Buffett paid 17% ? Shouldn't we all pay 10% ?

[Wiregrass Willie]

A recent thread brought out the fact that Warren Buffett only paid 17% of his $46 million income into taxes. The fact that Buffett is worth $45 BILLION and paid NO taxes on the $4 or $5 billion increase in his fortune shows just how lax and unfair our tax system really is.

It seems that most American's attitude toward paying taxes is similar to how many religious people feel about paying tithes.

There are some Protestant sects that believe in tithing and few of their members would argue that ten percent is too much to give to the Lord in thanks for the bounty He has allowed them to receive, The problem arises in defining just what is "tithable".

Let us listen in on the conversations that two Southern Baptists are having with the Lord. The first one -- Brother Bill is a Democrat. The second -- Brother George is a Republican. Both men have farms and each started the year with a herd of 100 cattle. Each cow is valued at $1,000 and each man saw his herd increase by 50 calves last year.

Each man is explaining to the Lord just how he arrived at the figure he is paying in tithes:

Brother Bill: "Lord, in gratitude for your giving me 50 cows last year I am writing a check to the church for $5,000. That is ten percent of the $50,000 which your blessing has increased my herd".

Brother George: "Lord, I am still figuring what I owe your church this year. As you know, my cows produced 50 calves last year -- each of which is worth $1,000 each. However, as you also well know, I only sold one cow. And that scrawny feller didn't bring but $850. By the time I figure in feed and other expenses, I doubt if I cleared over $100 on her. So here it is, Lord -- my check for $10. That's ten percent of $100. If that's not acceptable Lord, you just send it back to me. "

If we all admit that we would have had little or no "increase" last year were it not for the protection our country provides us -- should we not all be happy to pay for that protection ? And should that gratitude apply not only to secretaries but to their stock swindling bosses ?

[ayeshahaqqiqa]

1. It isn't only Christians who are supposed to donate to charity

Charitable giving is one of the Five Pillars of Islam. But the amount is less than 10%-and the Prophet said even those who are without funds could give to others-a smile, a helping hand, even gratitude for getting things from others. But note here that the giving is NOT to a church (or mosque) but to charities or needy people directly.

[slackmaster]

2. I paid about 16% last year

I think I could manage 17% without sacrificing too much.

[LiberalFighter]

8. 17% of your total gross income or taxable income?

For singles and filing separately the first $5150 is not taxed

For married the first $10300 is not taxed

Head of households the first $7550 is not taxed

In addition for each exemption claimed there is another $3300 that is not taxed

[slackmaster]

15. 16% of Adjustable Gross Income

That's how the figure is usually stated for individuals.

I filed as Single (I am divorced). My biggest deductions are mortgage interest and state income tax.

[LiberalFighter]

21. Did you have a refund?

If you did or didn't were the figures used the taxes owed and the adjusted gross income?


As I figured for myself... 71% of my AGI was taxable

With exemptions and deductions I paid 8.95% on AGI. I definitely would not want to pay 17% rate if we went to a flat tax.

[slackmaster]

23. My federal tax for the year was about 16% of my federal AGI for the year

Not really relevant, but I paid a small amount out of pocket to the IRS on the due date. My withholding was sufficient to avoid any penalty. I got a small refund from my state.

[Kazak]

3. I wish they'd tax me to death!

If it translated into better social services, it'd be well worth every penny in my view... :shrug:

[slackmaster]

16. If you were dead you wouldn't be able to enjoy the Great Society

:D

I believe Form 1040 includes a provision to make a voluntary contribution to reduce the national debt.

[Canuckistanian]

20. The money's there for social services

If they cut back on the excessive military and intelligence spending, there'd be social services for all, without the need for higher taxation rates.

Some DUer had a piechart graph in his/her signature line that had a giant slice labeled "X". That "X" represented all the classified military spending that is NOT disclosed in any Pentagon budget.

The "X" was just as large or larger than all social services provided by the Federal Budget, IIRC.

[Telly Savalas]

4. A 10% tax rate would entail eliminating about two thirds of government services.

Anybody offering tax cuts is being irresponsible to leave out the other part of the equation: which government services to axe.

I don't suffer well Small Government Conservatives who celebrate long lines at the DMV and no social safety net.

[salin]

6. not to mention

only private police, private new roads (with all public roads going to potholes), private schools (hello rising illiteracy for the poor), unregulated utilities, unregulated pollutants into air and water, etc. etc. etc.

[Jeff In Milwaukee]

10. Not necessarily...

Most "flat tax" schemes try to tax only earned income. Now if you taxed ALL income at ten percent, and closed ALL tax loopholes -- including those that let multi-billion dollar corporations pay no taxes at all -- a ten percent rate might be sufficient. My grasp of macro-economics is not good enough to say for sure, but I think we'd be within shouting distance.

[Wiregrass Willie]

14. Tax all increase and not just income

I suppose the point I'm trying to make is this:

The word "income" as defined by the IRS needs to be re-worked.

For example -- for arguments sake -- let's assume that Buffett's fortune increased last year from $40 billion to $44 billion.

On Buffett's $46 million "income" he only paid $7,820,000. ($46 mil * 17%) If we taxed him 10% of his "increase" ($4 Bill* 10%) he would have paid $400,000,000.

Take an American family with the mean income of $46,000 for last year. Let's deduct $20,000 as being non taxable because no family can live on less than that.

Let's also say that the family's $200,000 house increased in value by 2% or $4,000. And that their stock account went up $5,000.

They would now have an "increase" of $26,000 + $4,000 + $5,000. Under a flat tax on Increase, (rather than income) our family has a taxable "increase" of $35,000 for last year.

If they are taxed at a flat rate of 10%, they would pay $3,500 in Federal taxes. Please notice that this is only $50 more than what they paid in SS payroll taxes under the present scheme. ($3,450) Social Security would be paid out of general revenue so working class people would no longer have to support it with payroll deductions.

All we are doing is shifting the burden of government to those who benefit most from government -- ie -- the rich.

[Captain Hilts]

5. Taxes on investment income have been cut dramatically. Taxes on salaries have gone up.

THIS is why the gap between rich and poor is getting wider.

And things like the home mortgage tax break are welfare for the wealthier. No other country has something like this deduction. Not even Canada.

[KharmaTrain]

7. Bad Money...Bad Bad Money...

First of all, if Buffett earned any interest on his vast holdings, you better believe they were taxed. Now, I would supposed Buffett hires a top-knotch book who knows every IRS rule and loophole and is able to shelter some of that money away or defer taxes, but trust me, he sends the IRS a very nice check every year...more like every quarter.

That said...I've expressed this before that I pay far less in taxes on what I earn today than I did years ago when I was "starting out". The days when there was too much month left at the end of the money. Renting with no real assets to my name and zero savings, but I sure earned enough in that job that April 15th was a major struggle...no matter how well we calculated or put money away, the tax bill was always a killer. Today, I earn far more than those days and as I've grown, the tax burden has decreased...even though I pay more in actual dollars than I did in the past. It's a catch 22.

At one time I was a proponent to both the flat tax and the national sales tax ideas, but there's a more systemic problem...it's not the taxing, but how the taxing is done. I would have no problem paying more in taxes (and I will in 2011 when the current tax cuts sunset) and see the cuts for those making under 100k a year either remaining at the current level or reduced.

So much of the important services I use these days I pay for in my local taxes...while the federal went down, the state and local soared...adding to the woes of those stuck with the sub-prime mortgages and now a problem for the communities as people move away or give up homeownership and there's less tax money to pay for the schools or picking up the garbage.

[goddess40]

9. We should all pay the same rate

Double the poverty rate those under that don't pay income tax - they still pay sales tax, license fee... so they aren't out of paying all taxes. After that it should be a set rate on every dollar taken in. A similar situation could be set up for business. Most loop holes if not all could be eliminated. Maybe this is too simplistic but it does seem fairer and much easier.

I also think companies that have out source should have to pay big time rates to bring their goods back in to the US to help fund retraining programs and welfare for those they took jobs from.

[Jeff In Milwaukee]

11. Payroll taxes on out-sourced jobs...

Sending 5,000 jobs to India? Sure. But you're still going to pay employment taxes on those jobs to pay for the pain and suffering you're causing to the American Economy.

[Clark2008]

12. So, you're TRYING to stick the Middle Class, then, because

that's what a same-rate tax would do.

The middle class are too rich to afford real services, but too poor to actually pay for them. I know my mother is going through this crap right now. My step-father just died after three days on life support with no health insurance. Why didn't he have any? Because his employer didn't provide it, they were to "wealthy" to receive assistance but too poor to afford private health insurance.

Even if you doubled the poverty rate, you're still soaking the middle class. Do you know what the poverty rate is? For a family of four, it's those earning less than $20,000 - do you really think a family of four living on $40,000 can afford private health insurance or afford to lose that $4,000 a year in taxes?

Try quadrupling the poverty rate and you might have a case.

P.S. I also lived through it. I made a whopping $20,000 a year as a single Mom and was not allowed to get ANY social services for my child. I wasn't getting child support from my deadbeat ex-husband (he'd throw me a $200 bone every so often to stay out of jail, but they still have never gotten the $10,000 in back child support he owes my son) and I couldn't afford health insurance even WITH my company. I may not have been destitute, but one major illness would have left me that way.

[WinkyDink]

26. Yes, because taking $10 from a man making only $100 is the equivalent of taking

$10,000 from a man making $100,000.

EXCEPT NOT in real spending ability of what's left.

[Solo_in_MD]

13. I blame mostly well meaning pols for the screwed up tax system we suffer under

The current tax code sucks serious ass. Way way way to much tinkering for worthy causes, and not all of it done by repukes. By attempting to use taxes to incentivize certain behaviors (a major character flaw in many Dems) over the years we now have a major mess. Those saying just tax the stuff the rich buy are part of the problem. Remember the expensive yacht tax? Lots of boat builders (and the jobs they supported) went out of business in the US. However, the rich just registered their yachts out of the country in the name of their companies. No increase taxes and more unemployment. NOt a good thing.

Another key part is that most Americans have little faith in tax system equity. AMT and other items are forcing more people to look at tax dodges. The IRS can't stop much of it. Less taxes collected and more people deciding its alright to screw the system. Not a good thing.

We need a simple system that allows people to know what they are going to pay ahead of time. It needs to make compliance easy and is easily enforceable. No marriage penalty, strict limitation on deductions or offsets and hard limits on depreciation. It also needs to be paid automated as part of basic transactions, which is why it it tending to either an income or transaction based tax.

Such a move will cause a revolt among certain groups and lots of lawsuits. It will threaten many lawyers and accountants not to mention the IRS. There will be all sorts of FUDs and claims of unfairness, including the "its not progressive enough". I don't really care. We need to knock the current system on its ass and start over.

I tend to like a tiered system based on earned and unearned income with a floor to protect the working poor coupled with a VAT. Simple, easy to administer and enforce. Its a damn site better than what we have now.

[Stephanie]

17. You know Hillary will make sure he never does...

http://www.nydailynews.com/news/wn_report/2007/06/27/2007-06-27_buffet_of_praise_cash_for_hil_at_buffett.html?ref=rss

Buffet of praise, cash for Hil at Buffett dinner
Wednesday, June 27th 2007, 4:00 AM

Billionaire Warren Buffett called Hillary Clinton "the person to run this country" at a private dinner in Manhattan last night, according to one attendee.

"Hillary Rodham Clinton has the same goals that I do," said Buffett, according to New School Dean Fred Hochberg. "She is the person for the White House."

Asked how the markets would fare under her administration, Buffett said, "Ten years out, they'll be far more up with Hillary than any of the Republicans running now," according to Hochberg.

Buffett was more reserved during a question-and-answer session with Clinton that was open to the press.

The event, which aides said brought in about $1 million for Democratic frontrunner Clinton, had a ticket price of $4,600 for the dinner and $1,000 for a cocktail reception, both held prior to the exchange with Clinton and Buffett. Young professionals got a break with $500 tickets.

[Horse with no Name]

18. I don't think my taxes should be lowered

I think their taxes should be raised.
We are not being good stewards for our children. Saddling them with astronomical debt and a decaying infrastructure.
We should be ashamed.

[Big Pappa]

24. I think

I can be a better steward for my children by having more of my money to give them. Why should I want to trust the government(Bush) with that.

[Horse with no Name]

27. So if everyone does for their own--who takes care of the lesser of us?

I think you took a right turn somewhere.

[Big Pappa]

28. No turn right

but how much does the government need. If they cleaned up their waste I am sure there would be plenty to go around. And as I said before, do trust someone like Bush to be in charge of your money? I think I can do a much better job.

[mainer]

19. How much is capital gains?

Taxed at a lower rate.

[leftofthedial]

22. Buffet should pay 90%

[WinkyDink]

25. You want to reduce Buffett's taxes even more?