I think it’s a safe bet that the name “Warren Buffett” will come up in Obama’s State of the Union address tonight (which under this president ought to be renamed “State of the Demagoguery).
There’s a rumor that Obama will plant Warren Buffett’s now-famous secretary next to Michelle Obama to drive his demgogic point home.
We’re going to be told that “the rich should pay their fair share.” Because the fact that a tiny minority of the rich pay the overwhelming majority of the income tax burden while nearly half of Americans pay ZERO federal income tax is utterly immaterial:
The latest data show that a big portion of the federal income tax burden is shouldered by a small group of the very richest Americans. The wealthiest 1 percent of the population earn 19 percent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes. These are proportions of the income tax alone and don’t include payroll taxes for Social Security and Medicare.
We’re going to hear about the so-called “Buffett Rule,” the idea that Warren Buffett says he pays less in tax than his secretary and he thinks that he should pay more.
Part of the problem with that is that Warren Buffett is a big fat phony hypocrite who actually owes a BILLION DOLLARS in back taxes. So apprently the REAL “Buffett Rule” is to talk out of your ass while you welch on your legitimate tax obligations.
It is of course also true that Warren Buffett could pay as much tax as he wants. He hasn’t paid more because in point of obvious fact he’s never wanted to pay more. Which makes him not only two-faced, but two HYPOCRITE faces.
These points are inconvenient, so the media will proceed to ignore them as being completely besides the point.
But there’s more to it.
The reason that Warren Buffett is taxed at such a low rate is because he pays taxes on “capital gains” rather than “income.” Income has a top federal rate of 35%; capital gains are taxed at 15%. Capital gains are taxed at such a low rate because investors have to put their money at risk in order to receive a reward. And if you hike the capital gains rate, you decentivize investment (why risk your money on a business failing if you don’t even get to keep what you make when you win?) and economic growth and job creation tanks. It’s as simple as that.
Obama doesn’t care about helping the economy or increasing the actual tax revenues; he’s all about Marxist “fairness” instead as ABC News anchor Charles Gibson once got Obama to admit:
MR. GIBSON: And in each instance, when the rate dropped, revenues from the tax increased. The government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down. So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?
SENATOR OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.
The Senator then proceeded to bash evil rich (sorry for the redundancy) people, so the moderator asked the question again:
MR. GIBSON: But history shows that when you drop the capital gains tax, the revenues go up.
I wrote an article on this type of issue titled, “Tax Cuts INCREASE Revenues; They Have ALWAYS Increased Revenues.” It is simply true that every single time we have cut income tax and capital gains tax rates we have had a surge in revenue to the government because investment was being encouraged. Not only that, but the rich also paid a HIGHER percentage of that revenue than they had been paying prior to the tax cuts. It is simply win-win – unless you are a communist or a fascist, which unfortunately Democrats are today.
It’s not about the rich paying any “fair share,” because they already PAY MORE than their fair share. It’s not about increasing revenues, because the thing that Obama and liberals want to do will actually DECREASE revenues. Rather, it is about Karl Marx and class warfare and playing off of ignorant people’s greed and envy and using demagoguery to stir up Marxist-based anger. It is about cutting off your own leg so you can beat the rich man with it. At least until all your blood gushes out of your femoral artery and you yourself die.
Here’s one last thing to read about the “Buffett Rule”:
Wednesday, January 11, 2012
Class Warfare and the Buffett Rule
by Noman Says
Noman was delighted to find an Arthur Laffer opinion piece in this morning’s paper. In it, he argues that a millionaire surtax would hurt everyone but the super rich like Warren Buffet. Noman imagines that Buffet knows this, which is why he felt safe being so bold as to champion the notion.
Waving Mr. Buffett’s op-ed for all to see, Mr. Obama wasted no time in proposing a surtax on millionaires called the “Buffett Rule.” Putting aside all the oohing and ahhing over Mr. Buffett’s selflessness, his effective tax rate on his true income would hardly budge if this “Buffett Rule” were applied.
Mr. Buffett’s net worth rose by $10 billion in 2010 to $47 billion, according to Forbes Magazine. That increase, an unrealized capital gain, is part of his total income by any standard definition, including the one used by the Congressional Budget Office. After also including a $1.6 billion gift to the Bill and Melinda Gates Foundation, Mr. Buffett’s true income in 2010 was much closer to $11.6 billion than the $40 million figure cited in his op-ed. Hence his true effective tax rate was only 6/100ths of 1% as opposed to 17.4%. And these are just the additions to his income that we know about.That untaxed $11.2 billion of income would still not be touched by the Buffett Rule, after application of which his taxes would increase by $7 million. His effective tax rate would rise to .12% from .06%.
Zowie! Meanwhile, the rest of us would have our growth ceiling, and probability of reaching it, lowered.One might argue that Buffet’s paltry tax relative to his true income only underscores his point, which is that hedoesn’t pay enough. But, the real point is that under his own proposal, he still wouldn’t. The rest of us, on the other hand, would have to endure higher rates, higher taxes, a less prosperous economy, fewer routes to upward mobility, and the ignonimy of having to laud Buffet’s selflessness.
After laying Mr. Buffet’s pretensions to waste, Laffer targets his hypocrisy.
Mr. Buffett’s donation to the Gates Foundation goes to the heart of my critique of his public call for higher tax rates on the rich… [I]f his gift weren’t tax sheltered he wouldn’t give it. So much for “shared sacrifice.”
In a 2007 CNBC interview, when asked why he shelters his money through tax-free strategies rather than writing big checks to Uncle Sam, Mr. Buffett responded: “I think that on balance the Gates Foundation, my daughter’s foundation, my two sons’ foundations will do a better job with lower administrative costs and better selection of beneficiaries than the government.”
So Mr. Buffett thinks he and his family can put their money to better use than the government can. I guess he’s really not so different from the rest of us after all.
That article of clothing lying about your ankles, Mr. Buffet, is your pants. Whatever was once holding them up has been plucked off.
Laffer is the foremost advocate of the well-documented and statistically-verified policy argument that if you want the rich to pay more taxes in both absolute and relative terms, then the high end of marginal tax rates should be lowered, not raised.
When it comes to raising tax revenues by raising tax rates on the rich, Mr. Buffett would again appear to be on the wrong side of the argument. Between 1921 and 1928, the top marginal income tax rate fell to 25% from 73%. During this period, tax receipts from the top 1% of income earners rose to 1.1% of GDP from 0.6% of GDP. The top income tax rate dropped to 70% from 91% after the Kennedy tax cuts began in 1964, while tax receipts from the top 1% of earners rose to 1.9% of GDP from 1.3% of GDP in the period 1960 to 1968. By the way, these periods were two of the biggest booms in U.S. history.
Guess what was the third period of boom? Since 1978, the top earned income tax rate fell to 35% from 50%, the top capital gains tax rate fell to 15% from 39.9%, and the highest dividend tax rate fell to 15% from 70%. After taking office in 1993, President Clinton virtually eliminated the capital gains tax from the sale of owner-occupied homes and cut government spending as a share of GDP by the largest amount ever.
Meanwhile, the top 1% of earners saw their tax payments climb to 3.3% of GDP in 2007 from 1.5% of GDP in 1978, while the bottom 95% saw their tax payments drop to 3.2% of GDP in 2007 from 5.4% of GDP in 1978. Why would Mr. Buffett want to reverse these numbers?
Laffer’s facts are tough to argue with. But, that doesn’t prevent Statists from trying.
Of course, cynics and die-hard progressives might object to the above evidence on the grounds that it was driven by an explosion of income gains. But that’s largely the point.
The evidence suggests that big government Lefties’ real attraction to higher taxes is that they leave the vast majority of people worse off, not better. Widespread poverty, not increased receipts to the government, appears to be the true aim of the “fair share” set. Anything to reduce the sphere of private decision-making, and increase the dominion of centralized power, eh?
And, that’s just fine with Warren Buffet. He’ll cut his own deal with whatever hegemon needs to be placated.
Noman has written about Laffer, and Buffet, and encourages you read the former’s “The End of Prosperity” (2008). It sheds a great deal of light on class warfare as an economic stratagem, and makes one question the morals of those who foment it as a political one.
Hiking taxes on the rich won’t result in their paying more revenue; it will result in their paying less revenue as they quickly shelter their money by using tax free bonds and other investment vehicles such as collectibles. They will find if worth while to pay a high-priced tax attorney to find every possible shelter for their wealth. And if you can’t similarly afford such a high-priced lawyer, well, doom on you then.
The result of Obama’s demagoguery would be less investment in business and in job creation, which are the very investments we need more of.
The small businesses that produce 75% of America’s jobs are utterly terrified of Obama and his vile Marxist policies for damn good reason. Obama is counting on the American people’s ignorance and greed.
If Obama wins, America is doomed, and get ready for the beast of Revelation as his crony allies and his policies set up a $600 trillion collapse.
You won’t hear a word of any of the above in Obama’s speech tonight; but that is because virtually every word of his speech will be lies.
Oh, by the way, Obama is also going to tout his job recovery. It is all a lie. We have lost millions of jobs; the number of jobs available in America has collapsed:
But don’t you worry, Democrats. You can completely trust your ideological allies in the most biased news media since Goebbels to keep that shameful little secret of Obama’s, too.