Buffett: Stop coddling the super-rich

[Magic In The Night]

Two things. The part you didn't quote. ... Buffett has done this before. Claiming his average tax rate is about 17.4 percent, while nearly everyone in his office pays a higher average tax rate (he claims 36 percent on average).

Everytime he does this, he gets called on it. He has done it over and over again, and over and over again, the flaw gets pointed out. His ignoring it, demonstrates that he has a politicized agenda.

His personal Federal income tax rate is so low because he owns the bulk of the shares in Berkshire, and in the U.S. we tax corporate income tax on any dividends (when you own a company, you take dividends, to the extent you can legally, to avoid paying the personal income tax; dividends are not taxed as income). If you include how he is taxed at the corporate level, before taking his distributions, his average tax rate is closer to 50 percent. And that has been demonstrated. And Mr. Buffett still makes the same disingenuous argument.

But aside from that, I have done a bit of work on this, and the average effective Federal tax rate in the U.S. is 19 percent. If Warren Buffet's employess are paying 36 percent on average, he either pays his workers extraordinarily well (as in ridiculously well), or they are not all that smart (which begs the question of how Berkshire does so well) and paying way more taxes than they need to.

Do you have a link to the flaw?

I could link to myself actually, but I am not comfortable doing it. Go back to 2007. I think it was 2007. Maybe 2008. Buffett was making the same exact argument. You can find multiple places -- then, as well as yesterday after his op ed -- that point out that his effective tax rate at the corporate and personal level is more like 50 percent.

One thing he writes that doesn't make sense (I think you pointed out earlier) is that his employees are paying a federal tax rate of 35%, or even 41%... the top marginal tax rate is 28%, right?

What else is he including there? These employees must be making a s-load of money of their effective rate, after deductions, is at the top or even higher than the highest marginal rate.

Well unless the tea party slipped one past everyone, I believe the top marginal rate is still 35%. He might be including state tax or FICA in here, not sure. Or maybe the Medicare tax. FICA and Medicare should definitely be included when anyone is talking about anyone under the age of about 55 because most of those people will never see a penny of that money so all of it is, in effect, another tax.

 

[The Big Ragu]

Two things. The part you didn't quote. ... Buffett has done this before. Claiming his average tax rate is about 17.4 percent, while nearly everyone in his office pays a higher average tax rate (he claims 36 percent on average).

Everytime he does this, he gets called on it. He has done it over and over again, and over and over again, the flaw gets pointed out. His ignoring it, demonstrates that he has a politicized agenda.

His personal Federal income tax rate is so low because he owns the bulk of the shares in Berkshire, and in the U.S. we tax corporate income tax on any dividends (when you own a company, you take dividends, to the extent you can legally, to avoid paying the personal income tax; dividends are not taxed as income). If you include how he is taxed at the corporate level, before taking his distributions, his average tax rate is closer to 50 percent. And that has been demonstrated. And Mr. Buffett still makes the same disingenuous argument.

But aside from that, I have done a bit of work on this, and the average effective Federal tax rate in the U.S. is 19 percent. If Warren Buffet's employess are paying 36 percent on average, he either pays his workers extraordinarily well (as in ridiculously well), or they are not all that smart (which begs the question of how Berkshire does so well) and paying way more taxes than they need to.

Ragu, on the debt ceiling thread, you continually argue the old trope that the rich are getting screwed because the poor don't pay any Federal Income Tax -- ignoring that federal income tax is a very narrow measure that doesn't come close to including all the taxes paid, and that in terms of overall taxation the rates are barely progressive if they are progressive at all. Here you argue that Warren Buffett is painting an inaccurate picture by limiting his argument to the Federal Income Tax instead of the full taxation picture.

Which is it -- is federal income tax an accurate measure of taxation? No, it is not, and you are acknowledging it here.

Your own politicized agenda comes shining through.

I have no idea what you are talking about. Do you understand the difference between CORPORATE taxes and PERSONAL taxes?

That is the key to what I posted.

Warren Buffett is able to minimize his personal income tax by taking huge dividends from Berkshire Hathaway. Hell, I do that with my business which is a speck of a fly compared to Berkshiare Hathaway. It at least saves me on FICA tax (I pay twice as much as most people on here, because I make my own employer contribution and my employee contribution.

My point: When Warren Buffett tells you his effective tax rate is only 17 percent because he takes dividend income, rather than taking it as taxable payroll income, he is not being honest. He is the largest shareholder (i.e. -- owner) of the company, and before he can take those dividends, they get taxed at the corporate tax rate. That is money out of Buffett's pocket. The truth is that when you count what he loses BEFORE he ever takes his dividends -- what the government takes at the corporate level -- his effective tax rate is closer to 50 percent than 17 percent. He is disingenuous when he doesn't count that taxation or explain it in those op ed pieces.

I am not sure if I answered what you asked, because I didn't understand it. Hopefully, though, my point makes sense to you.

 

[Baron Scicluna]

Two things. The part you didn't quote. ... Buffett has done this before. Claiming his average tax rate is about 17.4 percent, while nearly everyone in his office pays a higher average tax rate (he claims 36 percent on average).

Everytime he does this, he gets called on it. He has done it over and over again, and over and over again, the flaw gets pointed out. His ignoring it, demonstrates that he has a politicized agenda.

His personal Federal income tax rate is so low because he owns the bulk of the shares in Berkshire, and in the U.S. we tax corporate income tax on any dividends (when you own a company, you take dividends, to the extent you can legally, to avoid paying the personal income tax; dividends are not taxed as income). If you include how he is taxed at the corporate level, before taking his distributions, his average tax rate is closer to 50 percent. And that has been demonstrated. And Mr. Buffett still makes the same disingenuous argument.

But aside from that, I have done a bit of work on this, and the average effective Federal tax rate in the U.S. is 19 percent. If Warren Buffet's employess are paying 36 percent on average, he either pays his workers extraordinarily well (as in ridiculously well), or they are not all that smart (which begs the question of how Berkshire does so well) and paying way more taxes than they need to.

Ragu, on the debt ceiling thread, you continually argue the old trope that the rich are getting screwed because the poor don't pay any Federal Income Tax -- ignoring that federal income tax is a very narrow measure that doesn't come close to including all the taxes paid, and that in terms of overall taxation the rates are barely progressive if they are progressive at all. Here you argue that Warren Buffett is painting an inaccurate picture by limiting his argument to the Federal Income Tax instead of the full taxation picture.

Which is it -- is federal income tax an accurate measure of taxation? No, it is not, and you are acknowledging it here.

Your own politicized agenda comes shining through.

I have no idea what you are talking about. Do you understand the difference between CORPORATE taxes and PERSONAL taxes?

That is the key to what I posted.

Warren Buffett is able to minimize his personal income tax by taking huge dividends from Berkshire Hathaway. Hell, I do that with my business which is a speck of a fly compared to Berkshiare Hathaway. It at least saves me on FICA tax (I pay twice as much as most people on here, because I make my own employer contribution and my employee contribution.

My point: When Warren Buffett tells you his effective tax rate is only 17 percent because he takes dividend income, rather than taking it as taxable payroll income, he is not being honest. He is the largest shareholder (i.e. -- owner) of the company, and before he can take those dividends, they get taxed at the corporate tax rate. That is money out of Buffett's pocket. The truth is that when you count what he loses BEFORE he ever takes his dividends -- what the government takes at the corporate level -- his effective tax rate is closer to 50 percent than 17 percent. He is disingenuous when he doesn't count that taxation or explain it in those op ed pieces.

I am not sure if I answered what you asked, because I didn't understand it. Hopefully, though, my point makes sense to you.

Either way, it sounds like Buffett is willing to pay more taxes. He just wants the government to tell him to do so.

Unlike a lot of wealthy people who are whining about paying an extra 4 percent of personal income tax while shipping jobs to China and India. At least Buffett sounds willing to step up to the plate.

 

[Point of Order]

You guys can parse it all you want, but when the richest guy in the world pays the lowest tax rate in his office we have problems. Period.

Why do you and Buffett hate the job creators and trickle-downers?

Corporate welfare.

 

[poindexter]

The truth is that when you count what he loses BEFORE he ever takes his dividends -- what the government takes at the corporate level -- his effective tax rate is closer to 50 percent than 17 percent. He is disingenuous when he doesn't count that taxation or explain it in those op ed pieces.


eh, I don't buy that argument. The Supreme Court has ruled that corporations have the same rights to free speech as individuals; could spend on elections as individuals.

 

[LongTimeListener]

Ragu --
On page 99 of the budget talks thread, you write, "the short of it is that in the United States, the wealthiest docile pays 45.1 percent of our taxes. That is effective tax receipts, not marginal tax rates." you go on to say that's a higher percentage than anywhere else. But you are relying solely on that portion listed under Federal Income Tax to make a highly misleading point because, as was pointed out by many others on that thread, FIT is hardly the whole of the tax picture. You ignored those replies. Now on this Buffett thread, he tells us what his Federal Income Tax was, and because it serves the purpose of your argument, you are arguing the other side of the coin and saying Federal Income Tax is not an adequate measure.

So why should anyone listen to a person who simultaneously argues that Federal Income Tax is proof that the rich pay more, and that Federal Income Tax is not proof that Warren Buffett pays less? If it is an accurate measure, it is accurate all the way around.

Also, I believe Buffett answered pretty well the questions about how his and his friends' taxes are reconciled, and that they are still lower because of carried interest, capital gains and such. I am especially glad that he took on the myth that people won't invest because their returns might be 4 percentage points lower, as well as the myth of job creation.

Whatever your problem is with the way Warren Buffett came by his numbers, you are doing the exact same massaging to come by yours, the only difference being that your efforts are in service of letting rich people keep even more of their money at the expense of the poor and middle class.

 

[Azrael]

All of these rebuttals also presume that Berkshire Hathaway actually pays the corporate tax each year. Which would make it a very unusual American company. Most corporations don't bother, which renders that particular argument against raising the capital gains rate moot.

http://www.nytimes.com/2008/08/13/business/13tax.html

http://www.reuters.com/article/2008/08/12/us-usa-taxes-corporations-idUSN1249465620080812

 

[FileNotFound]

If nothing else, Buffett is making a very good argument for simplifying the tax code.

 

[The Big Ragu]

Ragu --
On page 99 of the budget talks thread, you write, "the short of it is that in the United States, the wealthiest docile pays 45.1 percent of our taxes. That is effective tax receipts, not marginal tax rates." you go on to say that's a higher percentage than anywhere else. But you are relying solely on that portion listed under Federal Income Tax to make a highly misleading point because, as was pointed out by many others on that thread, FIT is hardly the whole of the tax picture. You ignored those replies. Now on this Buffett thread, he tells us what his Federal Income Tax was, and because it serves the purpose of your argument, you are arguing the other side of the coin and saying Federal Income Tax is not an adequate measure.

So why should anyone listen to a person who simultaneously argues that Federal Income Tax is proof that the rich pay more, and that Federal Income Tax is not proof that Warren Buffett pays less? If it is an accurate measure, it is accurate all the way around.

Also, I believe Buffett answered pretty well the questions about how his and his friends' taxes are reconciled, and that they are still lower because of carried interest, capital gains and such. I am especially glad that he took on the myth that people won't invest because their returns might be 4 percentage points lower, as well as the myth of job creation.

Whatever your problem is with the way Warren Buffett came by his numbers, you are doing the exact same massaging to come by yours, the only difference being that your efforts are in service of letting rich people keep even more of their money at the expense of the poor and middle class.

We were talking about FEDERAL PERSONAL INCOME TAX RATES in the aggregate on that thread. On this thread we are talking about what Warren Buffett claims his effective tax rate is. A has nothing to do with B.

You are muddling two threads, and two things that have nothing to do with each other, and not making a point that is understandable.

You are all over the place. What I posted about our Federal INCOME TAX rates on THAT OTHER THREAD was true. In the discussion about PERSONAL INCOME TAX RATES at the Federal level, I pointed out TRUTHFULLY, that we have the most progressive tax system in the world. That is the truth. That was the discussion on that thread.

On this thread, we are having a completely different discussion. if Warren Buffett wants to talk about his effective tax rate, as he did in that op ed piece, and claim he avoids paying personal income taxes by taking dividend distributions, and the result is that his effective tax rate is only 19 percent, that is just not true. To tell it HONESTLY, it has to be explained that before he takes those distributions, his money (as in, he is the largest shareholder in Berkshire, so Berkshire's money is HIS money as an owner) is taxed at the corporate tax rate. When you calculate it honestly, his effective tax rate is closer to 50 percent than 19 percent.

And the fact still remains, aside from what Warren Buffett's accountants do with his personal return, the wealthiest 10 percent of Americans in this country pay 45 percent of the Federal income tax in this country. That is based on tax receipts. Go to the IRS and check that number yourself. I have.

If you want to challenge any of that factually, you are welcome to. Nothing in there is opinion. It's just fact.

 

[LanceyHoward]

Ragu --
On page 99 of the budget talks thread, you write, "the short of it is that in the United States, the wealthiest docile pays 45.1 percent of our taxes. That is effective tax receipts, not marginal tax rates." you go on to say that's a higher percentage than anywhere else. But you are relying solely on that portion listed under Federal Income Tax to make a highly misleading point because, as was pointed out by many others on that thread, FIT is hardly the whole of the tax picture. You ignored those replies. Now on this Buffett thread, he tells us what his Federal Income Tax was, and because it serves the purpose of your argument, you are arguing the other side of the coin and saying Federal Income Tax is not an adequate measure.

So why should anyone listen to a person who simultaneously argues that Federal Income Tax is proof that the rich pay more, and that Federal Income Tax is not proof that Warren Buffett pays less? If it is an accurate measure, it is accurate all the way around.

Also, I believe Buffett answered pretty well the questions about how his and his friends' taxes are reconciled, and that they are still lower because of carried interest, capital gains and such. I am especially glad that he took on the myth that people won't invest because their returns might be 4 percentage points lower, as well as the myth of job creation.

Whatever your problem is with the way Warren Buffett came by his numbers, you are doing the exact same massaging to come by yours, the only difference being that your efforts are in service of letting rich people keep even more of their money at the expense of the poor and middle class.

We were talking about FEDERAL PERSONAL INCOME TAX RATES in the aggregate on that thread. On this thread we are talking about what Warren Buffett claims his effective tax rate is. A has nothing to do with B.

You are muddling two threads, and two things that have nothing to do with each other, and not making a point that is understandable.

You are all over the place. What I posted about our Federal INCOME TAX rates on THAT OTHER THREAD was true. In the discussion about PERSONAL INCOME TAX RATES at the Federal level, I pointed out TRUTHFULLY, that we have the most progressive tax system in the world. That is the truth. That was the discussion on that thread.

On this thread, we are having a completely different discussion. if Warren Buffett wants to talk about his effective tax rate, as he did in that op ed piece, and claim he avoids paying personal income taxes by taking dividend distributions, and the result is that his effective tax rate is only 19 percent, that is just not true. To tell it HONESTLY, it has to be explained that before he takes those distributions, his money (as in, he is the largest shareholder in Berkshire, so Berkshire's money is HIS money as an owner) is taxed at the corporate tax rate. When you calculate it honestly, his effective tax rate is closer to 50 percent than 19 percent.

And the fact still remains, aside from what Warren Buffett's accountants do with his personal return, the wealthiest 10 percent of Americans in this country pay 45 percent of the Federal income tax in this country. That is based on tax receipts. Go to the IRS and check that number yourself. I have.

If you want to challenge any of that factually, you are welcome to. Nothing in there is opinion. It's just fact.

Well, there is the fact that Berkshire has never paid a dividend. So I don't understand your references to Buffett paying himself dividend income.

 

[Azrael]

We have no idea how Buffett's taxes are prepared.

 

[The Big Ragu]

Ragu --
On page 99 of the budget talks thread, you write, "the short of it is that in the United States, the wealthiest docile pays 45.1 percent of our taxes. That is effective tax receipts, not marginal tax rates." you go on to say that's a higher percentage than anywhere else. But you are relying solely on that portion listed under Federal Income Tax to make a highly misleading point because, as was pointed out by many others on that thread, FIT is hardly the whole of the tax picture. You ignored those replies. Now on this Buffett thread, he tells us what his Federal Income Tax was, and because it serves the purpose of your argument, you are arguing the other side of the coin and saying Federal Income Tax is not an adequate measure.

So why should anyone listen to a person who simultaneously argues that Federal Income Tax is proof that the rich pay more, and that Federal Income Tax is not proof that Warren Buffett pays less? If it is an accurate measure, it is accurate all the way around.

Also, I believe Buffett answered pretty well the questions about how his and his friends' taxes are reconciled, and that they are still lower because of carried interest, capital gains and such. I am especially glad that he took on the myth that people won't invest because their returns might be 4 percentage points lower, as well as the myth of job creation.

Whatever your problem is with the way Warren Buffett came by his numbers, you are doing the exact same massaging to come by yours, the only difference being that your efforts are in service of letting rich people keep even more of their money at the expense of the poor and middle class.

We were talking about FEDERAL PERSONAL INCOME TAX RATES in the aggregate on that thread. On this thread we are talking about what Warren Buffett claims his effective tax rate is. A has nothing to do with B.

You are muddling two threads, and two things that have nothing to do with each other, and not making a point that is understandable.

You are all over the place. What I posted about our Federal INCOME TAX rates on THAT OTHER THREAD was true. In the discussion about PERSONAL INCOME TAX RATES at the Federal level, I pointed out TRUTHFULLY, that we have the most progressive tax system in the world. That is the truth. That was the discussion on that thread.

On this thread, we are having a completely different discussion. if Warren Buffett wants to talk about his effective tax rate, as he did in that op ed piece, and claim he avoids paying personal income taxes by taking dividend distributions, and the result is that his effective tax rate is only 19 percent, that is just not true. To tell it HONESTLY, it has to be explained that before he takes those distributions, his money (as in, he is the largest shareholder in Berkshire, so Berkshire's money is HIS money as an owner) is taxed at the corporate tax rate. When you calculate it honestly, his effective tax rate is closer to 50 percent than 19 percent.

And the fact still remains, aside from what Warren Buffett's accountants do with his personal return, the wealthiest 10 percent of Americans in this country pay 45 percent of the Federal income tax in this country. That is based on tax receipts. Go to the IRS and check that number yourself. I have.

If you want to challenge any of that factually, you are welcome to. Nothing in there is opinion. It's just fact.

Well, there is the fact that Berkshire has never paid a dividend. So I don't understand your references to Buffett paying himself dividend income.

Sorry. I really misspoke. His argument in that op ed is that as an investment manager, he gets a bargain "15 percent" tax rate, either by carrying interest or on his long-term cap gains (cap gains and dividend income often get lumped together) or by taking distributions (dividends). My point was that his effective tax rate is much higher than that 15 percent, or the 19 percent he claimed he pays, because that income is taxed twice (corporate income tax and THEN cap gains/dividend tax).

 

[YankeeFan]

We have no idea how Buffett's taxes are prepared.

If he wants to play such a public role in this "debate" and hold himself out as an example, he should probably release his tax returns.

 

[User 11148]

All of these rebuttals also presume that Berkshire Hathaway actually pays the corporate tax each year. Which would make it a very unusual American company. Most corporations don't bother, which renders that particular argument against raising the capital gains rate moot.

http://www.nytimes.com/2008/08/13/business/13tax.html

http://www.reuters.com/article/2008/08/12/us-usa-taxes-corporations-idUSN1249465620080812

A great big chunk of U.S. corporations (in the 60% to 70% range) are S corporations, whose profits are not subject to corporate income taxes. In those type firms, all profits flow directly to owners, where they are taxed at the prevailing individual rates. Lots of small businesses are set up this way -- a corporation with a handful of owners, each of whom gets a pro rata share of the company's net income. So long as the S-corporate form is a viable option (and it has been for a long time), the great bulk of U.S. corporations won't be paying corporate income taxes.

 

[poindexter]

There are also tons of C-corps not paying taxes either.

 

[poindexter]

Starbucks CEO tells other CEOs to stop donating to campaigns, and start creating jobs.

http://www.chicagotribune.com/business/breaking/chi-starbucks-chief-calls-on-ceos-to-stop-political-donations-create-jobs-20110815,0,7825357.story

 

[Mizzougrad96]

You guys can parse it all you want, but when the richest guy in the world pays the lowest tax rate in his office we have problems. Period.

I agree with you. My issue is what do they consider "Super Rich?" I know people who live in NYC or LA who make $250K a year, who have the same concerns that people who make 25 percent of that in other regions.

Put the tax on people who make over $5 million. I don't think people would have the same complaints...

 

[BrianGriffin]

We have no idea how Buffett's taxes are prepared.

If he wants to play such a public role in this "debate" and hold himself out as an example, he should probably release his tax returns.

I agree with this. I know there are a ton of loopholes that can be exploited to get to where he claims to be, but I can't sit here and speculate as to what those are or speculate that he's full of ****. But I also can't take him at his word.

I've just glanced through this thread and seen a lot about corporate taxes. Would money that is taxed as corporate tax technically be "his" money to be taxed? Again, I've just given this a cursory glance.

Ragu --
On page 99 of the budget talks thread, you write, "the short of it is that in the United States, the wealthiest docile pays 45.1 percent of our taxes. That is effective tax receipts, not marginal tax rates." you go on to say that's a higher percentage than anywhere else. But you are relying solely on that portion listed under Federal Income Tax to make a highly misleading point because, as was pointed out by many others on that thread, FIT is hardly the whole of the tax picture. You ignored those replies. Now on this Buffett thread, he tells us what his Federal Income Tax was, and because it serves the purpose of your argument, you are arguing the other side of the coin and saying Federal Income Tax is not an adequate measure.

So why should anyone listen to a person who simultaneously argues that Federal Income Tax is proof that the rich pay more, and that Federal Income Tax is not proof that Warren Buffett pays less? If it is an accurate measure, it is accurate all the way around.

Also, I believe Buffett answered pretty well the questions about how his and his friends' taxes are reconciled, and that they are still lower because of carried interest, capital gains and such. I am especially glad that he took on the myth that people won't invest because their returns might be 4 percentage points lower, as well as the myth of job creation.

Whatever your problem is with the way Warren Buffett came by his numbers, you are doing the exact same massaging to come by yours, the only difference being that your efforts are in service of letting rich people keep even more of their money at the expense of the poor and middle class.

We were talking about FEDERAL PERSONAL INCOME TAX RATES in the aggregate on that thread. On this thread we are talking about what Warren Buffett claims his effective tax rate is. A has nothing to do with B.

You are muddling two threads, and two things that have nothing to do with each other, and not making a point that is understandable.

You are all over the place. What I posted about our Federal INCOME TAX rates on THAT OTHER THREAD was true. In the discussion about PERSONAL INCOME TAX RATES at the Federal level, I pointed out TRUTHFULLY, that we have the most progressive tax system in the world. That is the truth. That was the discussion on that thread.

On this thread, we are having a completely different discussion. if Warren Buffett wants to talk about his effective tax rate, as he did in that op ed piece, and claim he avoids paying personal income taxes by taking dividend distributions, and the result is that his effective tax rate is only 19 percent, that is just not true. To tell it HONESTLY, it has to be explained that before he takes those distributions, his money (as in, he is the largest shareholder in Berkshire, so Berkshire's money is HIS money as an owner) is taxed at the corporate tax rate. When you calculate it honestly, his effective tax rate is closer to 50 percent than 19 percent.

And the fact still remains, aside from what Warren Buffett's accountants do with his personal return, the wealthiest 10 percent of Americans in this country pay 45 percent of the Federal income tax in this country. That is based on tax receipts. Go to the IRS and check that number yourself. I have.

If you want to challenge any of that factually, you are welcome to. Nothing in there is opinion. It's just fact.

Big red flag here Ragu. On the other thread YOU were talking strictly income tax while others were not. Here you are talking big tax picture while others are not.

It would seem that convenience would be the best reason to do that. The progressiveness of the income tax as discussed in the other thread is only appropriately discussed in the context of the entire tax code so to ignore the rest of the tax code makes little sense.

 

[The Big Ragu]

Brian. Period. We have the most progressive tax system in the world. That was the point being discussed on the other thread. It is still relevant on this thread.

EDIT: And I am just having the discussion appropriate to each thread. We weren't discussing effective tax rates or corporate tax rates on the other thread. The become relevant when Warren Buffett says what his effective tax rate is, because the bulk of what he has earned that goes to the government gets taken before he takes distributions or pays taxes on long-term gains. If he doesn't include the effect of that taxation on his income, he is not giving a true effective tax rate.

 

[dixiehack]

Trouble is that others were discussing effective overall rates on the other thread and you wouldn't address it.