Posted on 08/06/2007 6:14:14 AM PDT by Loyal Buckeye
Some of the biggest stories of the past few weeks have been about the great tax dodges by the financial kings of the hedge-fund and private equity world. Investment managers making upward of a $1 billion a year are paying lower tax rates than the people who teach their children or deliver their mail.
Warren Buffett, the world's third-richest man, blasted the U.S. tax system earlier this summer because he pays a lower rate of taxes than his secretary. Buffett said, without trying to avoid taxes, he paid 17.7 percent on the $46 million he made in 2006, while his secretary, who made $60,000, was taxed at 30 percent.
This imbalance is a consequence of decades of tax reforms that have benefited those at the top, with a marked acceleration under President Bush.
Buffett could not have been clearer about the pernicious consequences. He said tax disparities have expanded income inequality in a way that has hurt the economy, by constricting opportunity and stifling motivation.
This country has simply got to get back to a progressive tax structure if we are to fund our future liabilities and bring fairness to the system. The Democrats in Congress need to understand that their party's future depends not on collecting money from the rich for campaign contributions, but in collecting money from the rich for taxes. The worst thing the Democrats can do is reinforce the view that it doesn't matter which party is in power, since they are all beholden to the haves.
Progressivity used to be a basic principle of the U.S. income tax structure. The idea is simple: Those at the top of the income pyramid, who have benefited nicely from the economy and governmental policies regulating it, pay a greater proportion of their incomes in taxes.
The most well-adjusted and decent societies are those where the government provides basic social services (good schools, health care, police and fire protection), invests in infrastructure, including human capital, and promotes a thriving middle class. A progressive tax code contributes to this model by having society's most advantaged citizens provide the necessary resources for a more beneficent society. It also tamps down income inequality, and since people tend to view their lot in life in relative terms, this increases general well-being.
But America has been moving in the opposite direction. Since the 1960s, the widening of income inequality has been cheered on by a tax code that takes proportionately less from acquired wealth while keeping the burden on workaday paychecks.
We are at a point now, according a recent analysis by economists Thomas Piketty of the Paris School of Economics and Emmanuel Saez of the University of California at Berkeley, that in a matter of a few years we could see essentially a flat-tax system for middle-income earners and above. The progressivity will have been erased, because of increasing payroll taxes and the impact of the Alternative Minimum Tax on the middle class, coupled with decreasing estate and corporate taxes that are paid by the wealthy.
Piketty and Saez looked across all major forms of wealth and income taxes, including payroll, estate, income and corporate taxes. They say that in 1960, the top 0.01 percent of earners paid 71 percent of their income in federal taxes. In 2005, the same 0.01 percent, or those making more than $18 million annually, paid only about 35 percent.
Taxes for America's wealthiest are at historic lows, according to the economists. Meanwhile, the average federal tax rate for the middle class has remained roughly constant or ticked up a few percentage points, depending on where in the middle one falls.
Flattening the income tax, reducing if not eliminating capital-gains, estate and corporate taxes -- all in the service of the rich -- have been long-standing Republican priorities. Bush purposely allowed his tax cuts to exacerbate the Alternative Minimum Tax problem for the middle class in order to give bigger breaks to those at the very top.
According to Citizens for Tax Justice, Vice President Dick Cheney and his wife saved $111,000 in taxes last year thanks to the breaks he and the president stewarded through Congress. The Cheneys paid an effective tax rate of 23.4 percent on $1.8 million in income in 2006. Also less than Warren Buffett's secretary.
In 1983, Leona Helmsley famously told her housekeeper that only the little people pay taxes. Bush and the Republican Congress have made that quip truer than ever.
Robyn Blumner writes for Tribune Media Services.
blumner@sptimes.com
For additional health information, visit OhioHealth
buffet will burn in hell for what he has done.
LLS
What a load of crap.
Fair share would mean everyone with income pays tax. The Rats have bought votes by making vast numbers of “poor” immune from taxes. They have even gone so far as to give many refunds on taxes they did not pay.
There is no fairness in income taxation as it presently exists. Robin is a Rat shill spouting blather and drivel.
You are correct his annual salary is I believe ~ 500K he recieves his money in dividends. I'm surprized he isn't hit by the AMT.
Wealthy people do not have to live here. They can live anywhere in the world. It is typical of this dim-witted Democrat writer, who exhibits the usual class envy of the ink-stained wretch, that she doesn’t realize that it’s not smart to persecute the most productive citizens we have.
Warren Buffet should give away ALL his money, if he feels so guilty for being rich. But he should keep his mouth shut about how others should live.
Wasn’t Blumner also an attorney for the ACLU? I may be incorrect, but it runs in my mind that she was.
Assuming the Buffett stuff is true, the reason behind it is a decision by Congress to tax investment income at a lower rate than salary. As best I can determine, the American economy has been thriving as a result.
Just wait till this policy is changed and we return to the days of Jimmy Carter’s 20% interest rates. Then this lady will be writing columns about how Wall Street operators have no sympathy for how high interest rates are affecting secretaries.
If they value their money more than their country, then good riddance.
There's nothing stopping the phony from writing a check to the US Treasury for $15 or $20 million every year. If his conscience really, REALLY, bothered him that's what he'd do. Annnnnnd if he was so worried about paying his 'fair share' he wouldn't have willed all his BILLIONS to the Gates Foundation to avoid the Death Tax like he did.
He's full of 'it'.
Yeah, by the time Jimmah was done with us, the Yankee dollar was worth $.25.
We should have not tax except the “Fair Tax.”
The fair tax is a national sales tax.
Our economy would take off like a rocket with the fair tax.
We should have not tax except the “Fair Tax.”
The fair tax is a national sales tax.
Our economy would take off like a rocket with the fair tax.
16th Amendment
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States and without regard to any census or enumeration.
Oh, now I remeber, when the 16th Ammendment was passed, only the rich were expected to pay taxes.
Yep.
5.56mm
So she paid roughly $18,000 in taxes, he paid $8,142,000 and he’s complaining about it? How about giving her a raise ya cheap skate.
And they use percentages rather than absolute numbers to describe the actual amount paid in taxes. Plus there is this assumption that Buffet's secretary is an equal when it comes to running his business empire. What risks is she taking?
There is NO SUCH THING as “fair share” unless every tax payer were to pay the exact percentage as any other tax payer. I’m not wealthy, never have been wealthy, probably will never be wealthy and am not envious of the wealthy. I certainly don’t resent them. I will defend their right NOT to be burdened under our current Marxist system of graduated income tax rates.
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