

Harvey Golub's Response To Warren Buffett - nhebb
http://online.wsj.com/article/SB10001424053111903639404576516724218259688.html?mod=WSJ_Opinion_LEADTop

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jeffreymcmanus
I don't understand the often-repeated conservative talking point that "almost
half of all filers pay no income taxes at all". There are only two kinds of
people who pay no income taxes at all: the desperately poor and the super-rich
(who are taxed on investments at the 15% long-term capital gains rate). Is the
conservative proposal really that we should tax the desperately poor? Because
that seems not only a terrible public policy choice, but an extremely
inefficient way to close our budget gap.

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dantheman
I did a little googling for you, from 2009:

"About 47 percent will pay no federal income taxes at all for 2009. Either
their incomes were too low, or they qualified for enough credits, deductions
and exemptions to eliminate their liability. That's according to projections
by the Tax Policy Center, a Washington research organization."

...

"In recent years, credits for low- and middle-income families have grown so
much that a family of four making as much as $50,000 will owe no federal
income tax for 2009, as long as there are two children younger than 17,
according to a separate analysis by the consulting firm Deloitte Tax."

[http://finance.yahoo.com/news/Nearly-half-of-US-
households-a...](http://finance.yahoo.com/news/Nearly-half-of-US-households-
apf-1105567323.html?x=0)

~~~
wycats
Low- and middle-income families pay most of their taxes in the form of payroll
taxes, which are a mandatory 15% tax (shared by the employer, who also pays
their salary) on all income. Consumption taxes also apply to everyone, and for
those who spend most of their income each year, this amounts to at a 5-10%
additional tax.

Virtually nobody, with the exception of the very poor who qualify for the
EITC, are safe from these tax. The "50% pay no tax" is a right-wing talking
point that is intentionally dishonest.

~~~
NeilCJames
What makes Golub's point so misleading is that he counts consumption taxes,
payroll taxes, state taxes, and even future estate taxes when he pays them,
but only looks at federal income tax to get the "half the people pay nothing"
line.

~~~
eric-hu
Ah, thank you for clarifying on that. I was wondering how he came up with the
figure that 90% of his income would be taxed.

I wonder how much the average lower and middle class person would be taxed
according to this accounting scheme.

~~~
mrgubmint
I don't think it's possible to come up with the 80 to 90 percent that he
claimed. The top marginal rate for federal tax is 35%. State taxes and sales
taxes can be deducted from income for federal tax. Social Security tops out at
$106,800.00, and Medicare taxes are 1.45% on all income. As far as the estate
tax, he won't pay that - unless he inherited the money. His heirs will pay an
estate tax on anything over 5 million dollars that they inherit from him

The federal estate tax tops out at 35%, but also excludes some property and
deductions. New York state's estate tax is also capped at 35%.

Finally, the estate tax is seldom actual double taxation since a large
percentage of estates subject to taxation are in the form of stocks or
property which are not taxed until they are actually sold.

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birken
This response is nothing more than political talking points, whereas Warren
Buffett's article was a thoughtful and meaningful piece about a simple
positive change the country could make to help control the deficit. I'm not
saying some of his points aren't possibly valid, but nothing as written in
this article is deep enough to be meaningful.

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jmspring
Tax rates were higher under Clinton and the economy was booming. Oh, and there
was a budget surplus.

Along comes W, we end up in multiple confrontations over seas, cut incoming
revenues (of which I will admit to benefiting), and end up with huge deficits?

Clearly going back to anything in the Clinton era would tank the economy. The
particular article is particularly fluffy in the "private enterprise will
solve all problems" with comments about infrastructure programs like trains,
etc. The fact that we are spending less on infrastructure (roads, rail, fiber,
etc) is one reason we are seeing an overall quality of service decline.

I will certainly admit there are issues with the US tax code and there needs
to be more efficiency in the system. It is pretty clear that relying on
private industry for infrastructure (especially where there is a (or near)
monopoly, the companies do _NOT_ do what's write for the country. Another
local to California example PG&E and the gas pipeline debacle.

~~~
dantheman
The problem isn't taxation, it's spending. If we went back to Clinton levels
of spending we'd have a massive surplus. The big cuts that are coming due to
the debt ceiling negotiations aren't actually cuts, they're decreases in
predicted spending increases -- we can't even hold the budget steady. This is
complete madness.

~~~
jeffreymcmanus
The problem is neither taxation nor spending. It's a failure to correlate
revenue to our financial commitments. We will not be able to cut our way to
deficit reduction in our lifetimes; there's just too much deficit there. The
superstitious belief that we can balance our books by cuts alone (thereby
likely throwing the country into a second recession, which would make matters
worse) is the real madness in this discussion.

~~~
wisty
There are multiple problems, some of which interrelated.

You could go all the way back to the constitution of the USA. The US has non-
compulsory voting, because in theory this ensures only well-informed,
conscientious voters turn up. In reality, it leads to pork barrelling. Let's
say you are a chicken farmer, in a chicken farming district, and Congress is
considering a subsidy (or tax) on chicken farms. You and the boys at the
chicken farmer's club have an incentive to mobilize, and try to get people to
vote for the party (or candidates) with chicken-friendly views. But the
apathetic masses would rather just not vote, because this pork barreling
debate will not hurt their wallets _that_ much.

Whereas in Australia (which has compulsory voting), a politician who runs an
anti-pork campaign can get a fair bit of support from apathetic voters who
don't want to be at the polling booth, but have a sneaking suspicion that
government spending is not always wise.

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gaurav_v
There are a number of huge problems with this argument, but the most important
problems are the common ones:

1\. There's just so much waste!

The byline reads: "Before you ask for more tax money from me, raise the $2.2
trillion you already collect each year more fairly and spend it more wisely."
This is then supported by a few examples which don't address any of the big
entitlement programs necessary for nontrivial tax-reform.

2\. I pay such a large percent of the taxes!

He draws authority from the fact that "Today, top earners—the 250,000 people
who earn $1 million or more—pay 20% of all income taxes, and the 3% who earn
more than $200,000 pay almost half. Almost half of all filers pay no income
taxes at all. Clearly they earn less and should pay less. But they should pay
something and have a stake in our government spending their money too."

This is clearly a less meaningful statistic than percentage of income paid,
which was the crux of Buffett's argument. If I posses say, 90% of the assets
in some country X, certainly it doesn't make sense for me to yell, 'hey, I pay
like, 60% of the taxes in this place, and all of you Xonian slackers in the
bottom 5% are skating by on a free ride.' It particularly doesn't make sense
if, as he proposes, there is no tax on gifting money to your (grand)children,
and so perhaps I just inherited the wealth.

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forensic
The top 250,000 people basically run the government, so his polemic needs to
be addressed at them.

All the special interests he talks about are from his cohort of the top .1%

Basically, this article amounts to "Let Them Eat Cake"

~~~
gcb
care to elaborate "The top 250,000 people basically run the government"?

~~~
pyoung
Look up the citizens united case. The supreme court essentially said that
money = speech, and therefore, spending money to influence political campaigns
and elections is protected by the first amendment.

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gcb
but i think the 250000 people is just the poor with a good life.... isn't that
about the <1% you are taking about?

~~~
pyoung
Not sure I understand. The top 1% have little in common with the poor,
especially when it comes to political interests. Due to the supreme court
case, they can now spend unlimited amounts of money to try and influence
politics, which means that despite their significant difference in population
sizes, they are over-represented in our government.

~~~
gcb
the top 1% buys peanuts that cost 250.000 each.

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wisty
Did he actually read Buffett's article? Warren Buffett points out that while
the rich _do_ pay quite a bit of income tax, they often don't pay the same
share of other taxes.

Then he claims he pay's 80%+ tax. Um, really? I guess if you had massive
losses of lowly taxed income, and a really high salary, they could balance
each other out and you could pay unbounded taxes. But over 80% does not seem
typical.

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kitsune_
What strikes me as most odd is the fact that conservative'ŝ constantly point
out that 50% of people pay no taxes at all.

They use this figure to illustrate a demand for raising taxes on these people.

I never heard a conservative ask the question: Why are there such large income
disparities within our society? And how can we fix them?

The answer would not be raising the taxes on the poorest, but to lift them out
of poverty. However, most people know damn well that this would not work
without some major adjustments to the way we do business.

~~~
pyoung
I do agree with you, but I feel I should provide a slight correction. The
claim is that 50% of people pay no federal income tax. They still pay payroll
tax, state tax, and sales tax. So when conservatives make the '50% claim' they
are being fairly deceptive.

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joezydeco
_"Of my current income this year, I expect to pay 80%-90% in federal income
taxes, state income taxes, Social Security and Medicare taxes, and federal and
state estate taxes."_

Huh? What is he possibly doing that warrants this high of a tax on his income?

~~~
jeffreymcmanus
It's particularly odd that he's planning on paying estate taxes (unless he
plans to die this year). Estate taxes are paid by the estates of decedents,
not by living people.

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buff-a
There is a useful and effective fiction called "property" that I continue to
support. However, when 3% of the people earn 50% of the money, and use this
fact to _complain_ about paying 50% of the taxes, then it may be time to
demonstrate that this fiction exists only as long as it is mutually
beneficial, as opposed to some God given right or a fact of nature.

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comex
Jon Stewart recently took down the argument to tax the poor rather
effectively:

[http://www.thedailyshow.com/watch/thu-
august-18-2011/world-o...](http://www.thedailyshow.com/watch/thu-
august-18-2011/world-of-class-warfare---the-poor-s-free-ride-is-over)

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njharman
Yeah, "you earned it". Not your children. Why should they get free ride?

Estate taxes exist to encourage doing something productive with your immeanse
wealth rather than just hoarding it.

