’t see the rationale for it.”

What he’s talking about, of course, is the tax Obama has proposed ostensibly to recover the losses incurred in the TARP program. Obama has targeted about 50 banks to make this repayment.

The levy would apply to firms with more than $50 billion in assets, including Wells Fargo and Goldman Sachs, two companies that Berkshire has investments in. It would exclude Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders taken over by the U.S.

Look at the damage Fannie and Freddie caused, and they were run by the Congress,” said Buffett. “Should they have a special tax on congressmen because they let this thing happen to Freddie and Fannie? I don’t think so.”

Of course Buffet throws out a point, which I’ve put it bold, that the administration, Democrats in general and the media have studiously avoided. That’s the role that the two quasi-governmental organizations, Freddie Mac and Fannie Mae, played in the financial meltdown (and how much of the TARP money they sucked down). In fact, the tax is as much about recovering the money they required as anything. But pointing that out would be detrimental to the narrative the administration has been building about the “greed of Wall Street” and their unilateral culpability. According to Bloomberg data, Freddie and Fanny owe about $110 billion. Buffet, of course, is not so easily fooled:

The levy would apply to firms with more than $50 billion in assets, including Wells Fargo and Goldman Sachs, two companies that Berkshire has investments in. It would exclude Fannie Mae and Freddie Mac, the government-sponsored mortgage lenders taken over by the U.S.

“Most of the banks didn’t need to be saved,” Buffett said. “Including Wells Fargo.”

The bank tax would raise $90 billion over 10 years and, of course, be paid for by the banks customers. Also note that the sum of $90 billion is very close to the amount owed by Freddie and Fanny.

Obama is correct – “we want out money back”. But we want it back from the institutions which wasted it. Of course that’s impossible since taxing Freddie and Fanny is taxing ourselves. Of course, so is taxing banks. However, it is much more useful to demonize them, play the greed card and pretend the government is blameless than to tell the truth, isn’t it?

I mean, if they told the truth, they’d have to implicate Congressional Democrats like Barney Frank, wouldn’t they – and that would never do.

~McQ


Duh!

Warren Buffet on the economy and the effort of the government to “stimulate” it:

While praising efforts by Federal Reserve Chairman Ben Bernanke and others to stimulate the economy, he said the economy “can’t turn around on a dime” and that their efforts could trigger higher inflation once demand rebounds.

“We are certainly doing things that could lead to a lot of inflation,” he said. “In economics there is no free lunch.”

Funny how, when someone like Warren Buffet – who has been a supporter of Obama – says things like ‘trigger inflation’ and ‘no free lunch’, people who were previously playing the denial game (massive spending is necessary and good) suddenly figure there may be a problem.  Meanwhile the laws of economics have continued to function despite the denial.

For the most part the press has ignored Buffet’s words and they’ve been downplayed by the administration.  But perhaps if those who’ve been in denial are willing to consider Buffet’s warnings, they’ll be open to listening to others.  Such as warnings about the double talk that’s been coming out of the Obama administration the past few weeks.  For instance:

Confidence (too little) and uncertainty (too much) define this crisis. Obama’s double talk reduces the first and raises the second. He says he’s focused on reviving the economy, but he’s also using the crisis to advance an ambitious long-term agenda. The two sometimes collide. The $787 billion “stimulus” is weaker than necessary, because almost $200 billion for extended projects (high-speed rail, computerized medical records) take effect after 2010. When Congress debates Obama’s sweeping health care and energy proposals, industries, regions and governmental philosophies will clash. Will this improve confidence? Reduce uncertainty?

A prudent president would have made a “tough choice” — concentrated on the economy; deferred his more contentious agenda.

Instead he’s decided he’s not going to let a “good crisis” go to waste and pursue his very expensive agenda which has nothing to do with the economic crisis (or alleviating it). All the while he preaches about crisis, catastrophe, sacrifice, tightening belts and doing with less even as he plans to expand government beyond anything we’ve ever seen.

It is an amazing performance.

~McQ