4 ms·

Can we please knock off the nonsense of this "Buffett secretary" talking point? Debbie Bosanke is estimated to make north of $200k per year, while Buffet is pay

• jshen 15y ago
  "Of course her rate is higher." I think the vast majority of people would expect a billionaire to pay a higher tax rate than an upper middle class person. I wouldn't call that nonsense.
  • jdludlow 15y ago
    I'm sure that you're right, but then the vast majority of people are easily swayed by cheap political rhetoric. If they're playing by the same rules, which it appears that they are, then what's the problem? It's not like he hasn't already paid income tax on that money the first time he earned it, and his absolute tax bill is vastly larger than hers is. If not being jealous and covetous of those who make more than I do puts me in the minority, then I guess that's where I'm at. Sadly, I believe that to be the case.
    • justincormack 15y ago
      Capital gains are not really double taxation. Sure he paid tax, but then he earned more. Many countries charge income and capital gains at exactly the same rate, eg the UK does now.
      • walkon 15y ago
        How are they not being taxed twice? A company (which has owners) pays income tax on their profits, so the company and therefore, owners, have less capital remaining. Then, if the owners want to cash out anything from the post-income-taxed margin, they'll have to pay capital gains as well.
        • jshen 15y ago
          It's not that simple. One could just as easily make the case that workers get a lower salary due to higher corporate taxes, therefore they should pay a lower tax rate than owners. In short, it's not at all clear that a higher corporate tax rate is purely a tax on owners, and nothing else.
          • walkon 15y ago
            Employees are payroll taxed, that is different and regardless of the company's income, net or otherwise.
            • jshen 15y ago
              I'm certain the amount of profit after taxes affects the wages a company is willing to pay. Do you really think they are completely independent?
        • aaronblohowiak 15y ago
          That sounds like dividend taxes, not capital gains.
          • emu 15y ago
            We're off the original topic now, but I've never understood why the US doesn't enact a dividend imputation scheme, which nicely solves the double taxation problem on dividend income by giving the recipient of a dividend a credit for the corporate tax paid on that dividend. Australia has such a system.
        • krschultz 15y ago
          I pay state income tax on my paycheck, and then I take that money and buy a new computer and have to pay state sales tax too! And where I live, I pay state income tax, buy a car and buy sales tax, and then every year after that I pay property tax on the value of the car. It's a triple tax! I'm not really sure why capital gains is such a problem. And truthfully a lot of capital gains (maybe even most?) are not doubled taxed. If you buy stock with after-income-tax money, then yes you pay that tax twice. But if the capital gain is derived from equity compensation a lot of times you don't pay income tax so it is only a single tax. That is what the Buffett rule is all about (and this article as well).
    • cjdavis 15y ago
      Nice straw, man. Thinking that a progressive tax system is a good idea has nothing to do with being jealous and covetous of those who make more than you. If you disagree with a progressive tax system go right ahead and support your case, but you're not going to do that with bs arguments nobody is making.
    • krschultz 15y ago
      The capital gains rate & structure is a legit policy question. Talking about flag burning laws, who wears a flag pin or not, those are cheap political squabbles. Keep in mind, capital gains haven't always had a lower tax rate than ordinary income. There is no rule of nature that says it has to be that way. We could make the capital gains rate 0%, or 0% up to $200,000 and then 40% for everything over $200,000. Or we could make more than simply 2 rates based on the length of time it took for the gain. Or we could make it any number of other options. Which one of these is preferable for economic or philisophical reasons is a good question. Warren's Buffet's secretary is no different than Joe the Plumber - they are a personification of the policy. It's hard to latch on to abstract reasoning but easy to see when presented as a comparison of two people.
    • MartinCron 15y ago
      If they're playing by the same rules, which it appears that they are... Of course they are playing by the same rules. Rich and poor alike get preferential tax rates on capital gains income the same way that rich and poor alike get tax breaks on private jet ownership depreciation. Anything else would be class warfare.
  • citricsquid 15y ago
    Depends. The entire quip plays on peoples assumption they're both employees taking a standard wage and are "equal" besides the amounts. Unless I'm mistaken, Warren Buffet makes money from the ownership he holds, not as a salary, so the assumption people make ("of course he pays more", "what, he doesn't?!") is because they assume he's an employee and equal in everything but the amount, which isn't the case. He makes his money (a variable amount) from ownership, not work. If you prefaced the statement with an explanation of how he pays capital gains and not income tax because of the different types of money nobody would be confused / surprised.
    • revelation 15y ago
      I know you just want to make the case for a more differentiated view here, but what you are in fact doing is defending a higher tax rate on work than for capital gains through mere ownership.
      • jshen 15y ago
        Precisely. I inherited tens of millions, then invested it, should I pay a lower rate than a person that works for a living?
        • simplefish 15y ago
          I have no idea if you should, but in the US, you probably will. Depending on what year you inherited the money, you'll have paid up to 55%.
          • jshen 15y ago
            That seems reasonable. My problem is with the party that wants to abolish the estate tax and cut capital gains taxes.
        • analyst74 15y ago
          In that case, the more "fair" solution is high inheritance tax (maybe it's already in place?). Discouraging long-term investment through high capital gain is not a good solution.
• diogenescynic 15y ago
  "Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration." - Abe Lincoln
  • ef4 15y ago
    Lincoln was just pandering. If you want to see what labor looks like without access to capital, check out rural Africa. In reality labor and capital are completely symbiotic. At least until the robots take over.
• simplefish 15y ago
  There's actually some serious questions about that. In interviews, Bosanke has claimed to be paying a 35.8% tax rate. She's been a little coy about her income, but in one interview she claimed to only make $60,000 a year. Anyone with even a passing familiarity with the US tax code will quickly understand that this is not possible. Seriously. So we know that at least some of what she's claimed in wrong. And since Bosanke won't release her tax returns, that's really as far as we can go. In short, the "Buffet secretary" talking point really has no evidentiary value for either side. We simply have no idea what she makes or what she pays; all we know is what she's publically claimed is wrong.
  • mikeash 15y ago
    That specific example may have no evidentiary value, but if you simply take it as being a symbolic name for the general phenomenon of millionaires/billionaires paying a lower tax rate than regular working folk, it's pretty obvious that this not only can happen, but that it's not all that uncommon. And in fact, nobody disputes that it happens. The only dispute is over whether it should.
    • simplefish 15y ago
      Actually, it's very uncommon. Keep in mind, we have IRS data that shows the average rate paid by different groups, we know that most of the 1% is paying MUCH higher tax rates than the 99%. And should be make public policy based on the extremely rare edge cases, or the overwhelmingly common case? Also, this debate really depends what you mean by "millionaires/billionaires". And "taxes". And "tax rates". And "working folk". Being a billionaire is a measure of wealth; your tax bracket is based on income in a single year. Are we talking about marginal rates or average rates? Federal income taxes? All federal taxes? All taxes? How do we impute the corporate income tax (knowing, as we do, that it is paid by both employees and investors)? How do we impute the corporate half of the payroll tax (ditto)? How should we handle cases where someone is in the "1%" for a single year due to the sale of a single large asset they've been working on for decades (family farm, small business, IPO, or the like)? Does it truly make sense that someone who makes $50k/year for 10 years, then sells his start-up for $100m should be in the same tax bracket in that 11th year as an investment banker who makes $100m/year every single year? This is not an area with easy answers, and the tax code looks the way it does due to a long series of hard-fought struggles and difficult compromises. It's easy to look at Romney at say "he paid 14%", but it's less clear what rate is "right". Capital gains is fundamentally not normal income, and there's no reason it should be taxed at any given rate, much less whatever rate normal income would be taxed at. Some very socialist and egalitarian places have no capital gains tax at all. :) Edit: My initial post had some silly errors of fact. Mike Ash was quite polite in pointing them out. :) Thanks.