Buffett, Gates create indelible UNL moment

Lincoln Journal Star ^ | 10-8-2005 | LJS Editorial

[avg_freeper]

statement1: "Buffet, Gates, pay less taxes than soldiers in Iraq"

statement2: "There are people fighting in Iraq paying higher rates than mine"

The first statement in no way supports the second or vice versa.

more <> higher rate

[stevestras]

That is true.

However, speaking to an audience of college students, I'm sure they didn't catch the nuance of it. For that reason, it may be more accurate than you think.

[sitetest]

Dear Toddsterpatriot,

Even with the AMT, I think that if nearly all your income is dividends from public companies, you're just going to pay the 15%. Mr. Gates will lose the deductibility of his local property taxes, and if he owns any tax-free bonds, some of them may lose their tax-free status (although others will not), but I don't think the rate changes on dividends.

A quick review from google shows that long-term capital gains rates remain the same under the AMT, and I'm guessing so do taxable dividends paid on shares in "C" companies.

I'm unclear about the limitations on charitable contributions, but I'm sure that Mr. Gates has structured these to take maximum advantage of tax laws. I think that the deductibility is limited to half of one's income for the given year (but that's from memory, I don't recall precisely).

By the way, I forgot that late last year, Microsoft declared an extraordinary dividend, which paid Mr. Gates somewhere around $3 billion.


sitetest

[CodeToad]

"“I’m paying less than half of what I was paying years ago when I was making a lot less,” Buffett said. “There are people fighting in Iraq paying higher rates than mine.” "


Pure BS. Unless he is making about $50,000, he pays the highest rate possible.

[Toddsterpatriot]

Don't forget his $1,000,000 salary. It's safe to say he paid more $$ and a higher rate than any soldier in Iraq.

[CodeToad]

"The current tax code (NOT tax rates) benefits the rich."


Don't know much about the tax code, do you?

Class envy and class warfare are no way to build a country.

[sitetest]

Dear Toddsterpatriot,

"Don't forget his $1,000,000 salary."

Yeah, but that represents less than 1% of his total taxable income.

"It's safe to say he paid more $$ and a higher rate than any soldier in Iraq."

More money? Certainly! Perhaps more money than many thousands of soldiers put together!! LOL!!

Higher rate? I can't say because I don't really understand how the tax laws apply to folks serving in Iraq, and also, how are you going to count payroll taxes? Are you just going to look at the employee side? Then, if someone is entirely exempt from federal income taxes, the rate they're paying is a nominal 7.65%. But if you're counting the employer side (and I would), then it's nominally 15.3% of salary.

Mr. Gates, on the other hand, is likely paying 35% of his salary and bonus ($350,000), but only 15% of of his dividends (about $45 million on about $300 million). But, if he is able to fully deduct up to 50% of his income in charitable contributions (the AMT doesn't seem to disallow or reduce the deduction for charitable donations, but I'm not altogether sure about that), then it is likely that he paid about $22.5 million in income taxes on dividends, and his overall tax rate is about 7.6%:

Salary and bonus: $1 million Tax: $350,000
Dividends: ~$300 million
Charitable deduction: ~$150 million
Dividends subject to 15%, after deductions: ~$150 million
Dividend income tax: ~$22.5 million
Total tax paid: ~$22.85 million
Total income: ~$301 million
Rate: ~7.59%

For 2004, it looks more like this:
Salary and bonus: ~$950,000 Tax: ~$330,000
Dividends: ~$3.3 billion
Charitable deduction: ~$1.65 billion
Dividends subject to 15%, after deductions: ~$1.65 billion
Dividend income tax: ~$247.5 million
Total tax paid: ~$247.83 million
Total income: ~$3.30095 billion
Rate: ~7.51%

Of course, this is all simplified, and based only on information that is publicly available. The billion shares of Microsoft only account for a little more than half of Mr. Gates' reported wealth of $46 billion. I don't know where the other half is, and I don't know what kind of income it generates.

However, I'd bet that whatever income is generated elsewhere likely results in similar percentages of taxes paid.


sitetest

[Beagle8U]

If I had Bill Gates's money, and He had feathers in his ass, We would both be tickled!

[Surtur]

quote Buffett defined success as being loved by the people you hope love you. /quote

Well, that and having 36 Billion dollars. :0)

[RinaseaofDs]

If you think that whole thing irks you, you ought to have heard Buffet's speech to a Senate breakfast a couple of years ago.

The theme was, "I won the ovary lottery . . ."

His premise was that he was born male, white, American, to good parents, etc, which meant he had advantages that made what he is today possible.

As if his being born any other way, with the same talents, might somehow have disqualified him from making millions in America.

The only real advantage that 'luck' played in was perhaps that he was born American. Few other country in the world affords you the opportunities you have here.

Buffet has terminal affluenza, and he's just to the right of Soros.

[Toddsterpatriot]

The below chart shows monthly base pay. A military member may be entitled to other pays, such as a housing allowance (if authorized to live off base), or a monthly food allowance (if authorized to consume meals outside of the chow halls). Unless serving in a designated combat zone, base pay is taxable (federal income tax, social security tax, medicare tax, state income tax, etc). Some states do not tax military pay.

Military base pay is based upon grade (rank) and years of service:

Rank	<2	2	3	4	6	8	10	12	14	16	18	20	22	24	26
E-9	0.00	0.00	0.00	0.00	0.00	0.00	3769.20	3854.70	3962.40	4089.30	4216.50	4421.10	4594.20	4776.60	5054.70
E-8	0.00	0.00	0.00	0.00	0.00	3085.50	3222.00	3306.30	3407.70	3517.50	3715.50	3815.70	3986.40	4081.20	4314.30
E-7	2145.00	2341.20	2430.60	2549.70	2642.10	2801.40	2891.10	2980.20	3139.80	3219.60	3295.50	3341.70	3498.00	3599.10	3855.00
E-6	1855.50	2041.20	2131.20	2218.80	2310.00	2516.10	2596.20	2685.30	2763.30	2790.90	2809.80	2809.80	2809.80	2809.80	2809.80
E-5	1700.10	1813.50	1901.10	1991.10	2130.60	2250.90	2339.70	2367.90	2367.90	2367.90	2367.90	2367.90	2367.90	2367.90	2367.90
E-4	1558.20	1638.30	1726.80	1814.10	1891.50	1891.50	1891.50	1891.50	1891.50	1891.50	1891.50	1891.50	1891.50	1891.50	1891.50
E-3	1407.00	1495.50	1585.50	1585.50	1585.50	1585.50	1585.50	1585.50	1585.50	1585.50	1585.50	1585.50	1585.50	1585.50	1585.50
E-2	1337.70	1337.70	1337.70	1337.70	1337.70	1337.70	1337.70	1337.70	1337.70	1337.70	1337.70	1337.70	1337.70	1337.70	1337.70
E-1	1193.40	1193.40	1193.40	1193.40	1193.40	1193.40	1193.40	1193.40	1193.40	1193.40	1193.40	1193.40	1193.40	1193.40	1193.40
E-1 with less than 4 months of service					$1,104.00

So you're gonna claim that these guys paid a higher rate than Bill Gates?

[AFreeBird]

Well am I a tax accountant? NO. BUt I've seen enough of the "Charlie Foxtrot" of a tax code to know that the ones who have the resources to dig into it and use it to their advantage, are the ones who make out pretty good.

And if you think I'm into the class envy/warefare thing; I don't give a $#!t about how much those two make. What I DO have a problem with is a tax code that requires tax lawyers to figure out, and even then they all don't seem to understand it.

That's just plain wrong in my opinion.

[stevestras]

Thanks, that's an interesting scenario.

Bottom line for me is that these guys are using their positon to influence young minds that low tax rates are bad. If they have an extra 10 or 20 million, it goes back into our economy, not through the federal filter. That is good for all Americans. Combine this one example with liberal instructors accross the board and it is clear how much hard work we all have to do.

No matter if you agree with the Miers nomination, or not.

[sitetest]

Dear Toddsterpatriot,

"So you're gonna claim that these guys paid a higher rate than Bill Gates?"

Rate? Sure, it's possible. The E9 with 26 years appears to be making around $60K per year in base salary. He's paying payroll taxes on the whole thing. Personally, I'd count the employer side, as that's budgeted by his employer (the US government) when figuring out how much is available for compensation. That gives a total payroll tax rate of 14.2% of total salary compensation (including the employer's side of payroll taxes).

Now, it appears that these folks in Iraq don't pay federal income tax, or have it refunded to them? In that case, nothing else is added to their total rate of taxation.

But Mr. Gates may very well be paying less than that 14.2%.

However, if you don't want to count the employer side of payroll taxes, then these folks are paying only 7.65%, which still may be comparable to the rate Mr. Gates is paying.

Nonetheless, Mr. Gates certainly pays, in absolute dollars, thousands of times what any individual soldier pays in income and payroll taxes.


sitetest

[Alberta's Child]

A policy of regressive taxation sure won't win elections, but it certainly would improve things. Just imagine how many of our social ills would be cured if people were taxed based on their use of public assets and infrastructure -- regardless of their "ability to pay."

And how ironic is it that we argue the political feasibility of this point here on FreeRepublic, while the economic boom of the late 1990s (under a Democratic administration) was largely the result of an increasingly regressive tax policy that combined the tax hikes of 1993 (especially the higher Federal excise taxes and the new tax on Social Security benefits) and the capital gains tax cuts of 1995 and 1998 that were specifically aimed at "the rich."

[A. Pole]

Just imagine how many of our social ills would be cured if people were taxed based on their use of public assets and infrastructure -- regardless of their "ability to pay."

My imagination is failing me.

[A. Pole]

Just imagine how many of our social ills would be cured if people were taxed based on their use of public assets and infrastructure -- regardless of their "ability to pay."

My imagination is failing me.

[CodeToad]

"the ones who have the resources to dig into it and use it to their advantage, are the ones who make out pretty good."

To a good degree, yes, but this notion that the rich pay nothing or even less than their fair share is simply an ingorant position. The top 5% of wage earners pay 55% of all taxes collected. The bottom 25% of wage earners pay nothing!

[A. Pole]

The top 5% of wage earners pay 55% of all taxes collected.

Of all taxes? Which taxes do you include?

[Final Authority]

I verified what I believed to be accurate information. Check out the following: http://www.house.gov/jct/x-2-01.pdf

This is for year 2001. I think it is accurate to say that the top 10% pay more than 65% in tax revenue in income tax alone. I think the lower wage earning groups pay at a higher rate when payroll taxes are added in, but the majority of the federal revenue is still paid by the "rich". One must also understand, if a rich man is employing wage earners, he is essentially paying for half of the payroll tax out of what either could be profit or higher wages.

There is a great web site called economagic that may have much of the info that we could use to further discussion on this topic and others.