[Vision2020] WARREN E. BUFFETT: A Minimum Tax for the Wealthy

Mon Nov 26 12:52:56 PST 2012

This is a tax on the individual, not their businesses.  The only way this will affect their companies' bottom line is if they vote themselves a raise in order to offset the new taxes.  So, in theory, it shouldn't affect prices.

I'm all for a low corporate rate in order to keep prices low, but I see no reason why the ultra rich should get any breaks for individual taxes.  If anything, they should be raised because they can afford it.

I'm curious, has anyone looked into the "FairTax" proposal?  I'm just curious about it because Gary Johnson supports it.  I don't know enough about taxation to know if it would work.  Here is a description from Wikipedia:

"The FairTax is a tax reform proposal for the federal government of the United States that would replace all federal income taxes (including the alternative minimum tax, corporate income taxes, and capital gains taxes), payroll taxes (including Social Security and Medicare taxes), gift taxes, and estate taxes with a single broad national consumption tax on retail sales. The Fair Tax Act (H.R. 25/S. 13) would apply a tax, once, at the point of purchase on all new goods and services for personal consumption. The proposal also calls for a monthly payment to all family households of lawful U.S. residents as an advance rebate, or "prebate", of tax on purchases up to the poverty level."

Because it is replacing the other taxes, the consumption tax would be pretty high, probably between 20% and 25%.  The nice thing is that it is taken once, only at the time of a new purchase.  Any thoughts?

Paul

________________________________
 From: Donovan Arnold <donovanjarnold2005 at yahoo.com>
To: Scott Dredge <scooterd408 at hotmail.com>; "art.deco.studios at gmail.com" <art.deco.studios at gmail.com>; viz <vision2020 at moscow.com> 
Sent: Monday, November 26, 2012 11:37 AM
Subject: Re: [Vision2020] WARREN E. BUFFETT: A Minimum Tax for the Wealthy

I don't get it! How can you tax the people that control the prices of everything and not expect prices to rise? If you tax business owners and stock holders, they will simply make up for their loss in revenue by increasing the price of their goods and services. This means the poor and middle classes absorb the tax increases by rising costs of their goods and services they need and consume.

Further, it doesn't change the quality of life at all for the poor or middle classes if you tax rich people out of existence. What matters is the cost of living, the price of goods and services that we need or consume. The price of food, clothing, shelter, health care and medicine, transportation, and education need to be as low as possible. 

We should reduce taxes on the wealthy if the price of these needed goods and services is less than 60% of family income, and raise their taxes for entitlement programs when it goes above 75%  to subsidize the loss in quality of life. There would be a strong motive for businesses to keep the cost of living affordable while getting rich. 

Donovan J. Arnold

From: Scott Dredge <scooterd408 at hotmail.com>
To: art.deco.studios at gmail.com; viz <vision2020 at moscow.com> 
Sent: Monday, November 26, 2012 11:05 AM
Subject: Re: [Vision2020] WARREN E. BUFFETT: A Minimum Tax for the Wealthy

It should be deemed 'A Minimum Tax for High Income Earners'.  There is no tax for simply 'being wealthy' and sitting on a ginormous pile of cash.  Knock yourself out.

Date: Mon, 26 Nov 2012 10:58:08 -0500
From: art.deco.studios at gmail.com
To: vision2020 at moscow.com
Subject: [Vision2020] WARREN E. BUFFETT: A Minimum Tax for the Wealthy

November 25, 2012
A Minimum Tax for the Wealthy
By WARREN E. BUFFETT
Omaha 
SUPPOSE that an investor you admire and trust comes to you with an investment idea. “This is a good one,” he says enthusiastically. “I’m in it, and I think you should be, too.” 
Would your reply possibly be this? “Well, it all depends on what my tax rate will be on the gain you’re saying we’re going to make. If the taxes are too high, I would rather leave the money in my savings account, earning a quarter of 1 percent.” Only in Grover Norquist’s imagination does such a response exist. 
Between 1951 and 1954, when the capital gains rate was 25 percent and marginal rates on dividends reached 91 percent in extreme cases, I sold securities and did pretty well. In the years from 1956 to 1969, the top marginal rate fell modestly, but was still a lofty 70 percent — and the tax rate on capital gains inched up to 27.5 percent. I was
 managing funds for investors then. Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered. 
Under those burdensome rates, moreover, both employment and the gross domestic product (a measure of the nation’s economic output) increased at a rapid clip. The middle class and the rich alike gained ground. 
So let’s forget about the rich and ultrarich going on strike and stuffing their ample funds under their mattresses if — gasp — capital gains rates and ordinary income rates are increased. The ultrarich, including me, will forever pursue investment opportunities. 
And, wow, do we have plenty to invest. The Forbes 400, the wealthiest individuals in America, hit a new group record for wealth this year: $1.7 trillion. That’s more than five times the $300 billion total in 1992. In recent years, my gang has been leaving the middle class in the dust. 
A huge tail wind from tax cuts has pushed us along. In 1992, the tax paid by the 400 highest incomes in the United States (a different universe from the Forbes list) averaged 26.4 percent of adjusted gross income. In 2009, the most recent year reported, the rate was 19.9 percent. It’s nice to have friends in high places. 
The group’s average income in 2009 was $202 million — which works out to a “wage” of $97,000 per hour, based on a 40-hour workweek. (I’m assuming they’re paid during lunch hours.) Yet more than a quarter of these ultrawealthy paid less than 15 percent of their take in combined federal income and payroll taxes. Half of this crew paid less than 20 percent. And — brace yourself — a few actually paid nothing. 
This outrage
 points to the necessity for more than a simple revision in upper-end tax rates, though that’s the place to start. I support President Obama’s proposal to eliminate the Bush tax cuts for high-income taxpayers. However, I prefer a cutoff point somewhat above $250,000 — maybe $500,000 or so. 
Additionally, we need Congress, right now, to enact a minimum tax on high incomes. I would suggest 30 percent of taxable income between $1 million and $10 million, and 35 percent on amounts above that. A plain and simple rule like that will block the efforts of lobbyists, lawyers and contribution-hungry legislators to keep the ultrarich paying rates well below those incurred by people with income just a tiny fraction of ours. Only a minimum tax on very high incomes will prevent the stated tax rate from being eviscerated by these warriors for the wealthy. 
Above all, we should not postpone these changes in the name of
 “reforming” the tax code. True, changes are badly needed. We need to get rid of arrangements like “carried interest” that enable income from labor to be magically converted into capital gains. And it’s sickening that a Cayman Islands mail drop can be central to tax maneuvering by wealthy individuals and corporations. 
But the reform of such complexities should not promote delay in our correcting simple and expensive inequities. We can’t let those who want to protect the privileged get away with insisting that we do nothing until we can do everything. 
Our government’s goal should be to bring in revenues of 18.5 percent of G.D.P. and spend about 21 percent of G.D.P. — levels that have been attained over extended periods in the past and can clearly be reached again. As the math makes clear, this won’t stem our budget deficits; in fact, it will continue them. But assuming even conservative projections about inflation and economic
 growth, this ratio of revenue to spending will keep America’s debt stable in relation to the country’s economic output. 
In the last fiscal year, we were far away from this fiscal balance — bringing in 15.5 percent of G.D.P. in revenue and spending 22.4 percent. Correcting our course will require major concessions by both Republicans and Democrats. 
All of America is waiting for Congress to offer a realistic and concrete plan for getting back to this fiscally sound path. Nothing less is acceptable. 
In the meantime, maybe you’ll run into someone with a terrific investment idea, who won’t go forward with it because of the tax he would owe when it succeeds. Send him my way. Let me unburden him. 

Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.

-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com

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