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Warren Buffet agrees with me: tax the rich!
(This is from the New York Times.)
OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.
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.
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.
To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.
Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.
I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.
Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.
The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)
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.
Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.
Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.
But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.
Filed under Economic policy, Taxes
The Federal government is legally required to provide jobs
Yes, it’s true.
“The most galling thing about pundits stating with such certainty that the government cannot create jobs is the implication that the government has no business employing people. In actuality, however, the law requires the government, in particular the President and the Federal Reserve, to create jobs. This legal duty comes from three sources: (1) full employment legislation including the Humphrey Hawkins Full Employment Act of 1978, (2) the 1977 Federal Reserve Act, and (3) the global consensus based on customary international law that all people have a right to a job with favorable remuneration to provide an adequate standard of living. “
Filed under Economic policy, Jobs
Congressional Reform Act of 2011: Misleading and Fraudulent
There’s an e-mail making the rounds concerning Congressional pay and perks that is false and misleading. I’ve sent out corrections over and over, but I’m just one voice of reason. So I decided to post this here and hope it gets passed along too.
(Please note, that in correcting this misinformation, I am not arguing that current Congressional pay is necessarily reasonable, or that expense accounts or Congressional staffing couldn’t be beneficially trimmed.)
If you are curios enough to learn more, click here.
***
1. No Tenure / No Pension. A Congress person collects a salary while in office and receives no pay when out of office.
There is no tenure and no pension. Congressional reps fall under the same rules as any other federal government worker. After 5 years they MAY join a retirement and health benefit plan, paying in at the same rate and receiving the same benefits as other government employees.
2. Congress (past, present & future) must contribute to the Social Security system. All funds in the Congressional retirement fund will be rolled over to the Social Security system. All future payments flow into the Social Security system, and Congress participates equally with the American people.
There is no “Congressional retirement fund.” All Congressional pay is subject to the same Social Security and Medicare taxes as everyone else, and their SS benefits are figured exactly the same as everyone else’s.
3. Congress can purchase any additional retirement protection individually, just as all Americans can.
Of course. Always true.
4. Congress can no longer vote itself a pay raise. Congressional pay will rise by the lower of CPI or 3% annually.
Congress implemented a CPI based system long ago. For at least the past two years they have voted NOT to accept the increase.
5. Congress loses their current health care system and will participate in the same health care system as the rest of the American people.
They already do. See above.
6. Congress must abide equally by all laws imposed on all the American people.
Always true.
7. All other contracts, past and present, with Congressional Reps become void effective with passage of this amendment. The American people did not approve these contracts.
What contracts? I have yet to see any evidence of any “contracts with Congressional Reps.”
8. Term limits?
Worth discussing. While one side argues that they would encourage “citizen” representation (and I tend to lean that way), others say it would do even more to empower lobbyists and corporations, particularly following Citizens United.
This e-mail is getting wide circulation. Most of it is spam. PLEASE, IF YOU RECEIVE IT, DO NOT FORWARD!
Filed under Election law, Health Care, Social Security
On the Web
Time To Say Buh-Bye To Reactionary Blue Dog Heath Shuler?
“In terms of crucial votes taken in their entire congressional careers, only three Democrats– Dan Boren (Blue Dog-OK), Jason Altmire (Blue Dog-PA) and Joe Donnelly (Blue Dog-IN)– have voted more consistently with the Republicans than North Carolina Blue Dog Heath Shuler.”
To read the rest, click here.
Filed under Press coverage
Shuler joins six Republicans in fundraising effort
On Tuesday, Heath Shuler linked arms with six Republican congressional reps to raise funds at a pair of Taylor Swift concerts in Washington, DC.
“Six members of Congress will be attending the August 2 performance. Republican senator John Thune of South Dakota will be there along with Republican representatives Jo Bonner, of Alabama, Michael Grimm of New York, Tom Price of Georgia, and Kay Granger of Texas. Democratic rep. Heath Shuler of North Carolina will also be joining the lineup of lawmakers at the show on August 2, and Rep. Paul Broun [R] of Georgia will be the lone Congressman at the August 3 show.” – (Click here for story.)
Birds of a feather …
Filed under Campaign finance
