Warren Buffet Gets It – Why Doesn’t the US Congress and Obama Administration Get It?

Sometimes you have to wonder who is really in control in the United
States? Why do I say that, I know who is in control. We have always known
that the wealthy control the politicians and the politicians control the
laws and the laws control the population. It has always been that way and it
doesn’t appear that this dynamic will be changing anytime soon.

However, historically the wealthy have always given us in the middle class a
small piece of the American Dream and the ability to raise our children with
the belief in a positive future. All that positive history is over, now the
wealthy will not even pay their fair share in taxes and expect the rest of
us to “Eat Cake”.

Well here’s a News Flash for the wealthy — if you push the middle class
over the financial edge because of your collective greed just remember what
happened after the French Revolution – the privileged class did not do so
well.

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?

_r=1&emc=eta1

New York Times — Op-Ed Contributor

Stop Coddling the Super-Rich

By WARREN E. BUFFETT

Published: August 14, 2011

“We mega-rich should not continue to get extraordinary tax breaks while most
Americans struggle to make ends meet”.

By WARREN E. BUFFETT

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.

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.