Don’t look now but Warren Buffett is at it again. This time he’s written an op-ed in the NYT in which he claims it’s time “the rich” stop being “coddled” by Congress:
“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,” The 80-year-old “Oracle of Omaha” wrote in an opinion article in The New York Times.
Aw, poor Warren and his buds want to step up to the plate and give more money to those paragons of fiscal prudence in the Capitol, but Congress just won’t tear off the shackles of financial freedom darn it.
Now don’t get me wrong, I’m no Buffett hater. Far from it. I respect the man immensely for his investing and business acumen. But every time he opens his mouth on government policy it seems to me he makes startlingly weak and misplaced arguments for what would only result in bigger government with more spending and bigger deficits.
Let’s consider his parroting of the “shared sacrifice” mantra of the big government, big spenders in Washington D. C.. Is it really a sacrifice if the government makes you pay more in taxes? Isn’t that really just obeying the tax law? If Mr. Buffett and the wealthy in America really want to sacrifice, let them pay extra taxes.Make it in the form of a donation to the federal government that they can enter in whatever amount they see as fair “sacrifice” for the greater good.
This argument that higher tax rates need to be enforced so the rich can do their part is insulting, and misleading.
Speaking of his recent $6,938,744 tax bill, Buffett said this:
“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,” he said.
A large part of why Buffett’s tax burden is so much lower (as a percentage) than his employees is that his employees work for a salary, and most likely don’t take full use of tax-advantaged moves like investing in an IRA or 401(k) or health savings accounts,etc.. that allow people to “spend” that money before taxes – thus lowering their taxable income and their overall tax burden.
Just think about this logically for a minute. In this brief quote, Buffett wants you to believe that the tax rate on the wealthy is somehow higher than the rate on the middle and lower class wage earners. It’s not. It’s only effectively higher.The wealthy have a better sense of the tax code and they know how to minimize their tax bill using it.
This is key to understanding Buffett’s argument for Congress raising income tax rates. He puts out a public plea and Congress raises tax rates on “the rich.” Buffett and the wealthy know how to work the system to limit their taxable income and would likely pay only a nominal increase in real taxes if the rate were increased – but it lets him appear willing to “sacrifice”. What a great guy! Plus, if congress simply raises the rates, he pays far less in taxes than if they implement a flatter tax system and eliminate some of those perks he uses to lower his taxable income today.
He’s made similar pleas to raise the so-called death tax ( estate tax), because guys like Buffett know how to protect their assets from such a tax. He’s said as much in interviews – that the only people who would pay more if there was an increase in the estate tax are those who are not savvy enough to avoid it, and therefore don’t deserve to pass that down to their beneficiary.
By letting people “donate” more than their required tax bill, we would be giving Buffett and his friends who are tired of being “coddled” by the government a chance to really open their pocket books and make a true sacrifice to the government they so dearly love, and no longer hide behind Congress.
Anyone have a guess what would happen to the deficit if guys like Buffett paid more in taxes? Would the government put that extra income toward paying down the deficit, or spend it (and then some) on new programs or budget increases in already bloated programs?
If you honestly think more tax revenue will result in a lower deficit, please leave me your name and number in the comment section… I have a wonderful deal on an historic bridge I’d love to sell to you.