
Warren Buffett: Stop coddling the super rich - asanwal
http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html?_r=1&smid=tw-nytimesbusiness&seid=auto
======
orijing
All of the comments here attacking Warren Buffett's authenticity, suggesting
that he should put his money where his mouth is and write the Treasury a big
fat check, are missing the whole point.

Services provided by the government are public goods. It's blindingly obvious
that a single person cannot pay for those public goods. Just Buffett's own
contributions, no matter how much he donates, will not be enough to solve our
budget issue. It's called shared sacrifice because it's meaningless unless
everyone participates.

It's like the neighborhood park (i.e. medicare/social security): Everyone
wants one, but nobody wants to pay for it. In steps the neighborhood's rich
kid (Buffett), who suggests that all the rich kids pitch in to pay for the
park. If that happened, everyone would be made better off, but one kid alone
isn't enough.

This is a very canonical problem of public services provisioning and funding.
It's completely naive to sit back and suggest Buffett tackle the issue
himself, because we all know that's ridiculous.

Open your eyes. The problem is not Buffett's to solve. But he recognizes that
there is a problem.

Apologies for the harsh tone, but it baffles me how members of Hacker News can
think so naively. The attacks on Buffett are utterly unfair and unjustified.
We should all have an open mind and try to understand the proposal.

~~~
shmulkey18
"It's blindingly obvious that a single person cannot pay for those public
goods." ... "It's called shared sacrifice because it's meaningless unless
everyone participates."

Huh? By this logic, taxes are "meaningless" unless everyone pays taxes.
However, many poor and lower-income people do not pay income taxes. Does that
render the income tax "meaningless"?

Also, the claim that it's "like the neighborhood park... [e]veryone wants one,
but no one wants to pay for it" is absurd. We see many examples of charitable
contributions made by the rich and the middle class which are used to purchase
public goods such as museums, nature preserves and the like.

When push comes to shove, what Buffet really wants -- and what you are
advocating when you say that no matter how much money he donates, it "will not
be enough to solve our budget issues" -- is an increase in the size of
government fueled by higher taxes, rather than a diminution of its scope by
reducing the funds made available to it.

A bigger government benefits crony capitalists like Buffet, because they have
sufficient power and influence to ensure that the goodies that can be
redistributed by the Leviathan are steered their way. I wish Buffet would be
honest enough to say that, rather than bloviating about how terrible it is
that he doesn't pay enough taxes when he is unwilling to take the obvious
direct action necessary to rectify that unfortunate situation.

~~~
scottjad
> many poor and lower-income people do not pay income taxes.

And many middle-income people. ~45% of US households pay no federal income
tax.

~~~
Umofomia
While strictly true, this statement ignores all the other taxes that people
pay. Rather than rehashing the entire conversation, I'll simply point you
towards the thread where this was previously addressed:
<http://news.ycombinator.com/item?id=2885574>

------
ck2
The problem is getting low to middle income people to stop voting against
themselves. Good luck with that, they all seem to think they are going to be
billionaires someday so better keep those billionaire taxes low.

Either that or by bribing the wealthy with low taxes they might only ship out
half the jobs overseas instead of all of them.

It's just dumbfounding. Election after election, over and over.

~~~
forkandwait
I keep trying to formulate my take on this, and failing, but here goes anyway:

The democratic party and American leftists no longer understand non-college
working people and, for the most part, no longer reach out to them. Working
people think that the left today advocates either for weirdos or for the
completely screwed up, and wants everybody to pay for its programs to help
said weirdos and fuckups. There is some valid reason for this impression, with
the Great Society programs and affirmative action in the sixties and seventies
being partly funded by taxes on the middle classes, along with fiascos like
school bussing and over-compensated hiring practices screwing over people who
didn't feel like they deserved it. (And poor management of government agencies
making them ineffective at cost effective delivery of services.)

However, working people don't see themselves as fuckups (because they're not),
and they don't have a lot of patience with weirdos. So they aren't going to
feel comfortable with the gay marriage/ social worker part of the left (the
old union guys were socially very conservative for the most part).

Also, most of the left today seems to me to be made up of people who really
have no connection to actual poor working class people, so there is
automatically a divide that is mobilized by the Karl Roves of the world.

Furthermore, if you have ever been lower middle class or "working poor", you
learn early that very traditional personal character values can make the
difference between you and your family living in a _truly shitty_ situation or
rising out of the muck around you to actually have a decent marriage/ nice
friends/ safe home. So when college educated lefties come around and tell them
to have pity on fuckups and weirdos because its society's fault, or that
personal character and traditional values don't matter, any working class
person is likely to tell them to go to hell.

So today's Republicans mobilize personal character rhetoric, traditionalism
rhetoric, and the cultural non-understanding between leftist leadership and
working people, and -- voila, working people voting against their own
interests.

Until the left figures out the working classes again -- which means taking the
time to show up in the middle of the country, go to church, eat ribs, etc, etc
-- Capital will continue to screw everyone. So quit whining about how stupid
working class people are -- nobody represents their interests today, neither
left nor right, but at least the Republicans pretend.

~~~
_delirium
I think your analysis is close to home, but with one huge caveat: it really
only applies solidly to the _white_ working class, which is these days only
about half the working class (though it depends on how you define "working
class"). The black and hispanic working classes, which are a large portion of
the country, are strongly organized within the Democratic Party, though the
hispanic working class is a bit more split.

There are plenty of disconnects between them and the white middle-class wing
of the party as well, especially around issues like gay marriage and
separation of church/state, which tend to be seen as "rich white liberal"
issues. But I think it's a bit more complicated than simple conservatism, and
it's often more than balanced by significant left-leaning sentiment on
economic issues. There is, for example, huge support for social safety nets,
welfare systems, socialized healthcare, etc., among the non-white working
class. If you put single-payer healthcare to a referendum in black working-
class neighborhoods in Atlanta or Brooklyn, it'd pass by lopsided majorities.
So I think the left wing of the Democratic party is fairly well in tune with
that portion of their concerns, but most of the party is arguably out of touch
by not being left enough on economics, promoting more of a middle-class,
centrist liberalism that's roughly ok with the economic status quo and not
very interested in major social-justice initiatives.

There's also no real cultural understanding between the GOP and this segment
of the working class: a _good_ showing for a Republican is 10% of the black
vote, almost all of it coming from the wealthier portion (i.e., they only
connect on class issues). But I agree that the Democratic connection is not
great, either, especially if you take the national party; they're often seen
as economic-centrist social liberals, less bad than the GOP but not really
willing to fight for the working class on economics (or at least not
succeeding at doing so).

~~~
ddw
> They're just, apparently, completely unable to actually get those
> initiatives through Congress.

There is a Progressive Caucus in Congress but they just don't have the numbers
to pass anything, especially with a refusal for any sort of compromise from
the Right. And there are simply too many Blue Dogs that will tow the line in
the middle.

If someone were a "liberal", it would be best to get progressive candidates in
Congress, not just any Democrats.

------
BrainScraps
Reading this just makes me think of all of the lobbying dollars and campaign
contributions that must have been paid by the super-rich to get these tax
breaks.

Am I the only one that feels some populist rage welling up when he hears how
much money is wasted on campaigning for office and influencing people in
office? Aren't there more worthy uses of wealth and scarce resources?

And it just pains me that so many people think that they "have to play the
game" to get things done by politicians. Non-profit organizations that use
large percentages of their spend on "wining and dining" elected or appointed
officials to try to make things beneficial things happen. Ugh.

~~~
dantheman
They only do that because it pays off. If the government was more
decentralized and controlled significantly less dollars the incentives
wouldn't be there and it wouldn't happen. It's a structural problem that
happens in any system. Where power is concentrated it becomes beneficial to
influence it - the more concentrated the more that can be spent.

~~~
rdtsc
I bet it wouldn't phase them a bit. They would create a watchdog professional
organization (see US Chamber of Commerce) that makes sure local elections and
appointments are influenced just as effectively as federal ones.

This already happens in judge elections in many states. Certain "business-
friendly" candidates are showered in campaign money, with the expectations
that when certain cases are appealed those judges will end up making "the
right choice".

~~~
dantheman
It's easier for people to control their government at the local level, than at
the national level. For instance, the city of Cambridge a year or so ago
removed all the DHS cameras that were put up after 9/11. That wouldn't happen
if they were controlled at the national level. Look at gay marriage or
marijuana, only a problem at the national level - let the states do what they
want; it's less of a chance of one group going in and ruining it for everyone.
Sure, it's probably not optimal there will be some laggards, and perhaps even
backward progress. But overall, the system will be more stable and allow the
most amount of freedom for those who want it - being able to vote with your
feet is much better than voting in an election.

~~~
perfunctory
> being able to vote with your feet is much better than voting in an election.

I've had this idea for a while already. Indeed, it would be interesting to set
up a free market system for the governments. US seems to be an ideal place for
this sort of experiment given the ease of movement. Competition between states
could be quite healthy.

------
cromulent
It looks like Joe Nocera got his wish from a week ago.

"I keep waiting for one wealthy, well-known figure to stand up and say
publicly that he or she is willing to pay more in taxes as part of the shared
sacrifice necessary to gain control of the country’s deficit."

[http://www.nytimes.com/2011/08/09/opinion/nocera-while-
the-m...](http://www.nytimes.com/2011/08/09/opinion/nocera-while-the-markets-
swoon.html)

~~~
dublinclontarf
We'll let them voluntarily pay more taxes then, or donate to charity, or start
a charity or whatever.

By their very nature taxes are not voluntary, they're taken by force of law.
Don't pay them then go to jail.

This is a stupid (but very easy) argument to make, one (of the richest)rich
person says he'd be happy to pay more tax, therefor all rich people should pay
more.

If he really wants to make a difference he'd be way better off spending his
money on charirty, then it's not going to be entirely eaten up paying for
beurocracy. THe government is not efficient AT ANYTHING.

When you pay taxes you're funding all that crap you don't agree with. Wars,
funding for lobbies, paying politicians fat saleries, all those police raids
on pot smokers etc. Why the hell would you want to give more to that?

~~~
dwolfson20
Maybe take a look at Buffett's charitable record sometime.

~~~
yummyfajitas
Why does Buffet donate to charity rather than the treasury? Does he believe
that the government will use his money less efficiently than the organizations
he donates to?

~~~
chc
There are any number of possible answers to that question that don't fall into
the false dichotomy you've set up. Why are you not a plumber? Is it because
you believe that plumbing is worthless?

------
jeffool
A couple of recent quotes of his: "I could end the deficit in five minutes.
You just pass a law that says that anytime there is a deficit of more than 3%
of GDP all sitting members of Congress are ineligible for reelection."

[http://www.ritholtz.com/blog/2011/07/warren-buffett-i-
could-...](http://www.ritholtz.com/blog/2011/07/warren-buffett-i-could-end-
the-deficit-in-5-minutes/)

Also, he's against having a debt ceiling. "All it does is slow down a process
and divert people’s energy, causes people to posture. It doesn’t really make
any sense,"

[http://www.politico.com/news/stories/0711/59335.html#ixzz1V4...](http://www.politico.com/news/stories/0711/59335.html#ixzz1V4WmujAg)

------
jquery
Notice that Warren Buffett is asking for tax increases on those who make more
than $1M and $10M respectively. I'm fine with this. He seems to "get", unlike
so many Democrats, that $250k/year is not rich.

Where I get nervous is all the Democrats who seem to think that there is no
difference between $250k and $1M/year and up. I get kind of ill seeing
obscenely wealthy Democrats in Congress, almost all making MUCH more $250k,
trying to lump my household in with the rich. I'm willing to pay more, but not
if these wealthy Democrats won't create a distinction between $250k/year,
$1M/year, and $10+M/year.

~~~
eftpotrm
While I agree there's a big distinction between someone earning $250k/year and
$10m/year, are you aware that if your family is earning that much then you're
earning over _eight times_ the median household income?

~~~
callmeed
You're wrong. First, the median income in the US is now at or slightly above
$50K per year.

Second, assuming earned income (which is fair even for $250k earners), a
median income household will be in either a 15% or 25% tax bracket (depending
on if married). A $250k household will be in a 33% tax bracket.

~~~
eftpotrm
My statistic was showing $31k, but if we say $50k, fine - it's now merely five
times the median, not eight. That's still a comfortable situation by almost
anyone's standards.

Now, if your $50k household is in a 25% tax bracket, they're paying $12.5k so
leaving a net income of $37.5k. Your $250k household at 33% are paying $83k,
net income $167k, 4.4 times the net income of the $50k household. So what was
your point exactly?

------
robryan
I suspect that the kind of people working behind the scenes to keep things as
they are aren't anywhere near the super rich but the well off for who a high
tax rate would impact their standard of living. Once you get up to the super
rich they really aren't putting all earnings into the standard of living they
keep.

(Don't have anything to back this up, just the impression I get from reading
bits and pieces on the issue)

------
sliverstorm
The more I hear about this guy, the more I like him. He is so frank, it seems
like he'd be a very interesting person to meet.

~~~
zzeroparticle
I've always enjoyed reading Buffett's remarks in Berkshire's shareholders
reports because of those very reasons. There's no BS; he just tells it the way
it is, covering both successes and failures. And when he talks about the
overall economy, he puts it in terms that people can readily grasp the concept
without being swamped by gobbledegook.

<http://www.berkshirehathaway.com/reports.html>

~~~
dwolfson20
He also puts on a great shareholder's meeting every year, where he and his #2
Charlie Munger spend a lot of time just answering questions. And of course,
there are the discounts at Dairy Queen and Nebraska Furniture Mart. He even
supports local independent businesses like The Bookworm.

<http://www.berkshirehathaway.com/meet01/VisGuide2011.pdf>

------
drblast
Voluntary gifts of money can be sent to the U.S. Treasury at this address:

<http://www.fms.treas.gov/faq/moretopics_gifts.html>

One has to ask, if any super rich person really considered the U.S. Government
a worthwhile investment, why are they donating to various charities instead of
to the Treasury?

~~~
netmau5
Most decent charities deliver far more per unit donated than the US government
could ever wish to achieve. If you're interested in pure charity, you're not
going to get much bang for your buck at the federal level.

~~~
drblast
My point exactly. It's easy to consider who's paying what taxes and thinking
about if that's fair, but the _right_ question to ask is, "Is this a
worthwhile investment?"

Who pays what in taxes is really a diversion.

~~~
henryprecheur
> Who pays what in taxes is really a diversion.

The "who" is actually pretty important.

Tax the working man more, and you'll discourage working. Tax the rich, and he
might move to another country.

There are many ways to raise money for the state, and none is really "fair".
There will always somebody who'll be screwed in some way.

------
rdl
The really low hanging fruit, IMO, to raise tax revenue without "raising
taxes" (in the sense of raising tax rates) is to reclassify carried interest
as ordinary income.

That, combined with a few other similar changes (mortgage interest deduction,
maybe funding ssi and medicaid separately from old age and medicare) and huge
cuts in defense (due to ending 1-4 of the wars), seems like it would be fairly
effective.

What I'd like to see is a flat income tax for ordinary and dividend/capital
gains at 25-35% for all income, huge cuts in spending, combined with a single
refundable tax credit set at ~subsistence income, universally applied.
However, that's a much bigger change and pretty unlikely to happen.

------
a5seo
What's missing is an estimate of the revenue impact of doing what Buffet
suggests.

I've always heard that this kind of policy would add little to revenue,
because there is simply far more tax money available by taxing earned income.

~~~
dmayle
If you just count the top 400 income earners in the US that he mentions in the
article, and they restore the the 1992 rate of 29.2% (as opposed to the 21.5%
of 2008), then we're talking about 7 billion dollars

~~~
a5seo
So here's a question- if you follow Buffett's logic, then a guy who builds a
company for 40 years, most likely goes with barely any income in some years,
and sells it for $10M when he retires, that guy gets slapped with a 100% tax
increase.

Buffett doesn't differentiate the Walton kids who inherited billions and
assuredly live off capital gains their entire lives from the entrepreneur who
makes $10M that ONE year of his life that he sells his company.

Buffett claims that the tax rate in fact was of no consequence to his
behavior. Well, I guess if you're in the business of speculation, that's
true... you _must_ invest/speculate because that IS your job.

But the same is not true for entrepreneurs who build stuff. What's the
entrepreneur's incentive to build his company and to wait to reap his gain if
his gain is taxed like ordinary income? Why not just pull income out of his
company instead of reinvesting it? On the margin (that's the key), this tax
policy will affect entrepreneurs decisions.

I've read Snowball, Buffett's biography, and it's pretty clear Warren has
never built a company that serves customers. He's always been a speculator.

Bottom line, Buffett's proposal would have punishing consequences on
entrepreneurs who earn big windfalls a handful of few times in their lives.
That absolutely WILL have consequences on entrepreneurs decisions and
risk/reward tradeoff.

Unless a policy to tax the super rich is proposed that doesn't somehow have
that pernicious side effect of treating entrepreneurs' gains as earned income
who see precious few windfall gains in their lives, I'd never support it.

There's a reason why society created lower tax rates for capital gains.
Perhaps we should go back and study them.

~~~
dmayle
Really?

First, we're talking about the difference between ~20% and ~30%, so for your
case, the business owner will _only_ walk away with 7 million dollars to
retire on. Is this entrepreneur undergoing undue hardship?

What's barely any income for someone who builds a $10M company? 60k? 50k? It's
certainly not $10,890 (the federal poverty level). Even if we're talking about
a business owner who takes no income, it's because they're living off of the
money they've already earned, not because they're taking welfare checks while
running their business.

I would alo like to remind you that your typical employee, who's paying the
higher tax rate, will be laid off in years of recession, may have to take a
lower salary because of outsourcing, etc. I'm not going to classify one
hardship versus the other, but I do want to point out that the business owner
usually has a higher mean salary, even if the variance is larger.

You ask what the entrepreneur's incentive is if his gains are taxed like
ordinary income? That's simple: money, and lots of it. Business ownership is a
risk, and it comes with a reward.

Do you really think that a higher tax rate will stop an entrepreneur from
creating a company? I dare you to head down to Startup Camp, and ask anyone
there if they are planning to start a company because they expect to receive a
lower tax rate. I can save you some time: they won't. There's a passion and a
drive that accompanies entrepreneurs, and they will start companies because
that's what they want to do, what they need to do.

If entrepreneurs choose to take a higher salary during the course of the
business, that's fine, it's just tax planning. Anyone with sizable income does
it.

You say there is a reason why society created a lower tax rate for capital
gains, and that's true, but the economic situations of those times were
different than now. I would suggest to you there was also a reason why there
were bloody revolutions against the aristocratic class.

The rules of our society must continually adapt to the situation at hand. We
are currently in the middle of the two extremes mentioned above, I just hope
we realize it and don't get too far to one side or the other.

~~~
a5seo
"Do you really think that a higher tax rate will stop an entrepreneur from
creating a company"

No, but more likely to sell early, give up more easily when the going gets
tough, not invest as much in growth (and pocket the profits)... Yes. This is
all about decisions "on the margin." It's truly a canard to suggest, as you
do, that incentives don't matter.

"there was also a reason why there were bloody revolutions against the
aristocratic class"

Please. Would you rather make $70k/yr today or $70k in 1900. Let's not pretend
the pie is smaller today for those in middle or even bottom.

------
karmafeeder
As a freshly minted middle-class American, I disagree with Mr. Buffet's
argument here. Though his eagerness to share the tax-burden is laudable, I
hope that tax rates stay low for him. I would pay higher taxes to keep it that
way.

Simply put, I don't trust the government with that money.

~~~
revscat
I don't trust capitalists with it.

~~~
olalonde
I can't help but wonder what the hell you are doing on a venture capital
firm's website.

~~~
njharman
Learning about the enemy.

------
scottjad
Warren is omitting very crucial information and knowingly deceiving most
people. He's pretending he doesn't pay very many taxes, but he does, he just
pays different taxes. In this article he mentions capital gains, income, and
payroll taxes but does not mention corporate income taxes. Corporate income
taxes are taxes on the owners of corporations. I don't know exactly how much
he paid, but some quick math I'd guess he alone paid 1.6 billion last year in
corporate income taxes. (Berkshire paid 5.6 billion, Warren's worth 53
billion, Berkshire 178 billion, giving Warren 29% ownership, if you have
better numbers feel free to share). So he mentions 6 million dollars in taxes
but omits 1.6 billion from the discussion.

~~~
hypersoar
It's hardly fair to Berkshire Hathaway's income as part of Buffet's personal
income. Unlike his own, its money is not his to spend however he likes.

~~~
scottjad
If Warren owned 100% of Berkshire would you still think it's unfair to
consider what Berkshire pays in taxes a tax on Warren? Then why is it not fair
to consider it on a percentage basis like I have?

The owners of corporations are the people being taxed by corporate income
taxes, since without these taxes, that money would be theirs to spend as they
wish, either by investing in their business or taking it out by paying
dividends.

------
bmahmood
Majority of the comments seem to be discussing the merits / morality of
taxation, rather than Buffet's central points.

Entertaining the discussion on the merits of taxation, I've found John Rawls'
Justice as Fairness to be especially enlightening.
(<http://en.wikipedia.org/wiki/Justice_as_Fairness>) Essentially, a just
society is one in which decisions are made to benefit the worst-off in
society. Given a majority of the factors that contribute to individual success
are outside our control (what family you were born into, what neighborhood you
lived in, what school you went to, etc), a just society would in turn be one
which compensates for such naturally-occurring inequalities. He provides a
well-thought out argument for how progressive taxation is a necessary (but
certainly not sufficient) lever to do so.

Now in practice, it is true that our government has been terribly inefficient
in managing tax revenue and creating public goods. But that shouldn't discount
the role government can play. Realizing the potential reach and role of
government, the goal shouldn't be to neuter it, but to make it more efficient.

On Buffet's central points, I find them hard to argue with. 1) Lower taxes on
the rich in the last 10 years have been neither necessary nor sufficient for
economic growth or job creation, especially in light of the 20 years before
that. 2) The front-end drivers for entrepreneurs, VCs, and angels have more to
do with product creation, addressing a market need, and simply playing the
game. Money is of course a big part in too, but tax cuts only play a back-end
behavioral incentive- they affect the NPV of behavior that was already in
play. 3) Just because the actual tax revenue on the rich may not put a huge
dent on the deficit (as some comments seem to imply), the point is that the
billions in tax revenue it would raise could still stave of cuts to programs
that the poor and middle class depend on.

(And larger food for thought on the role of tax cuts, and how they've
contributed to the deficit
[http://www.theatlantic.com/politics/archive/2011/05/the-
char...](http://www.theatlantic.com/politics/archive/2011/05/the-chart-that-
should-accompany-every-discussion-of-deficits/238786/))

------
aj700
Taxing the money that moves - as it is earned - will only produce so much
revenue. The rich need to be taxed, not beccause it will allow lots of lovely
spending, because the gov will inevitably do a bad job of spending it. Though
you could put it towards debt reduction first.

You have to tax the money that doesn't move. The millions of unneeded unspent
$ that the rich are sitting on, with a wealth tax. You may not even make the
poor richer, but you will make the rich poorer. Good.

~~~
dwolfson20
It's a nice intention, but how do you devise that mechanism? If I keep $10,000
in my savings account for 30 years, are you going to tax it every year?

~~~
felipemnoa
The government does that already by printing more money. The more money
printed the less valuable your $10K. Better to keep money on assets that do
not devalue with inflation.

------
cfontes
Very well pointed, it takes a lot of altruism to say that when you are the
potential target. I read Snowball and like this man actions and thoughts. He
is really a very unique kind of person, some might argue that he did some
things to benefit himself in the past, But I disagree and think that the world
would be a better place if more man like this were in charge of the power over
civilization.

------
pakitan
I'm a huge fan of Warren Buffet but in this case I think the math just doesn't
seem right. I don't have the exact numbers, I took data from wikipedia and the
NYT article, so, please, let me know if my math is way off.

From the article, there are about 200,000 people with income of $1M+. Let's
make it $5M per person. That's 1 trillion USD combined income.

The rest of the taxpayers seem to be about 200,000,000 with an average income
of about $25,000. Combined income = 5 trillion.

So, if they reduce the tax of the bottom group with 2%, as Mr. Buffet
suggests, the tax of the upper bracket has to be hiked with 10% _just_ to
compensate. And if we add another 10%, just for the fun of it, that's 100
billion taken from the rich but it's still a measly part of the budget (around
3 trillion) not to mention the debt (15 trillion). And don't forget that
people with 1M+ income have a vast number of legal and semi-legal tricks at
their disposal to reduce their tax rate. The moment you increase the tax too
much, you start seeing money flowing to offshore locations.

So, while "tax the rich more" and "let them share the burden" are great feel-
good slogans, I don't think they offer any practical solution for the huge USA
deficits.

~~~
benjoffe
Your big assumption there that those 200,000 people with income of $1M+ have
an average of $5M per person is where your logic fails. This source:
[http://www.google.com/publicdata/explore?ds=a7jenngfc4um7_&#...</a> shows the
US total personal income for 2010 being over 12.5 trillion, your two groups
only add up to 6 trillion.

~~~
pakitan
Well, given some kind of power law distribution, I don't think the $5M are
that far off. In fact, this suggests that my guess may have been on the higher
end: [http://motherjones.com/politics/2011/02/income-inequality-
in...](http://motherjones.com/politics/2011/02/income-inequality-in-america-
chart-graph)

It says average income for top 0.1% is $3M and those 200,000 are exactly the
top 0.1%. I'm not sure where the huge discrepancy comes from, when it comes to
the total personal income stats you posted and I hope someone can clear this
up.

------
ecounysis
I wish Buffett would run for president. He could probably get a few things
done.

~~~
Jach
Alternatively buy the President + Congress.

~~~
wpietri
Definitely. He might not be able to buy the whole thing, but as long as he
substantially drives up the cost of a Congressman, that's a step forward. A
couple hundred grand (and 10 million in lobbying money) gets you billions of
benefits, which is way too cheap.

------
yummyfajitas
If we want shared sacrifice, maybe we should ask people at the bottom to share
as well. Anecdotes of Warren Buffet's office aside, in general the richest
people pay the largest proportion of taxes.

We already lean quite heavily on the top 1% - the top 1% actually pays more in
taxes than the bottom 90%.

<http://www.taxfoundation.org/news/show/22652.html>

A graph of the data in that article:

<http://i.imgur.com/wa8uu.png>

In terms of taxation of the top 10%, the US is the most progressive country in
the OECD.

<http://www.taxfoundation.org/blog/show/27134.html>

Maybe the tax code needs tweaking at the level of the top 400, but it's very
progressive up to the level of the top 1%.

~~~
kenjackson
I love the lies with statistics.

"We already lean quite heavily on the top 1% - the top 1% actually pays more
in taxes than the bottom 90%."

The chart of course only shows federal income tax.

What about federal payroll? What about excise taxes? And at the state and
local levels, what about sales taxes?

Here's a much better link:

[http://www.wweek.com/portland/article-17350-9_things_the_ric...](http://www.wweek.com/portland/article-17350-9_things_the_rich_dont_want_you_to_know_about_taxes.html)

From this article you'll note:

 _This year the first $9,350 of income is exempt from taxes for singles and
$18,700 for married couples, just slightly more than in 2008. That means
millions of the poor do not make enough to owe income taxes.

But they still pay plenty of other taxes, including federal payroll taxes.
Between gas taxes, sales taxes, utility taxes and other taxes, no one lives
tax-free in America.

When it comes to state and local taxes, the poor bear a heavier burden than
the rich in every state except Vermont, the Institute on Taxation and Economic
Policy calculated from official data. In Alabama, for example, the burden on
the poor is more than twice that of the top 1 percent. The one-fifth of
Alabama families making less than $13,000 pay almost 11 percent of their
income in state and local taxes, compared with less than 4 percent for those
who make $229,000 or more._

and

 _It’s true that the top 1 percent of wage earners paid 38 percent of the
federal income taxes in 2008 (the most recent year for which data is
available). But people forget that the income tax is less than half of federal
taxes and only one-fifth of taxes at all levels of government.

Social Security, Medicare and unemployment insurance taxes (known as payroll
taxes) are paid mostly by the bottom 90 percent of wage earners. That’s
because, once you reach $106,800 of income, you pay no more for Social
Security, though the much smaller Medicare tax applies to all wages. Warren
Buffett pays the exact same amount of Social Security taxes as someone who
earns $106,800._

Don't let some fool you into believing that the poor don't pay their share of
taxes. They do.

~~~
yummyfajitas
If you have data showing that including payroll or state taxes change this
picture, feel free to post it.

I gave the best data I have access to.

~~~
Umofomia
The link that he gave already adjusts the numbers for payroll taxes (but it's
obvious from looking at how the tax is collected that it's regressive -- i.e.,
flat rate up to $106k and then no tax on wages above that).

With regard to state taxes, this report gives a pretty thorough analysis for
all 50 states: <http://www.itepnet.org/state_reports/whopays.php>

It's pretty evident from the data in this report that state taxes are very
regressive in most states, mostly due to sales taxes.

~~~
yummyfajitas
The link he gives does not provide % of tax burden / % of income earned, nor
do I see any way to figure that out from the data given.

I agree that payroll taxes are regressive past $106k, but it's hardly clear
that this changes the picture significantly. I.e., the 12.4% a poor person
pays in payroll taxes need not outweigh the 0% they pay in income taxes.

------
scottjad
Warren's real federal tax rate on 99% of his income: 59%

A portfolio company makes $1 in income. Without any taxes, Warren could put $1
in his pocket if he wished. Instead the portfolio company (Wells Fargo) pays
33% taxes, then the holding company (Berkshire) pays 29% taxes, then Warren
pays 15% dividend taxes. In the end it's 59%, all of which is really truly a
tax on Warren once the smoke and mirrors go away. (- 1 (* 1 0.67 0.71 0.85))
=> 0.595655

So right now 7 out of 12 months of his income is taken by the federal
government, and he thinks they should take more! Maybe 9 out of 12 months,
where ideally (in his mind) the state government would then come in and take
the rest.

------
genieyclo
Politics is rearing its ugly head again on HN. Flagged.

------
jhgjhg
Who pays income taxes? The rich mostly.

<http://ntu.org/tax-basics/who-pays-income-taxes.html>

------
davidw
Off topic: most articles about politics.

------
zackattack
Taxation is subject to marketplace effects.

I've learned something from Mr. Buffet.

------
aneth
Could everyone make sure every Republican and Tea Partier they know reads
this? Republican concerns are critical to this country, but the current
incarnation is deeply harmful.

~~~
reader2000
It's pointless: for them their belief trumps facts.

------
chailatte
The combined wealth of American's billionaires is only $1.5 trillion. [1] If
we taxed them 100%, it would only pay off our budget deficit for one year. We
still have around 54 trillion total debt to pay down. Not to mention 115
trillion unfunded liabilities.

And which entrepreneurs would be stupid enough to work 14 hours a day and hire
workers, knowing that the government will tax them 90%? They would all flee
the country.

We have too much debt, period. From military, medicare, and social security
spending. Problem is, if we reduce any one of these, either our soldiers
returns home broke and angry, or the seniors die of starvation/disease. (35%
of Americans already over the age of 65 rely almost entirely on Social
Security payments alone. Median retirement savings of households over the age
of 65 is less than $45,000).

Tough choice. But it looks like the current politicians aren't going to make a
decision, but let Bernanke print dollars until hyperinflation arrives.

<http://english.alarabiya.net/articles/2011/03/10/140943.html>

~~~
reader2000
Stop fabricating numbers. The US National debt is about $14.5 trillion, not
anywhere close to 54 trillion.

Btw, the Bush tax cuts — costing $1.8 trillion from 2002 to 2009 — are a big
reason we got into this deep hole.

Buffet: I would note that a net of nearly 40 million jobs were added between
1980 and 2000. You know what’s happened since then: lower tax rates and far
lower job creation.

~~~
mnemonicsloth
It's not a made-up number.

US debt _to bondholders_ is around $14.5 trillion.

The US also promised Medicare and Social Security payments to retirees that
are underfunded by $59 trillion:

[http://www.usatoday.com/news/washington/2007-05-28-federal-b...](http://www.usatoday.com/news/washington/2007-05-28-federal-
budget_N.htm)

The numbers will vary here according to longevity and interest rates, but the
bill is huge, and it will have to be paid with tax money.

------
nazgulnarsil
Buffet isn't this economically illiterate. The super rich must wish to hose
the only sort of rich.

------
carsongross
Thanks for the advice, Warren.

Can we have our Goldman bailout money back now?

Yours,

The U.S. Taxpayers

~~~
siglesias
Most of it has been paid back or is on track to be paid back:
<http://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program>

------
VT_Hokie
If Warren feels so guilty, then he should write a check to the US Treasury for
his entire net worth.

------
andrewflnr
Warren buffet pays about 17%, and the people in his office pay an average of
36%. So the solution, the way to restore fairness, is to raise taxes on him? I
don't really think so. Maybe I'm a bit of a wingnut, but I find tax rates of
about 30% disgusting simply on moral grounds, and I don't see why the
discussion should go much further. Surely one of a government's prime
constraints should be _not screwing_ its citizens?

~~~
wpietri
I don't feel like I'm getting screwed. As a small business owner, I think I
get fantastic value for the taxes I pay every year. It could be better, sure,
but having lived on 4 continents, it's here that I've chosen to live and start
my latest business.

~~~
andrewflnr
I'm pretty sure that's because America does a better job of this than most
other countries. Out of curiosity, what kind of rate are you paying?

------
shmulkey18
This guy kills me. He's more than welcome to write a big check to the US
government. Until he does, you'll all forgive me when I consider him somewhat
less than sincere in his desire to see more of his income go to the IRS.

------
TheSkeptic
Funny. Buffett certainly didn't mind a little coddling in 2008. He was
arguably one of the largest individual beneficiaries of bailouts which shifted
ungodly amounts of toxic debt from failed private institutions to taxpayers.
See [http://blogs.reuters.com/rolfe-
winkler/2009/08/04/buffetts-b...](http://blogs.reuters.com/rolfe-
winkler/2009/08/04/buffetts-betrayal/).

While it's now mighty generous of Buffett to invite the government to increase
his taxes, he could spare us another
([http://www.cnbc.com/id/40229527/Warren_Buffett_s_Letter_to_U...](http://www.cnbc.com/id/40229527/Warren_Buffett_s_Letter_to_Uncle_Sam))
nauseating and embarrassing New York Times op-ed and instead put his money
where his mouth is. As another poster has noted, the Treasury will gladly cash
Buffett's check
(<http://www.treasurydirect.gov/govt/reports/pd/gift/gift.htm>).

~~~
MikeCapone
The whole financial system and everybody that depends on it was a beneficiary
of the bailouts. If everything collapsed, everybody would have suffered.
Buffett just happens to own a bigger slice of the market than almost anyone,
so of course he benefited significantly. But singling him out, especially
since he's stayed away from wall street's games and made extraordinary efforts
to keep things above board for decades, is totally unfair.

~~~
TheSkeptic
You should do your research before making statements like "especially since
he's stayed away from wall street's games and made extraordinary efforts to
keep things above board for decades."

Buffett didn't sit idly by while his holdings were threatened. He lobbied for,
and supported, bailouts.

Not content with bailouts of companies he owned large stakes in, he made
sweetheart deals to invest in Goldman Sachs and GE knowing what was going to
happen. Have you ever explored those?

If his GS and GE investments aren't convincing enough, here are a few choice
examples of the Oracle of Omaha's hypocrisy:

1\. While he promotes higher tax rates for high-earning individuals, he
lobbied against a tax that would have sought to recoup TARP losses from
bailed-out banks (see [http://abcnews.go.com/Business/buffett-bank-tax-higher-
rich-...](http://abcnews.go.com/Business/buffett-bank-tax-higher-rich-guy-
taxes/story?id=9613127)).

2\. Buffett once famously warned that derivatives were deadly, but when it
came time to put his money where his mouth was, he lobbied against proposed
derivatives regulations that would have cost Berkshire billions (see
[http://www.independent.co.uk/news/business/news/buffett-
lobb...](http://www.independent.co.uk/news/business/news/buffett-lobbies-
against-clampdown-on-derivatives-1955260.html)).

3\. In 2010, Buffett once defended the ratings agencies (see
[http://www.wnyc.org/articles/wnyc-
news/2010/jun/03/buffett-d...](http://www.wnyc.org/articles/wnyc-
news/2010/jun/03/buffett-defends-credit-ratings-agencies-at-congressional-
hearing/)), but apparently he's only willing to defend them so long as they
agree with him (see [http://www.foxbusiness.com/markets/2011/08/05/buffett-to-
fbn...](http://www.foxbusiness.com/markets/2011/08/05/buffett-to-fbn-sp-
downgrade-doesnt-make-sense/)).

Bottom line: whatever one may have once thought about Warren Buffett, his
actions over the past several years make it clear he is no investor, he is a
corporatist. And quite a successful one at that.

~~~
Locke1689
None of the positions you linked are inherently contradictory. Especially in
the derivatives trading I have the feeling you have no idea what you're
talking about. Going back and requiring existing derivatives contracts could
cost a huge amount of money and time that wasn't taken into account when they
were first bought. Applying the regulation to future contracts is a perfectly
reasonable suggestion (especially since the vast majority of derivatives
contracts are short term).

~~~
MikeCapone
btw, When Berkshire acquired Gen Re (a massive reissurer), they closed down
its derivatives book. It cost Berkshire hundreds of millions and took years,
but they closed that book because they couldn't understand these derivatives.

The ones that Buffet has invested in are way more straightforward, don't pose
any systemic risk, and have very different collateral requirements than the
toxic stuff.

------
hugh4life
"But for those making more than $1 million — there were 236,883 such
households in 2009 — I would raise rates immediately on taxable income in
excess of $1 million, including, of course, dividends and capital gains. And
for those who make $10 million or more — there were 8,274 in 2009 — I would
suggest an additional increase in rate. "

If you really want to see something get passed, you're better off putting the
cutoffs at $5mil and $25mil(maybe even slightly higher). The $1mil cutoff
sounds nice in a soundbite and it polls well, but it's not hard to find
sympathetic faces(small businesses and large family farms) who would get
caught up in that. His cutoffs would end up hurting the the "upper middle
class" and the "lower rich" more than the "super rich".

And if you want "shared sacrifice", you should be talking about a consumption
tax.

What this country needs most is a firm federal spending cap at 20% of GDP.
There would be less opposition to raising taxes and balancing the budget if
the measuring stick for spending wasn't tax revenues but the GDP.

~~~
pmorici
Buffet is talking about "Taxable Income" meaning a small business or family
farm would have to be making 1 Million in profits for it's owners before they
would actually be effected by such an increase in rates.

Consumption tax would likely put an undue burden on the poor because where as
the rich invest and save a large portion of their income the poor spend close
to 100% of what they make on things like food and housing.

~~~
hugh4life
"Buffet is talking about "Taxable Income" meaning a small business or family
farm would have to be making 1 Million in profits for it's owners before they
would actually be effected by such an increase in rates."

I understand perfectly... go ahead, put the cutoff at 1Mil and you're going to
lose politically.

"Consumption tax would likely put an undue burden on the poor"

I don't care... I'm mocking the idea of "shared sacrifice"... the poor pay
almost no taxes.

------
DanielBMarkham
Once I realized that you could take all the money from the rich, stop all
defense spending, and still have a massive budget problem? These sorts of
things stopped being an issue for me.

Seriously folks, it's a red herring, an issue created to make sure that one
party has something to fight the other party over. If you want to sack the
rich, have at it. Just don't pretend that by taking that position you are
doing anything at all for the national treasury. Or poor folks, for that
matter.

In the larger picture, many technologists view the state as something of the
past. Tens of thousands of people make their money simply because computers
are hooked to each other over wires. It has very little to do with national
budgets or policy (yes, you can throw out a bunch of silly nonsense about
national broadband policies and such, but let's get real: this economic
activity takes place in all sorts of various scenarios.)

So if you are the type to sit around pining away your day, thinking about all
those super-rich folks and how good they have it, I'm sure this will be a fun
article for you. If, however, you are concerned with public policy -- and the
fact that in the US, at least, the majority of people do not even pay an
income tax, yet vote on the rates for the rich minorities (gee, wonder how
that will turn out?) then this is all so much posturing.

I don't feel a need to slam Buffett. He's a patriotic citizen who means well.
Smarter guy than me in a lot of areas. I'm just not sure that this article has
anywhere near enough merit to have 500+ points on HN. It offers no solutions,
only rehashed populist tripe. If you want to set the income tax at 95% of all
money made over a million bucks? Have at it. It's not important.

~~~
ender7
Please supply a source for your claim in your first sentence.

~~~
DanielBMarkham
I would appeal to simple reasoning: everybody has known that the U.S. is on an
unsustainable spending curve due to entitlements for the last decade or more.
The only thing that changes is how politicians choose to spin it from year to
year. If you create a system where politicians get elected promising to spend
money that doesn't exist, then such a system will outgrow any amount of
revenue you can throw at it. If you somehow changed the rates right now and
squeezed enough out of the economy to make it all balance? Ten years from now
some new bunch of guys will be running on a platform to provide SUVs in every
driveway or something equivalently intellectually sexy and emotionally
attractive. It's simply too enticing not to.

But you asked for something solid, so here's the result of some random
Googling. Note that it's a little unfair for this author to use the current
year's deficit in this calculation, but then again with growth rates where
they are it's only a decade or so until such spending will be commonplace even
in a frugal environment.

<http://billwhittle.net/?p=562>

There are about 400 billionaires with a total net worth of around $1.3
Trillion.

Seriously, this entire discussion all boils down to how honest you can be
about how the system is broken, not which party is to blame, how much the rich
should pay, whether or not we need more or less government, or any of that.
All of that nonsense is just bullshit to keep you coming out to vote.

I'd also point you to a graph of total debt as a percentage of GDP.
<http://www.usgovernmentspending.com/federal_debt_chart.html> Even if you
argue that the last year or two is somehow "special" (A common theme when its
your guys spending the money) It's plainly clear that the trajectory leads to
default in a very short amount of time.

~~~
jfb_1973
'everybody has known that the U.S. is on an unsustainable spending curve due
to entitlements'

I wouldn't agree with that. I would say that the problem is fighting two un-
funded wars coupled with a decrease in revenues caused by the Bush Tax Cuts.
Long term we have issues with popular entitlements such as SS and Medicare.
But our immediate problems are generally due to the drop in revenues from the
Bush era and an massive increase in military spending.

------
tomjen3
If Buffet finds it so wrong that he pays so little tax, I am sure the IRS
wouldn't mind if he paid more.

Personally I would adjust Social Security to the expected life time (and re-
adjust it every year); get out of Iraq, Afghanistan and Libya; half the army
(you got nukes, you don't need that big an Army to defend yourself) and stop
the war on drugs.

