Will Buffett profit from the Buffett Rule?

Forbes Magazine. Reasonably reputable, though conservative.

I note that the author is pretty well credentialed.

Quite frightening that the entire thing could be orchestrated to profit Warren Buffett.

Forbes article on Obama's understanding of taxation

I've been wondering why Mr. Buffett would be so OK with policies that would mean such a big increase to his own tax liabilities.

Discuss...

I still get a chuckle out of people who believe the Buffet rule is anything more than a drop in the bucket.

He claims that he is fine with rich folk like him paying tax at a higher rate. It is entirely possible that he's not lying...but I'll believe it when I see it. And Doc- you are right.

I'm expecting another influx of Ontarians soon- their new "compromise" budget includes a 2% surtax on income over $500k. Bring your money west, my friends. We oil producing, world destroying, country financing people welcome you.

Pumpkin. Yeah. It's a little chilly in Denver tonight. Pumpkin pie sounds good.

Wish I had realized that before I wrote up a long ass, waste of time post only to delete it all. Sometimes I'm a little slow on the uptake.

I think the article is perfectly clear that the Buffett Rule is a drop in the bucket.

The point I was picking up on is that Berkshire Hathaway is one of the largest tax shelter businesses in the world. In other words, more taxes for the wealthy will mean more people running to Mr. Buffett to buy his products. Sure he wants to "pay as much as his secretary", especially if it means HUGE profits structuring tax shelters for wealthy people that want to avoid exactly the kind of multiple taxation that the rule brings.

"Raise taxes on the wealthy, so they will buy my products to shelter their income so they don't have to pay higher taxes".

Wow.

Lols at people that don't understand the difference between the income tax and capital gains tax.

The feds have raised the capital gains tax three times since the 60s, research what happened to those revenues.

I would also ask the more liberal among us to research the percentage of taxes paid by the rich in out country vs those idealistic socialist utopias.

Well, the functional difference between having 30 billion dollars in the bank or 25 billion is pretty small. Either is a ludicrous amount to actually spend, so I can understand if Buffett doesn't really care one way or the other how much he personally pays. From everything I hear he doesn't really spend it anyway.

This article starts out by calling the president a "Community Organizer" which the author apparently thinks is some sort of gotcha pejorative. Never did understand that one. He then continues with a bunch of half-truths about taxes and I didn't go much further. Saying that investment incomes are triple-taxed because corporate profits are taxed, and dividend income, and capital gains is deliberately misleading. That's like me saying I got fifty-tuple taxed because they took taxes out of all my paychecks instead of just one of them.

For a tax system to be equitable, the government should be taking its cut whenever value is created. The value created in a business can't be quantified all in one type of tax. The portion of a business' profits that are distributed as dividends are actually a COST to that company that reduces their taxable corporate profits by whatever amount they spent paying the dividends, so if you didn't tax dividend income, that portion of value created by the business would go untaxed. Not double dipping, not at all. Capital gains taxes are a different place that the value created by a business is taxed. If an investment goes up in value over time, that is actual value created by the operation of the company, but it can't be quantified until the capital gain is realized. If you are trying to equitably tax all of the actual value that a company creates, you have to tax all three of these things. Maybe this guy does understand taxation better than the president, but he's apparently hoping his readers don't.

z31maniac wrote: I would also ask the more liberal among us to research the percentage of taxes paid by the rich in out country vs those idealistic socialist utopias.

Don't bring facts into a political discussion, it takes all the fun out of it.

Definitely a very biased article with no real citations to back up anything he said. It's pretty sad you take this seriously.

He talks about how building schools/science labs is only a fraction of the 47 trillion dollar budget so Obama shouldn't make such a big deal about it. At the same time he is making a big deal about how we SHOULDN'T pass the Buffet rule because it is only a negligible amount of the future budget...so why bother?

Trans_Maro wrote:

z31maniac wrote: I would also ask the more liberal among us to research the percentage of taxes paid by the rich in out country vs those idealistic socialist utopias.

Don't bring facts into a political discussion, it takes all the fun out of it.

Yes, because that is a fact if I've ever seen one...

In reply to Josh:

It depends on the type of corporation.

S Corporations are not subject to double taxation. They distribute the dividends before corporate taxes, as you described.

C Corporations, however, ARE subject to double taxation. They distribute the dividends after corporate taxes have been paid. Large corporations are C Corps.

The article is discussing the income sources of wealthy people. It is assuming the business is owned by wealthy people, and looking at THEIR income, not the business' income.

The Buffett Rule does not propose to raise taxes on businesses. It proposes raising taxes on wealthy.

So, as owner of the business (C Corp), the corporate taxes are a hit. Taxes on the dividends are a second hit on the same money.

Joshua wrote: It's pretty sad you take this seriously.

Forbes holdings have 27 million unique visitors to their websites per month.

Looks like there are a lot of people who take it pretty seriously.

Josh:

you are correct, folks who call President Obama a "community organizer" do so as a sort of code word/phrase meaning: this guy who never really worked in his life and therefore (also) has no real managerial experience.

I have to wonder if Mr. Buffett is saying he thinks the wealthy should be taxed at the same rate as "the average taxpayer" because he feels at this time in his life it wouldn't hurt to "give back" to his country....or because he feels "...what the heck, I won't be around all that much longer, I'd rather have the country feel good about me before I go, rather than have a few rich people feel good about me for keeping my mouth shut on taxes".

z31maniac wrote: I would also ask the more liberal among us to research the percentage of taxes paid by the rich in out country vs those idealistic socialist utopias.

Okay, now what?

pres589 wrote:

z31maniac wrote: I would also ask the more liberal among us to research the percentage of taxes paid by the rich in out country vs those idealistic socialist utopias.

Okay, now what?

Because I'm tired of hearing how "the rich" don't pay fair their fair share, when in comparison to more socialist European countries the ratio of tax income they are responsible for is notably higher here, than in those European countries.

In other words, in most of those European countries, the lower income levels pay higher portions of the taxes than here.

The top 1% earn ~18% of the income and pay nearly 40% of the taxes.

It's all a moot point really, even if the gov't took 100% of the income of people who make more than $250k a year, it wouldn't cover the current spending levels.

I agree!

mguar wrote: Taxes on earning a million dollars plus per year should be more than the taxes earned on $12,000. per year..

Statements like this drive me bonkers.

Seriously? Where in the world does info like this come from?

Got any links, calculations, basis, etc. for such an outlandish statement?

The 2012 income tax rate on $12,000 is 15% for single filers, 10% for jointly filing or head of household.

The MOST it could be is $1800.

The 2012 income tax rate on $1 million in income is 35% if earned as income, 15% if earned as capital gains.

The LEAST it could be is $150,000.

If calculated as a percentage, the rate on $1 million can never be less than the maximum 15% required for $12K in earnings.

I call BS.

And we all know there are no loop holes & sheltering devices to lower one's taxes paid here in America, right? Right guys?

mguar wrote: All I can say is I want to pay a lot more taxes..... That would mean I earned a whole bunch more money.. Taxes on earning a million dollars plus per year should be more than the taxes earned on $12,000. per year.. In England if you were successful and paid taxes rather than evade taxes the queen would Knight you or give you some other reward.. Maybe that's what we need?

i used to think like that- when i was 20 years old making $6 and hour.. 7 years later, i was making $18.25 and hour and looking back at how much more expendable income i had when i was making that $6 an hour because i didn't have bills to pay and the income taxes being taken out of my check every week was more than the total amount i was taking home when i was just starting out.

so if you want to pay more taxes, then by all means go for it.. don't take all of your deductions- not even the standard deduction- and don't hide any of your money in tax shelters like 401k plans. hell, pay them more than your return says you have to if it makes you feel better. but i don't want to pay more taxes- i'd rather keep the money i work hard to earn and use it to buy stuff that makes me happy and spread the money around locally by doing so.

pres589 wrote: And we all know there are no loop holes & sheltering devices to lower one's taxes paid here in America, right? Right guys?

Doesn't change the rate.

Doesn't change the fact that people who make $1 million pay a lot more taxes (even with shelters and loopholes) than people who earn $12K.

Show me a legal method that is otherwise.

It's not true.

Buffet's Berkshire/Hathaway hasn't paid taxes since 04.

Most of the people who whine and cry about the rich not paying enough don't realize that many of these rich people all ready paid taxes twice on that money. First when they made it as income and again when taken as interest on an investment.

In reply to ThePhranc:

You pay capital gains on the profit from an investment. Trying to say that's paying taxes on the same money twice is a lie. It's actually worse but I'll try to keep this friendly.

In reply to SVreX:

I wasn't backing up the $12k thing.

Actually, now I am.

Think about the other taxes that go into living. Sales tax for instance. Think of the percentage of income a person making $12k pays out in sales tax vs. a millionaire. Every situation is different but to pretend this is a black and white issue while only talking about income taxes and nothing else is disingenuous.

In reply to pres589: I'll quote myself because you may have missed it since you were being so nice.

"First when they made it as income and again when taken as interest on an investment. "

Thats twice on the same money, with out that money there is no interest.