Time to Talk About the Buffett Rule

From a piece on CNN:

"A minimum 30% tax on million-dollar incomes won't do much to eat away at the nation's debt, it won't create jobs, and no one expects it to get through the Democratic-controlled Senate, much less the Republican-majority House."

So what do you think? A good rule with no support? A misguided attempt by people who really don't understand the economy? Is it now just the President's turn to play some election year politics?

Personally, I think it started out as the second and moved to the third. 60% of Americans disagree with me (Gallop: 60% support it, 37% oppose).

I agree that it may have started out as the second and then became the third.

I also think that the 60% who support it have simply bought into the "fairness" mantra, not considering the fact that if it were 'fair', it would by definition be 'without bias'. Doesn't the government support Truth In Labeling laws?

By the way, do you know who else paid a lower effective tax rate than his secretary?

I paid a higher tax rate than Romney, and it's my privilege to be able to support multiple homes and elevators for cars for the super wealthy. I mean, do you know what a stable of horses costs these days? !Splat!

A percentage of income is a percentage of income. All income. Just close the loopholes and tax ALL income at the same rate, including capital gains, then I'd be happy. It should be a sliding rate, cause, 10% of 1000 means a whole lot more than 10% of a million, to the individual. But even then, if you tax it all fairly, then the upper rate doesn't need to be 30%.
And that bull about them being 'job creators' is just that. BS Individual tax rates don't have squat to do with job creating except for the gardener and pool boy. Taxing Romney fairly wouldn't make him less of a business man. He'd still like firing people at the higher rate. :0!

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Originally Posted by peggy

A percentage of income is a percentage of income. All income. Just close the loopholes and tax ALL income at the same rate, including capital gains, then I'd be happy.

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It's not perfect, but I'm still generally a fan of a flat tax. And yes, on all income sources. That means Warren Buffett's dividends, his secretary's salary or my 401k disbursements. I don't know the math exactly, but it seems like 15% should be enough to run the government on and doesn't sound like an unfair number.

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Originally Posted by Alan

By the way, do you know who else paid a lower effective tax rate than his secretary?

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Well, according to those pesky watchdogs at ABC News, HE did.

I think I'm looking at a higher tax rate than that on some income probably as well. Second year in a row I'm filing an extension because I just don't understand my taxes still. They actually got more confusing that before, income started appearing in weird places, noone knew where it was coming from and going to. Sigh, this too shall pass.

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Originally Posted by Gregg

From a piece on CNN:

"A minimum 30% tax on million-dollar incomes won't do much to eat away at the nation's debt, it won't create jobs, and no one expects it to get through the Democratic-controlled Senate, much less the Republican-majority House."

So what do you think? A good rule with no support? A misguided attempt by people who really don't understand the economy? Is it now just the President's turn to play some election year politics?

Personally, I think it started out as the second and moved to the third. 60% of Americans disagree with me (Gallop: 60% support it, 37% oppose).

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I'm with the 60%......the rich should pay their fair share.

I think the first thing that needs to be done is closing a lot of the loopholes and maybe even doing away with a lot of deductions.

One deduction I wonder about is the charitable one. I never take it, because for me to itemize as a single with no dependents doesn't make financial sense. For you average income folks, does the charitable deduction make much of a difference for you tax-wise, or is this something that only really benefits higher income people?

I'd think you'd want to take a step back, and talk about what "fair" means first...

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Originally Posted by txgran

I'm with the 60%......the rich should pay their fair share.

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Care to elaborate on what that might be?

If we want to talk about fair share, how about we include those 49% of folks who don't pay income taxes AT ALL? The top 10% of earners pay 70% of all the taxes. How is that not fair?

Source: http://www.ntu.org/tax-basics/who-pa...ome-taxes.html

The only way to get them would be to eliminate the credits middle class people with kids take (mostly the child credit and mortgage interest probably). Like I found out from doing the math it is not possible to fall below the tax threshold if you work full time, no deductions, no kids (even if you earn minimum wage). So you have to ask if you really want to eliminate mortgage interest and kid deductions and find someone who will campaign on that? (good luck with the latter)

Well, since those extremely wealthy folks were doing just fine, even when their tax rates were well above 50%, and since societies really work best, especially democratic societies, when the middle class is healthy and prosperous, and since the extremely wealthy in our society have reaped a disproportionate amount of the gains in these past decades while the middle class has kind of taken it in the shorts, it's a start.

The folks with the huge amounts of money have the wherewithal to buy the politicians with their campaign donations to vote for policies that tilt the playing field firmly in the direction of those big money folks. It's time that some attention was paid to making things better for the 99%, rather than even more benefits for the 1%.

We are a part of that fortysome percentage of households that paid no Federal tax this year. So mixed in with the poor, who simply have too little income to owe tax, middle class working people who manage to fall in that group because of children or mortgage deductions, you can add a number of people, many millionaires, who pay no Federal taxes, too. If your income is derived from capital gains, dividends, tax exempt investments, limited partnerships that are taxed advantageously, etc., you can have quite a nice income, but the "wage slaves" in the middle class will be paying through the wazoo, while you sail through, courtesy of the very rich who managed to buy politicians who write the tax code, paying literally, nothing. The superrich didn't INTEND those tax laws for folks like us, but if your income comes from the same sources that the superrich get their income from, you ride on their coattails with those preferential tax laws.

We just finished doing our taxes this year. We are quite comfortable......enjoyed that nice Princess cruise down through the Panama Canal in January, living very nicely. Because of our tax code (which really wasn't designed for us, but since we ARE the investor class, however small), we, this year, paid no Federal income tax at all.

Capital gains shielded from even the lower rate by tax regulations intended to allow the very rich to harvest capital losses on stocks you have every intention of dying owning, and passing to your children whose cost basis will reset at the valuation at the time of your death, thereby having had the advantage of those "losses" without ever suffering the real loss, limited partnerships with their advantageous tax benefits, investments in tax-free municipal bonds, and the preferential way stock dividends are taxed (paying on only half your dividends), if we HAD a secretary with the same income, but derived from a paycheck, she or he would have paid quite a bit of Federal tax.

The tax playing field is tilted against income derived from work and toward income derived from dividends and capital gains. It isn't right that the very rich pay less percentage of their income than people making only a tiny fraction of their income, and SOME of the rich agree with that and are willing to see increased fairness. Others want to grasp hold of every cent they can, regardless of whether they have enough to live a thousand lifetimes already.

It is not fair that we had a comfortable income this year, yet owed no Federal taxes at all. It is not fair that the very wealthy pay a lesser rate than the people who work for them. It is not fair that access to politicians ensures that the tax laws are made in the favor of the very rich, or those whose income is derived from investments rather than from working.

Even though it is to my personal disadvantage, I would like to see that changed. My income from capital gains and dividends spends exactly the same as if those dollars were obtained by a paycheck. They don't give me half as much groceries at the grocery store for those dollars. Why should those dollars be taxed at half the rate (or even allowed to be free of tax at all) because we didn't EARN them, but simply sent our money out to work. Income is income.

It's time for this change. I agree with the Buffett rule. Completely.

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Originally Posted by loosechickens

Even though it is to my personal disadvantage, I would like to see that changed. My income from capital gains and dividends spends exactly the same as if those dollars were obtained by a paycheck. They don't give me half as much groceries at the grocery store for those dollars. Why should those dollars be taxed at half the rate (or even allowed to be free of tax at all) because we didn't EARN them. Income is income.

It's time for this change. I agree with the Buffett rule. Completely.

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How many times should the same dollar be taxed? If you, as a partial owner of a company, invest your money in the form of stocks or bonds, which then generates a 10% annual return, should it be subjected to the highest corporate tax rate in the world prior to you receiving it only to then have it taxed again at a 25 to 30% rate? Exactly how many slices of the pie should the government take before you are allowed to enjoy the crumbs?

That argument might hold some water, Alan, if hardly any corporations really PAID those corporate tax rates, but since something like 2/3 of corporations pay none at all, and even multinational corporations pay a tiny fraction of that marginal rate, it's more like a shell game, that argument.

Should our corporate marginal tax rate be lowered and the loopholes that make most corporations pay only a fraction of the marginal rate be done? Sure. Let's go.

Hey, the very, very rich have managed in many ways to gull people into believing that their pockets weren't being picked. But it may be that the "pickees" are getting fed up. Especially since the slice of the pie that those very, very rich people have has gained steadily in size. And that if anyone is getting "crumbs", it's NOT them, hahahaha.

gotta go......carry on.....back tonight to see how the discussion went.

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Originally Posted by loosechickens

Well, since those extremely wealthy folks were doing just fine, even when their tax rates were well above 50%, and since societies really work best, especially democratic societies, when the middle class is healthy and prosperous, and since the extremely wealthy in our society have reaped a disproportionate amount of the gains in these past decades while the middle class has kind of taken it in the shorts, it's a start.

The folks with the huge amounts of money have the wherewithal to buy the politicians with their campaign donations to vote for policies that tilt the playing field firmly in the direction of those big money folks. It's time that some attention was paid to making things better for the 99%, rather than even more benefits for the 1%.

We are a part of that fortysome percentage of households that paid no Federal tax this year. So mixed in with the poor, who simply have too little income to owe tax, middle class working people who manage to fall in that group because of children or mortgage deductions, you can add a number of people, many millionaires, who pay no Federal taxes, too. If your income is derived from capital gains, dividends, tax exempt investments, limited partnerships that are taxed advantageously, etc., you can have quite a nice income, but the "wage slaves" in the middle class will be paying through the wazoo, while you sail through, courtesy of the very rich who managed to buy politicians who write the tax code, paying literally, nothing. The superrich didn't INTEND those tax laws for folks like us, but if your income comes from the same sources that the superrich get their income from, you ride on their coattails with those preferential tax laws.

We just finished doing our taxes this year. We are quite comfortable......enjoyed that nice Princess cruise down through the Panama Canal in January, living very nicely. Because of our tax code (which really wasn't designed for us, but since we ARE the investor class, however small), we, this year, paid no Federal income tax at all.

Capital gains shielded from even the lower rate by tax regulations intended to allow the very rich to harvest capital losses on stocks you have every intention of dying owning, and passing to your children whose cost basis will reset at the valuation at the time of your death, thereby having had the advantage of those "losses" without ever suffering the real loss, limited partnerships with their advantageous tax benefits, investments in tax-free municipal bonds, and the preferential way stock dividends are taxed (paying on only half your dividends), if we HAD a secretary with the same income, but derived from a paycheck, she or he would have paid quite a bit of Federal tax.

The tax playing field is tilted against income derived from work and toward income derived from dividends and capital gains. It isn't right that the very rich pay less percentage of their income than people making only a tiny fraction of their income, and SOME of the rich agree with that and are willing to see increased fairness. Others want to grasp hold of every cent they can, regardless of whether they have enough to live a thousand lifetimes already.

It is not fair that we had a comfortable income this year, yet owed no Federal taxes at all. It is not fair that the very wealthy pay a lesser rate than the people who work for them. It is not fair that access to politicians ensures that the tax laws are made in the favor of the very rich, or those whose income is derived from investments rather than from working.

Even though it is to my personal disadvantage, I would like to see that changed. My income from capital gains and dividends spends exactly the same as if those dollars were obtained by a paycheck. They don't give me half as much groceries at the grocery store for those dollars. Why should those dollars be taxed at half the rate (or even allowed to be free of tax at all) because we didn't EARN them, but simply sent our money out to work. Income is income.

It's time for this change. I agree with the Buffett rule. Completely.

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Very well stated......

By the time my dollars arrive at the bank I've already been taxed on them at a few different levels. I then use those dollars to pay my property taxes. Or fill my tank and pay fuel/wheel tax as I do. Or I stop at the store for shampoo and pay sales tax along with the product. Or I pay my cell phone bill which has more silly little nickle and dime taxes than I can even fathom... Under our current system it is nearly impossible to transfer money from one entity or person to another without additional taxation at every step and I believe the few transactions so far immune are part of proposed revisions (services, interstate transactions, etc.). My pie has diminished significantly before I ever get to take a bite.

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Originally Posted by Tradd

I think the first thing that needs to be done is closing a lot of the loopholes and maybe even doing away with a lot of deductions.

One deduction I wonder about is the charitable one. I never take it, because for me to itemize as a single with no dependents doesn't make financial sense. For you average income folks, does the charitable deduction make much of a difference for you tax-wise, or is this something that only really benefits higher income people?

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If you have enough deductions to make itemizing worthwhile, yes, it can make a difference even for lower-income folks, especially if you tithe. This year was an ugly tax year for me: I lost my home to a fraudulent loan, so goodbye mortgage tax deduction. Lost my health insurance, so goodbye to self-employed premium deduction. Had to liquidate IRA funds to pay basic bills. "Income" from settling a debt I couldn't afford to pay in full (and two more to go - even if I could find the money to settle, I couldn't afford the taxes). Taxes on unemployment income... the list goes on. I made less this year than any year in the last decade, yet more in taxes. Ouch.

An interesting angle to this debate can be found in The Spirit Level, a book examining the societal costs of income/wealth inequality. It's hard to fully consider the "fairness" question without looking at that aspect.

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Originally Posted by loosechickens

That argument might hold some water, Alan, if hardly any corporations really PAID those corporate tax rates, but since something like 2/3 of corporations pay none at all, and even multinational corporations pay a tiny fraction of that marginal rate, it's more like a shell game, that argument.

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You can cherry pick some years where there are timing differences between book and tax income or skew the stats with a large number of small companies that really have no income or pay it all to the owners in salary, or whine about the deferral on taxation of foreign earnings when most of the rest of the world doesn't tax foreign earnings at all. But for the most part corporate income is taxed.

Here is an open invitation to anyone who thinks dividends are taxed too low- run all your income through a corporation, have the corp pay tax at 35% corporate rates, and then pay yourself a dividend that is then taxed at 15%. Then you too can have a 15% tax rate. See how great that would be? - hint, if you think it would be you need help with math.

You can change the system, but you have to change the system, you can't just change parts or you end up with the Frankenstein system we have now.

Would this new rule replace the AMT, or would it function as an alternative alternative minimum tax?

The AMT does need to go (a more convoluted secret taxation system you could hardly devise), but sure replace it with higher progressive taxation, reduce deductions.

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Originally Posted by loosechickens

Well, since those extremely wealthy folks were doing just fine, even when their tax rates were well above 50%, ....

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That's not exactly a fair comparison of tax rates, is it?

When the tax rates on "the extremely wealthy" were higher, the structure of the tax code itself was more-than-a-bit different, so simply loooking at notional rates doesn't tell you the story.

To compare honestly between different eras, you'd want to look at the actual effective rates paid, bottom-line.

As I suspect most people understand.

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Originally Posted by HKPassey

An interesting angle to this debate can be found in The Spirit Level, a book examining the societal costs of income/wealth inequality. It's hard to fully consider the "fairness" question without looking at that aspect.

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Ah yes, now we see it. It's unfair that some people have a great deal of wealth. We need to spread that wealth around....

I do not understand the rationale of expecting the very poorest people in our society to have to pony up and pay more taxes than they already do. (Yes, they do pay taxes. Sales tax, gas tax, utility taxes, etc.) So many of them have multiple part time jobs with no benefits making minimum wage and must run households and raise children and pay health costs on those paltry hourly wages. Still, people want the poorest to cough up more and "pay their fair share" whatever that means. This mentality seems so utterly heartless to me.

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Originally Posted by bae

Ah yes, now we see it. It's unfair that some people have a great deal of wealth. We need to spread that wealth around....

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after taking a big cut to run an inneficient government that pays for many worthless programs and a military machine.

If the wealthy are taxed more it is not going to do a bit of good if spending is not cut as well. We have this giant deficit and need to bite the bullet. Do we really need a department of education and legislators making laws about schooling at the federal and state levels? If we simplify the tax code maybe the huge IRS budget can also be cut.

Sometimes we forget all the philanthropy that many wealthy people are involved in without first siphoning through our tax system and having someone else determine what the good causes are. Someone in my town gave $500,000 towards a new YMCA- I imagine they are quite wealthy to be able to do that. Many of our local businesses sponsor music performances, scholarships, baseball teams etc. The whole community benefits. If by doing so they pay less in taxes I am all for it.

There are a lot of good people doing a lot of good in this world spending money supporting good causes, paying for their kids education, helping their elderly parents, and helping establish programs that help people help themselves.

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Originally Posted by bunnys

"pay their fair share" whatever that means

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So what does that mean? Should the amount of tax you pay have any relation to the amount of government services you consume? Should we take money from those that have it just because they have it or should it matter how they got it? Which is more important, income or assets? What exactly do you think makes it a "fair" share?

Y'all are wrong! WRONG I TELL YOU!!!!!

The Buffet Rule means that you always take a clean plate when you go back for seconds, and never never never drool into the community food supply on a buffett line.

I really thought that you guys knew these things...

What's really funny is that within *minutes* of the Senate vote on this today, I received bulk emails from various progressive organizations complaining about the vote failing, and asking for funds to defeat The Forces Of Evil in the upcoming elections.

Go figure...

The whole issue is clearly yet another attempt to divide us all, to raise money for politicians, and to keep stirring the pot.

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Originally Posted by Iris lily

Y'all are wrong! WRONG I TELL YOU!!!!!

The Buffet Rule means that you always take a clean plate when you go back for seconds, and never never never drool into the community food supply on a buffett line.

I really thought that you guys knew these things...

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Oh, everybody knows that. This is about the sliding scale they charge you at the door. Half the diners eat for free and the few percent they dislike the most, who are already paying for 70 or so percent of the evenings meals, get to pay an additional premium for the privilege of dessert.

They pay for what, their own wars? Who benefits from those anyway?

Who paid for the federal reserve bailout of all the banks, and then much of the European banks? (which may have really be an indirect bailout of who knows what). 1.2 trillion? Who benefited?

Maybe worse if you believe things like this:
http://dailybail.com/home/holy-bailo...illion-of.html

Absolutely massive bailout of the financial system (likely continues with more and more and more).

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Originally Posted by Alan

How many times should the same dollar be taxed? If you, as a partial owner of a company, invest your money in the form of stocks or bonds, which then generates a 10% annual return, should it be subjected to the highest corporate tax rate in the world prior to you receiving it only to then have it taxed again at a 25 to 30% rate? Exactly how many slices of the pie should the government take before you are allowed to enjoy the crumbs?

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Or alternatively, which income should be taxed at a higher percentage. Income derived from the sweat of one's labor or income derived from opening an investment account statement and smiling?

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Originally Posted by East River Guide

So what does that mean? Should the amount of tax you pay have any relation to the amount of government services you consume? Should we take money from those that have it just because they have it or should it matter how they got it? Which is more important, income or assets? What exactly do you think makes it a "fair" share?

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It's impossible to know how much government services anyone takes. How could one even begin to calculate the benefit the oil companies get from our military presence in the middle east. I'd be willing to guess, though, that it far outstrips whatever taxes they pay.

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Originally Posted by herbgeek

If we want to talk about fair share, how about we include those 49% of folks who don't pay income taxes AT ALL? The top 10% of earners pay 70% of all the taxes. How is that not fair?

Source: http://www.ntu.org/tax-basics/who-pa...ome-taxes.html

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Of course the people who scream about all those who "don't pay taxes" ignore the fact that a sizeable chunk of the non-tax-payers are retired and living off a relatively small social security income and students. In other words, people who DID pay taxes for most of their lives or those who WILL pay taxes most of their lives.

And as Tradd mentioned, there are a lot of us with no children and no mortgage deduction who are only able to take the standard deduction. I make a high 5 figure income and pay a way higher percentage tax rate then Buffet. And that doesn't even take into account the very regressive withholding taxes for social security and medicare, which don't get taken out of investment income.

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Originally Posted by Alan

Oh, everybody knows that. This is about the sliding scale they charge you at the door. Half the diners eat for free and the few percent they dislike the most, who are already paying for 70 or so percent of the evenings meals, get to pay an additional premium for the privilege of dessert.

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ha ha ha ok.

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Originally Posted by bunnys

I do not understand the rationale of expecting the very poorest people in our society to have to pony up and pay more taxes than they already do. (Yes, they do pay taxes. Sales tax, gas tax, utility taxes, etc.) So many of them have multiple part time jobs with no benefits making minimum wage and must run households and raise children and pay health costs on those paltry hourly wages. Still, people want the poorest to cough up more and "pay their fair share" whatever that means. This mentality seems so utterly heartless to me.

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I know of no one proposing that the burden on the poor should be increased. Economic equations are neither heartless or compassionate in their own right. That type of consideration comes from the parameters set by those who apply the rules to society. Even flat tax advocates who propose a percentage straight across the board all have lower limits below which a person would not be expected to pay. Some people misinterpret that as compassion, but in reality it is simply a practical matter. It doesn't make any sense to force someone to pay when doing so will place them in a position of needing more assistance that will cost society more than those people paid in the first place.

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Originally Posted by Gregg

I know of no one proposing that the burden on the poor should be increased. ...

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Oh I don't know. There is one point of view that holds EVERYONE w should have some skin in the "Tax Me" game. I realize it's not practical to require someone below the poverty line to cough up a few bucks for income taxes, they just don't have it, but I like the philosophy of it. Everybody plays, everybody pays.

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Originally Posted by jp1

How could one even begin to calculate the benefit the oil companies

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Companies don't receive any benefits. Ever. All tax burdens fall on people- employees, investors or consumers.

In most cases a consumption oriented tax could be tailored to more readily reflect government usage than one based on income.

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Originally Posted by Iris lily

..... but I like the philosophy of it. Everybody plays, everybody pays.

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Yea, kind of like health care with the affordable care act. Everyone plays so everyone pays! Glad you finally see the light Iris L.;)

I'm getting into this conversation late but one thing they never mention is that by the time you get your dividend, its already taxed at the corp tax rate of 35%, though the corporation probably pays a someone lower rate, then you pay our 15% tax, so its double-taxed.

I general, I am for all tax hikes which increase other taxes and against those which increase mine :)