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Warren Buffett: “Stop Coddling the Super-Rich” (2011)

86 points by porsupah 10y ago

bwoj 10y ago
Of course the super-rich are going to get coddled. If you are in a position of influence they can throw $100,000 to a million dollars your way to make sure you enact the policies they want. This can be in the form of consulting gigs or speaking fees or what have you. Point is, the money is literally chump change to them.
- sharemywin 10y ago
  a lot of the loops holes are for the "jobs" they are going to create.
parsnips 10y ago
How about "stop soaking the working class and spending like drunk sailors?"
chollida1 10y ago
> 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 I've been in finance long enough to believe that this is true. The problem is that the rich have the ability to take their income in alot of different ways. Tax income more, they'll take it as dividends. Tax dividends more, they'll take it as capital gains. Tax capital gains, they won't realize their capital gains until they can offset them with realized losses or they'll just get bank loans again't their stock holdings. Tax assets on death and they'll pass them o n in trusts. Some will move money off shore if they think they can get better returns that way. The problem is that no tax code can close all loop holes because you just can't foresee the creative ways people will out maneuver the tax code. Who would have thought 25 years ago that companies would buy other companies in different countries, not to acquire their products or markets, but to acquire their headquarters address to lower the tax paid in the US.
- cmdrfred 10y ago
  New tax code: Every time money changes hands it is taxed at X percent. Admittedly it is pretty simple example but my point is the loopholes are not on accident, it's by design.
  - guard-of-terra 10y ago
    Will HFT be affected? Such people don't have to work in "money", they can pass shares or bonds or IOUs. Edit: fix stupidity
    - cmdrfred 10y ago
      Is HFT a net benefit to the average American? Does the average American even care? It seems to me that HFT prevents the average American from having any participation in the process. Find a new business model. Bonds have a cash value, tax that. If they start only using IOU's hit them for unauthorized creation of currency under the National Bank Act of 1863 and the Legal Tender Act of 1862.
  - dragontamer 10y ago
    Yeah, except certain changing of money is considered unfair (ie: do you really want to be taxed if you give your friend a $50 in cash as a gift?), while other exchanging of money is considered good for the economy (ie: tax breaks on education-related expenses). The loopholes aren't there by design, but the complications of the taxes are in there by design. We wish to encourage education and business (both education and business expenses are deductable). We want to encourage renewable energy (solar taxes, net metering, etc. etc.). We want to encourage home ownership (mortgage deductible), charitable giving (church donation deductibles, etc. etc.). Taxes aren't complicated if you just fill out a 1040EZ. Taxes become complicated when you want to make sure you got all of the money back from deductibles and credits.
  - JonFish85 10y ago
    Isn't that the way it already is, for the most part? Granted there are some things that aren't taxed this way (land & food come to mind), but for the most part, as money flows through the system, it is taxed. Buy a laptop for $1,000: * That comes out of money you've been paid, presumably, so in 43 US states, you've paid income tax already on it, and your company has paid payroll taxes. * 45 US states charge sales tax, so you pay sales tax. * If you paid with a credit card, a cut of your transaction goes to the credit card company, who pays taxes on their profits from that transaction. * The money is transferred to a bank account, and that bank is taxed on the profit that they make from that deposit. * The laptop company pays taxes on the profits that they make from that laptop (depending on where they're located, but if it was sold in the USA, they pay taxes). * Any shipping company involved moving that merchandise around paid taxes on the profits they made. * The company that brought the laptop into the USA pays the import taxes/tariffs associated with it. Just at a glance, every time something changed hands, it is taxed. And this doesn't get into things like excise tax, which are even more fun.
c3534l 10y ago
Lets not forget the rebuttal, too. http://www.forbes.com/sites/paulroderickgregory/2012/01/25/warren-buffetts-secretary-likely-makes-between-200000-and-500000year/#3e547f7b18b8 http://www.forbes.com/sites/paulroderickgregory/2012/01/25/w... Edit: maybe that source isn't as good as I remember, but other sources seem suspicious over the factual accuracy of Buffet's claims. http://www.politifact.com/truth-o-meter/article/2011/sep/21/does-secretary-pay-higher-taxes-millionaire/ http://www.politifact.com/truth-o-meter/article/2011/sep/21/... http://www.factcheck.org/2011/10/shes-no-buffetts-secretary/ http://www.factcheck.org/2011/10/shes-no-buffetts-secretary/
- throwawaywtf 10y ago
  and how exactly is that ad-hominem attack a rebuttal?
- kbenson 10y ago
  Buffet himself declares that he pays a 17.4 percent rate on taxable income. His staff, like Bosanek, pay an average of 34 percent. The IRS publishes detailed tax tables by income level. The 2009 results show that the average taxpayer paying Buffet’s 17.4 rate earns an adjusted gross income between $100,000 and $200,000. But an average taxpayer in Bosaneck’s rate (after downward adjustment for payroll taxes) earns an adjusted gross income of $200,000 to $500,000. Therefore Buffett must pay Debbie Bosanke a salary well above two hundred thousand. Is it me, or does that not make any sense? The average tax payer of that percentage makes that amount, therefore she must make that amount? Am I supposed to believe this man doesn't know how averages work? Because the alternative is he's being very disingenuous.
  - djrogers 10y ago
    The way the progressive tax rates work in the US, you truly have to get to a pretty high level of adjusted gross income to average 34%. In 2011 the highest tax bracket was 35%, so you couldn't even pay 34% until you earned $379,151 or more. Given that you'd only pay 35% tax on the money earned above $379,151, so it'd take a pretty darned high income to bring your total tax rate up to 34%.
known 10y ago
Not possible due to https://en.wikipedia.org/wiki/Stockholm_syndrome https://en.wikipedia.org/wiki/Stockholm_syndrome
gadders 10y ago
Good counter-argument at the time from Michael Arrington from TechCrunch: http://techcrunch.com/2011/08/15/screw-the-rich-heres-how/ http://techcrunch.com/2011/08/15/screw-the-rich-heres-how/ "Buffett calls for an increase in all types of taxes – income, dividend and capital gains. That would be a nice triple layer of protection against any newcomers, and still preserve all – 100% – of the $47 billion he’s accumulated until now."
- bprieto 10y ago
  Arrington nails it. If Buffett was really willing to pay more taxes, he could just stop using loopholes to avoid paying hundreds of millions every year. Or stop litigating with the IRS to get to pay less. He doesn't want "the rich" to pay more taxes. He wants other (less) rich people to pay more taxes.
- deleted 10y ago
  [deleted]
- kamaal 10y ago
  Simply put, absolutely the first thing one does after getting rich is preventing others from getting rich. Rich people are not comfortable with the fact that it should easy for others to get rich, how useful would their current position be, if it were?
wturner 10y ago
In the United States there are about 500 billionaires. There are also 150 million U.S. gun owners in a declining middle class where dead end temp work is a lifestyle for a large part of the population and basic social well-being and security is an "issue". I can tell you from first hand experience, when you are in that state ... you are not in your right mind. If I was one of those 500 people I would be very paranoid.
- kbenson 10y ago
  My understanding is that there's a few uber-rich that push for reform specifically because of this (or at least they use this argument on their less agreeable brethren). Being rich is only useful if there's enough stability to allow that fortune to be used.
- deleted 10y ago
  [deleted]
- mikeash 10y ago
  That's an interesting perspective on the fact that gun rights and lower taxes for the wealthy are currently part of the same political movement.
beyondcompute 10y ago
Are there similar statements by any of Russian oligarchs?
agounaris 10y ago
on taxation, I always believe that "you" should make the tax reasonable enough to render its avoidance obsolete. Close all loopholes with flat laws and just force them. On the other hand there will always be some corrupted official to create another loophole in the process...
- antisthenes 10y ago
  Unfortunately, this always runs into the problem of the elites influencing politics and policy, so all the loopholes will never be closed and there never will be 100% effective enforcement (as the Panama papers shed some light on). I bet there were people in the 1850s saying the exact same thing.
_yosefk 10y ago
How about not bailing out private enterprises with public money? That'd cost Buffet a few tens of billions.
- tim333 10y ago
  They could of done and allowed the banking system to collapse and cost all Americans billions instead of making a profit for the public on the bailout. That said I can see an argument for what they did in Norway where if the government has to bail out a bank, they get to own it.
loki49152 10y ago
Warren, shut your hypocrite mouth until you start writing checks to the US Treasury that cover the gap between whatever you're taxed and whatever you think you should be taxed. Even then, STFU. You have no right to dispose of the lives of others.

86 points by porsupah 10y ago

bwoj 10y ago

Of course the super-rich are going to get coddled. If you are in a position of influence they can throw $100,000 to a million dollars your way to make sure you enact the policies they want. This can be in the form of consulting gigs or speaking fees or what have you. Point is, the money is literally chump change to them.

sharemywin 10y ago
a lot of the loops holes are for the "jobs" they are going to create.

parsnips 10y ago

How about "stop soaking the working class and spending like drunk sailors?"

chollida1 10y ago

> 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 I've been in finance long enough to believe that this is true. The problem is that the rich have the ability to take their income in alot of different ways. Tax income more, they'll take it as dividends. Tax dividends more, they'll take it as capital gains. Tax capital gains, they won't realize their capital gains until they can offset them with realized losses or they'll just get bank loans again't their stock holdings. Tax assets on death and they'll pass them o n in trusts. Some will move money off shore if they think they can get better returns that way. The problem is that no tax code can close all loop holes because you just can't foresee the creative ways people will out maneuver the tax code. Who would have thought 25 years ago that companies would buy other companies in different countries, not to acquire their products or markets, but to acquire their headquarters address to lower the tax paid in the US.

cmdrfred 10y ago
New tax code: Every time money changes hands it is taxed at X percent. Admittedly it is pretty simple example but my point is the loopholes are not on accident, it's by design.
- guard-of-terra 10y ago
  Will HFT be affected? Such people don't have to work in "money", they can pass shares or bonds or IOUs. Edit: fix stupidity
  - cmdrfred 10y ago
    Is HFT a net benefit to the average American? Does the average American even care? It seems to me that HFT prevents the average American from having any participation in the process. Find a new business model. Bonds have a cash value, tax that. If they start only using IOU's hit them for unauthorized creation of currency under the National Bank Act of 1863 and the Legal Tender Act of 1862.
- dragontamer 10y ago
  Yeah, except certain changing of money is considered unfair (ie: do you really want to be taxed if you give your friend a $50 in cash as a gift?), while other exchanging of money is considered good for the economy (ie: tax breaks on education-related expenses). The loopholes aren't there by design, but the complications of the taxes are in there by design. We wish to encourage education and business (both education and business expenses are deductable). We want to encourage renewable energy (solar taxes, net metering, etc. etc.). We want to encourage home ownership (mortgage deductible), charitable giving (church donation deductibles, etc. etc.). Taxes aren't complicated if you just fill out a 1040EZ. Taxes become complicated when you want to make sure you got all of the money back from deductibles and credits.
- JonFish85 10y ago
  Isn't that the way it already is, for the most part? Granted there are some things that aren't taxed this way (land & food come to mind), but for the most part, as money flows through the system, it is taxed. Buy a laptop for $1,000: * That comes out of money you've been paid, presumably, so in 43 US states, you've paid income tax already on it, and your company has paid payroll taxes. * 45 US states charge sales tax, so you pay sales tax. * If you paid with a credit card, a cut of your transaction goes to the credit card company, who pays taxes on their profits from that transaction. * The money is transferred to a bank account, and that bank is taxed on the profit that they make from that deposit. * The laptop company pays taxes on the profits that they make from that laptop (depending on where they're located, but if it was sold in the USA, they pay taxes). * Any shipping company involved moving that merchandise around paid taxes on the profits they made. * The company that brought the laptop into the USA pays the import taxes/tariffs associated with it. Just at a glance, every time something changed hands, it is taxed. And this doesn't get into things like excise tax, which are even more fun.

c3534l 10y ago

Lets not forget the rebuttal, too. http://www.forbes.com/sites/paulroderickgregory/2012/01/25/warren-buffetts-secretary-likely-makes-between-200000-and-500000year/#3e547f7b18b8 http://www.forbes.com/sites/paulroderickgregory/2012/01/25/w... Edit: maybe that source isn't as good as I remember, but other sources seem suspicious over the factual accuracy of Buffet's claims. http://www.politifact.com/truth-o-meter/article/2011/sep/21/does-secretary-pay-higher-taxes-millionaire/ http://www.politifact.com/truth-o-meter/article/2011/sep/21/... http://www.factcheck.org/2011/10/shes-no-buffetts-secretary/ http://www.factcheck.org/2011/10/shes-no-buffetts-secretary/

throwawaywtf 10y ago
and how exactly is that ad-hominem attack a rebuttal?
kbenson 10y ago
Buffet himself declares that he pays a 17.4 percent rate on taxable income. His staff, like Bosanek, pay an average of 34 percent. The IRS publishes detailed tax tables by income level. The 2009 results show that the average taxpayer paying Buffet’s 17.4 rate earns an adjusted gross income between $100,000 and $200,000. But an average taxpayer in Bosaneck’s rate (after downward adjustment for payroll taxes) earns an adjusted gross income of $200,000 to $500,000. Therefore Buffett must pay Debbie Bosanke a salary well above two hundred thousand. Is it me, or does that not make any sense? The average tax payer of that percentage makes that amount, therefore she must make that amount? Am I supposed to believe this man doesn't know how averages work? Because the alternative is he's being very disingenuous.
- djrogers 10y ago
  The way the progressive tax rates work in the US, you truly have to get to a pretty high level of adjusted gross income to average 34%. In 2011 the highest tax bracket was 35%, so you couldn't even pay 34% until you earned $379,151 or more. Given that you'd only pay 35% tax on the money earned above $379,151, so it'd take a pretty darned high income to bring your total tax rate up to 34%.

known 10y ago

Not possible due to https://en.wikipedia.org/wiki/Stockholm_syndrome https://en.wikipedia.org/wiki/Stockholm_syndrome

gadders 10y ago

Good counter-argument at the time from Michael Arrington from TechCrunch: http://techcrunch.com/2011/08/15/screw-the-rich-heres-how/ http://techcrunch.com/2011/08/15/screw-the-rich-heres-how/ "Buffett calls for an increase in all types of taxes – income, dividend and capital gains. That would be a nice triple layer of protection against any newcomers, and still preserve all – 100% – of the $47 billion he’s accumulated until now."

bprieto 10y ago
Arrington nails it. If Buffett was really willing to pay more taxes, he could just stop using loopholes to avoid paying hundreds of millions every year. Or stop litigating with the IRS to get to pay less. He doesn't want "the rich" to pay more taxes. He wants other (less) rich people to pay more taxes.
deleted 10y ago
[deleted]
kamaal 10y ago
Simply put, absolutely the first thing one does after getting rich is preventing others from getting rich. Rich people are not comfortable with the fact that it should easy for others to get rich, how useful would their current position be, if it were?

wturner 10y ago

In the United States there are about 500 billionaires. There are also 150 million U.S. gun owners in a declining middle class where dead end temp work is a lifestyle for a large part of the population and basic social well-being and security is an "issue". I can tell you from first hand experience, when you are in that state ... you are not in your right mind. If I was one of those 500 people I would be very paranoid.

kbenson 10y ago
My understanding is that there's a few uber-rich that push for reform specifically because of this (or at least they use this argument on their less agreeable brethren). Being rich is only useful if there's enough stability to allow that fortune to be used.
deleted 10y ago
[deleted]
mikeash 10y ago
That's an interesting perspective on the fact that gun rights and lower taxes for the wealthy are currently part of the same political movement.

beyondcompute 10y ago

Are there similar statements by any of Russian oligarchs?

agounaris 10y ago

on taxation, I always believe that "you" should make the tax reasonable enough to render its avoidance obsolete. Close all loopholes with flat laws and just force them. On the other hand there will always be some corrupted official to create another loophole in the process...

antisthenes 10y ago
Unfortunately, this always runs into the problem of the elites influencing politics and policy, so all the loopholes will never be closed and there never will be 100% effective enforcement (as the Panama papers shed some light on). I bet there were people in the 1850s saying the exact same thing.

_yosefk 10y ago

How about not bailing out private enterprises with public money? That'd cost Buffet a few tens of billions.

tim333 10y ago
They could of done and allowed the banking system to collapse and cost all Americans billions instead of making a profit for the public on the bailout. That said I can see an argument for what they did in Norway where if the government has to bail out a bank, they get to own it.

loki49152 10y ago

Warren, shut your hypocrite mouth until you start writing checks to the US Treasury that cover the gap between whatever you're taxed and whatever you think you should be taxed. Even then, STFU. You have no right to dispose of the lives of others.