Skip to comments.Warren Buffett and the Corrupting of the American Soul
Posted on 12/02/2012 4:56:24 AM PST by Kaslin
Bottom line would raising taxes on the wealthiest Americans have a chilling effect on hiring?
It was Matt Lauers final interview question for his guest, on last Tuesdays episode of NBC-TVs Today show.
No, the guest adamantly replied. No and I think it would have a great effect in terms of the morale of the middle class..
The guest was famed investor Warren Buffett, CEO of the Berkshire Hathaway holding company and a personal friend of President Obama (and by the way, did you know that Obama calls him, and not the other way around? Mr. Buffett would want you to know). He was spouting the usual its time to raise taxes on us rich folks rhetoric for which hes become famous.
But Buffetts closing comments were a bit different this time. Higher taxes on the rich will provide a morale boost for those of us in the middle class? How is that so? Why would I, a mere middle class guy, be made to feel better simply because my government is confiscating greater portions of somebody elses money?
Buffetts remarks during the NBC TV interview, while in-step with prevailing political sensibilities, were nonetheless mostly illogical. Earlier in the interview Lauer brought up a recent quote from Honeywell CEO David Cote who had noted on another national TV program that he (Cote), and others like him, were feeling a lack of confidence in the political process, so much so that the uncertainty was making them keep their money on the sidelines and preventing them from making additional investments and hiring new workers.
Well, Buffett responded, At Berkshire Hathaway, we're investing 9 billion in plant equipment, thats a record, breaking last year's record. That was an interesting response, and it was certainly a nice plug Mr. Buffett offered for his own company.
It was also a very artful dodge from the facts, and rather irrelevant to the discussion. Cote has articulated some grave concerns about a lack of leadership at the White House, and in Congress, and has noted how this lack of leadership has created serious, stifling uncertainty in the business market. So has Cisco CEO John Chambers, Wynn Resorts CEO Steve Wynn, and Intel CEO Paul Otellini (who, ironically, serves on President Obamas Council on Jobs and Competitiveness). Buffett would prefer to ignore this (its always uncertain he told Matt Lauer).
Buffett also reiterated in the interview that people like him have not been paying their fair share of taxes for all these many years. This is where his illogic hits a crescendo. If Mr. Buffett (or anybody else) isnt paying enough in taxes, then hes only got himself to blame. He could easily choose to make an extra contribution to the I.R.S. He could also instruct his staff of lawyers and accountants who represent him to the I.R.S., to stop calculating all the legal, allowable tax deductions that are available to him. All of these methods, and others, would allow Mr. Buffett to pay more in taxes if thats really what he wants.
But then Buffett had to go and perpetuate the same myth that he and the President have been perpetuating for over two years, when he alleged (once again) that his secretary pays more in taxes than he does. This is not only a myth, it is a lie. Buffett, and wealthy Americans like him, dont draw income like most working Americans do; they get paid with investment dividends. Dividend earnings are created when somebody takes money that they have already earned, and they invest that money. That it is to say, dividend earnings are produced with money that has already been taxed as income, and when dividend earnings are taxed, the original investment capital is, in essence, being taxed for the second time.
This is why our government taxes dividends at a lower rate than it taxes income. It is to create an incentive for people to put their capital at risk, and invest in business enterprises (rather than merely holding on to that money and enjoying it in less risky ways). When Buffett compares his secretarys income tax to his own dividend tax, hes comparing apples and oranges, and 18% of Buffetts dividend earnings no doubt amounts to a lot more money than 30% of his secretarys salary. Dividends and income are treated very differently, and for good reason but his comparisons make for amusing soundbytes.
As for Buuffetts assertion about an alleged morale boost this, also, makes for amusing soundbytes and headlines, and allows Buffett to provide some political cover for the President (you know, the President who calls him). Yet the real disgrace is if he is right about this.
Are Americans really so petty and covetous that we are comforted when rich people have their money taken away from them? Or do sufficient numbers of us still understand America to be a meritocracy a society where we all achieve in different measures, yet we are all blessed with the freedom to try and achieve all that we can?
“If Mr. Buffett (or anybody else) isnt paying enough in taxes, then hes only got himself to blame. He could easily choose to make an extra contribution to the I.R.S.”
NO, NO, NO, NO!!! This is where the conservative argument - “let the rich voluntarily pay more if they want” - loses power.
IN FACT: they already pay more. Buffet and obama lie.
That is disgusting. To the extent that it is true - that some members of the middle class would be cheered up to see taxes raised on the wealthy - the idea of America has failed. What would improve my morale would be to see government spending cut to the levels under Bill Clinton's last budget (not enough of a cut but a great start!), and taxes cut by the same percentage of taxes paid for all Americans, or even better to a flat tax. Warren Buffet and his companies (Geico, Fruit of the Loom, Benjamin Moore, Pampered Chef, See's Candies, Dairy Queen, and others) have now joined GM, Chrysler, CITI, and the other TARP/Bailout companies on my permanent boycott list.
Mr. Buffett seeks to capitalize, however on the far more base emotion of envy, to justify taking the rewards of hard work, risk taking, and, in some cases dumb luck.
That is not the ticket to riches for anyone, especially as the onus will likely fall not on those who are genuinely rich, but on the more prosperous of the middle class instead.
Only those whose entire lives are wrapped in envy...
>>That is not the ticket to riches for anyone, especially as the onus will likely fall not on those who are genuinely rich, but on the more prosperous of the middle class instead.
That’s the Obama and Buffett plan. They both know that the wealthy have quite a few ways to shelter their wealth, to defer income and capital gains, to make sure that they “earn” nothing while living like kings.
So, if the government raises their tax rates, they pay nothing more and the government “discovers” that raising those taxes wasn’t enough so they have to dig deeper to find revenue. Once they dig down to the middle class, they’ll strike gold because we don’t have many ways to shelter our income, or to defer it because we need that money to eat and keep the roof over our heads.
At this stage in the road to communism, you eradicate the middle class. All is going according to plan.
That's an interesting question. What makes it even more interesting is that higher tax rates for "the rich" will result in lower revenue from "the rich," just as the lower tax rates resulted in higher revenue. Therefore, the rich will actually pay lower taxes, while the envious are simply imagining they pay more. What a waste of a life, being that person.
Buffet’s father was a Republican congressman, but I don’t know if he was “republican”?
Notice nobama’s little Cracka friend only pushes INCOME TAX.
Buffett has not and does not pay ANY income tax. ZERO.
His management and control of B-H are zero taxable salary, all compensation as Cap Gains and only when he sells, so again zero tax.
Buffet’s insurance companies supply daily revenue to be invested in companies broken up via high inheritance and other taxes. His greed knows no end.
The article’s argument regarding double taxation of dividends fails to take into account the most important fact. That is, dividends are typically paid out from AFTER-TAX corporate profits.
Corporate income tax rates run 35% at the Federal level, another 5% at the State level: that’s a 40% tax before any dividend is distributed. Add the 15% personal tax rate for the dividend on the remaining 60% of after-tax profit, and you’ve got a 49% rate paid on corporate profits. The byzantine IRS code has all sorts of preferences, credits, and so forth that reduce the effective corporate tax rate, so call it 45%.
Raise the personal tax rate to 43% and government gets a whopping 62% of all corporate profits. It is, in effect, the majority shareholder in every enterprise. And this analysis doesn’t include the sales taxes, property taxes, severance taxes, payroll taxes, excise taxes, etc., etc., etc. that corporations pay.
Warren Buffet knows this perfectly well, and his statements are downright Clintonian.
A high dividend tax rate actually makes things easier for the elites who yearn for a coalition of big business and big government. A high dividend rate reduces the pressure to pay dividends, which enables crony capitalists and entrenched corporate executives to retain earnings at the expense of shareholders.
George W. Bush, a guy who every liberal knows is a blithering idiot, was smart enough to understand all of this. That’s precisely why his tax reform cut the dividend tax rate.