Warren Buffet's Stance on Taxes - Page 3

adios · #21 11-13-2007, 06:09 PM

[ QUOTE ]
Buffet is no idiot. He knows the prudent thing to do is to come out favoring higher taxation for the wealthy because it lowers his profile as a target. Then what does he do? Give $37B to a charitable foundation to preclude government attack on the accumulated capital after his death.

Gates has done the exact same thing.

[/ QUOTE ]

Gates got the idea from Buffet it's just that Gates set up his foundation and Buffet was persuaded by Gates to contribute. Buffet has been on the record for a long, long time stating that he would donate his fortune to charity stating that his children would not inherit his fortune. I believe that his children will/have received a lot of money from Buffet's ex wife but from Buffet they basically have received all they're going to get (a college education payed for).

Don't see how this is an advantage to Buffet tax wise. Sure he gets to write off his charitable contributions but he doesn't get to spend it either.

maxtower · #22 11-13-2007, 06:14 PM

I meant more in the same terms as Buffett, percentage of income.

CrushinFelt · #23 11-13-2007, 06:14 PM

[ QUOTE ]
crushin, this is a morality/equality issue. I dont think anyone here will argue that taxes are good, or lowering any taxes wouldnt be good for the economy and financial markets. If you want to debate the merits of a progressive tax system perhaps politics or SMP would be better

[/ QUOTE ]

I don't know anyone in those forums, and I can probably get the same various responses here (they've already basically been mentioned). The one or two times I ventured into the politics forum it was only for about 10 seconds because it seems that people over there would rather be long winded than actually getting a point across.

spider · #24 11-13-2007, 06:15 PM

[ QUOTE ]
Who pays what in taxes

[/ QUOTE ]

This doesn't include payroll (aka FICA, aka Social Security taxes) and the top marginal rates you cite are not applied to capital gains. For the really wealthy, capital gains are where the income is much moreso than wages.

You might want to read what Buffett is saying if you want to rebut it. His main point is that when adding payroll taxes to the income tax on wages, the marginal rate on someone making 50k is much higher than that of a wealthy person who is past the FICA limit (about 95k this year) and making a good bit of his/her money from capital gains (taxed at 15%, not 36%). There is also the issue about carried interest and stuff and whether it should be taxed normally (36%) or at CG rates (15%) but that's really a side issue to what Buffett is talking about.

riverdance · #25 11-13-2007, 06:19 PM

those ntu figures do not include payroll taxes, but i think they DO include capital gains taxes in their definition of "personal income taxes".

CrushinFelt · #26 11-13-2007, 06:21 PM

[ QUOTE ]
You might want to read what Buffett is saying if you want to rebut it. His main point is that when adding payroll taxes to the income tax on wages, the marginal rate on someone making 50k is much higher than that of a wealthy person who is past the FICA limit (about 95k this year) and making a good bit of his/her money from capital gains (taxed at 15%, not 36%).

[/ QUOTE ]

Could you explain this a bit for me then? I'm not sure what you mean by the FICA limit.

This was the other reason I wanted to start this thread was to get some insight on what part of the tax structure Warren Buffet is talking about.

riverdance · #27 11-13-2007, 06:27 PM

fica taxes are 7.65% (6.2% soc security + 1.45% medicare) on all wages up to approx 95k. wages above 95k are only taxed at 1.45% (the medicare portion)

therefore, somone earning 50k pays a higher percentage of his total income in FICA taxes than someone earning 250k.

but one could argue that this discrepancy is more than made up by the fact that INCOME taxes are far less as a percentage of ttoal income for the 50k person vs the 250k person

maxtower · #28 11-13-2007, 06:30 PM

FICA limit:
The 6% you pay in social security taxes is only on the first 95k you earn as an employee. Someone who earns 150k will pay 6% on the first 95k, and 0% on the remaining 55k, for an effective rate of 3.8% FICA tax. For a person earning 50k/yr, they will pay the full 6%.
The reasoning behind this is because there is a cap on SS benefits.

Because of dividend and capital gains taxes being lower than income taxes, rich people tend to pay less (percentage wise) too, since a larger percentage of their income will be in the form of dividends and cap. gains rather than wages.

Borodog · #29 11-13-2007, 06:37 PM

[ QUOTE ]
[ QUOTE ]
Buffet is no idiot. He knows the prudent thing to do is to come out favoring higher taxation for the wealthy because it lowers his profile as a target. Then what does he do? Give $37B to a charitable foundation to preclude government attack on the accumulated capital after his death.

Gates has done the exact same thing.

[/ QUOTE ]

Gates got the idea from Buffet it's just that Gates set up his foundation and Buffet was persuaded by Gates to contribute. Buffet has been on the record for a long, long time stating that he would donate his fortune to charity stating that his children would not inherit his fortune. I believe that his children will/have received a lot of money from Buffet's ex wife but from Buffet they basically have received all they're going to get (a college education payed for).

Don't see how this is an advantage to Buffet tax wise. Sure he gets to write off his charitable contributions but he doesn't get to spend it either.

[/ QUOTE ]

He doesn't want to spend it. He wants to preserve the accumulated capital, and the productive capacity it embodies, because that is the best possible thing you can do for society. If government were to attack that accumulated capital via the estate tax, for example, it would have to be broken up, and all those years of accumulated capital would be converted into consumption via government redistribution, which is really, really damaging to society in the long run.

Gates and Buffet are heros for that $70 or 80B (or whatever it is) charitable foundation. That fund will do an immense amount of good around the world for decades, whereas government would squander it in one week and have nothing to show for it except more damage done.

Badger · #30 11-13-2007, 06:38 PM

Poor people: "I lose a higher percentage of my pay to taxes than rich people, tax them more."

Rich people: "I pay so much more money in taxes, quit taxing me."

Really is there any more to this argument than a matter of perspective on who should be carrying the tax burden? And for most people your perspective will depend on how much you make.