Warren Buffett on Taxes

He's back at it, folks. Berkshire Hathaway (NYSE: BRK-B  ) CEO Warren Buffett wrote another -- I think his third -- op-ed in the New York Times on why capital gains taxes can and should be raised on the wealthy. He writes:

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.

I'd add: Most savings account currently yield far less than a quarter of 1%.

Buffett's big point is that capital gains taxes have been considerably higher for most of modern history -- nearly double the current rate. "I was managing funds for investors then," he writes. "Never did anyone mention taxes as a reason to forgo an investment opportunity that I offered."

Here's what this looks like over the last 60 years:

Source: Tax Policy Center.

It isn't causation, of course, but I'd point out that the last decade was one of the worst ever for stocks even as capital gains taxes were at historic lows.

Buffett makes a similar point: "Under those burdensome rates [of past decades] both employment and the gross domestic product (a measure of the nation's economic output) increased at a rapid clip."

I've shown this before. Here's GDP growth at different levels of top income tax rates:

And jobs:

It can't be stressed enough: These charts don't show that low taxes lead to lower growth. That's been the trend over the last 50 years, but it's almost certainly not causation. What they show is that other factors -- population growth, global trade, demographics, technological breakthroughs, tax deductions, and countless other factors -- matter much more. The world where people say "Cut/raise tax rates and growth will rise/fall" just doesn't exist. It's a lot more complicated than that.

Back to Buffett's point about capital gains taxes and people's willingness to invest. As the Tax Policy Center explains: "About half of all corporate dividends are paid to investors that don't pay tax -- pensions, non-profits, foreign entities, and the like. Changes in the dividend tax rate don't affect their tax bills."

That's true for capital gains, too. According to the Investment Company Institute, there was $17.9 trillion in retirement-fund assets last year. 46.1 million Americans hold investments in an IRA. Changing the capital gains tax rate has virtually no direct impact on these investors since withdrawals are typically taxed as income.

For better or worse, taxes are going to be a big issue in the coming weeks as Congress and the president hammer out a deal to avoid the fiscal cliff. My simplistic view is that over the long term, taxes should roughly equal the services people demand from their government. In near unison, those people demand a generous social safety net and a large military, which alone make up 78% of federal government spending. However it's done, be it tax reform that reduces deductions to broaden the base or raising marginal rates themselves, the simple truth is that current tax revenue isn't enough to pay for the services voters by and large refuse to cut. 

"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," Buffett writes. "Send him my way. Let me unburden him."

What do you think? 


Read/Post Comments (49) | Recommend This Article (54)

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  • Report this Comment On November 26, 2012, at 12:59 PM, mdk0611 wrote:

    In additon to lack of causation (think about GDP growth during WWII with high tax rates) , graphs that focus on rates ignore another important factor. For example, when you look at the 70% and 50% rates, remember that taxpayers had access to legal tax shelters that have been limited or eliminated by the Tax Reform Act of 1986. The widening or narrowing of the tax base is also an important consideration.

    With respect to Buffett, I recall that in 2008 he was quoted as saying that while the LTCG tax rate could definately increase without harming the market and the economy there was a limit to how far they could go "harm free". 20% was a no brainer, but at 28% things could get dicey. Well, when you add the ACA 3.8% to a nominal 20% tax rate, you're up to 23.8%. That's getting pretty close to where Buffett got nervous before he was a full fledged acolyte of the current administration

  • Report this Comment On November 26, 2012, at 1:08 PM, TMFMorgan wrote:

    ^ There are an untold number of tax shelters and deductions today, too. And that was mentioned in the following paragraph -- "tax deductions."

  • Report this Comment On November 26, 2012, at 1:17 PM, mdk0611 wrote:

    With all due respect, the untold number today is nowhere near what it was pre-1986. It's particularly true for individual taxpayers. In addition, today's deductions/credits like the Child Tax Credit are often phased out at income levels well below what would be defined as "wealthy" .

  • Report this Comment On November 26, 2012, at 1:32 PM, KCinAustria wrote:

    >>The world where people say "Cut/raise tax rates and growth will rise/fall" just doesn't exist.

    Sadly, that is the only world which DOES exist. What doesn't exist is a world where those people are right more often than random chance.

    Nice article. I've always said I've never seen a (non-partisan) study showing that lower taxes lead to higher growth, and now the data you present confirms my suspicion. (Here I am falling into confirmation bias....)

  • Report this Comment On November 26, 2012, at 1:33 PM, jhenricks39 wrote:

    The longer an Investment is held, Inflation becomes a larger componet of the Capital Gain. Inflation is not Income and should not be taxed!

  • Report this Comment On November 26, 2012, at 1:34 PM, TMFMorgan wrote:

    I'm not denying that effective rates were much lower than statutory rates in the past. But again, that's true today, too. The number of loopholes isn't the relevant statistic; the size is. One of the largest, the 401k, wasn't introduced until 1978.

    In 2007 only 117k tax returns (0.08% of the total) had an effective rate of between 30% and 35%. For those making more than $200,000, 80% had an effective rate below 25%, with half below 20%.

  • Report this Comment On November 26, 2012, at 1:36 PM, TMFMorgan wrote:

    <<think about GDP growth during WWII with high tax rates>>

    The numbers are all post-WW2.

  • Report this Comment On November 26, 2012, at 1:50 PM, mdk0611 wrote:

    In addition to the size of the loopholes you need to look at who can take advantage of them. A large number of people could take advantage of 401(k) plans but the limit on contributions (much lower than today's limit) placed a cap on how much they lowered the effective rate for wealthy taxpayers. Buffett is focused on upper income taxpayers, who faced the same fixed limit as middle income taxpayers. So for Buffett's targetted group, 401(k)'s were not a big deal

    On the other hand, before the TRA of 1986, real estate limited partnerships, R&D limited partnerships, equipment leasing limited partnerships could allow upper income taxpayers to take a much larger bite out of taxable income than a 401(k) plan. There was no limit to the amount of qualifying mortgage debt that would yield mortgage interest deductions. Of course, since credit card interest was also deductible it wasn't as important for it to be mortgage interest.

    BTW - 2007 was a phase-in year for the changes included in the Tax Reform Act of 1986. Beware of statistics for that year.

  • Report this Comment On November 26, 2012, at 1:53 PM, mdk0611 wrote:

    familigia 112- Mankiw missed a loophole, albeit a corporate loophole as opposed to one that benefits Buffett personally. BRK takes major advantage of the "dividends received deduction" available to corporations to substantially reduce corporate income taxes paid.

  • Report this Comment On November 26, 2012, at 1:56 PM, kthor wrote:

    I think Buffett should just send his checks to the IRS and be the roll model to the top 1% instead of merely supporting the tax increase ... words and doing it are two different things

  • Report this Comment On November 26, 2012, at 2:54 PM, fooledoux wrote:

    I don't either agree or disagree with Mr. Buffet, but your chart would imply that higher taxes create jobs. My thought would be: What if higher taxes are the response to a growing economy rather than the other way around. I don't know. I'm just a guy that buys stocks in companies that are well run and hope their prices increase.

  • Report this Comment On November 26, 2012, at 4:22 PM, wbyd777 wrote:

    I am obviously not as financially smart or nearly as successful as Buffet and my belief on whether taxes should or should not be increased is more complex than "yes" or "no." But one area, that I am confused by in his comments is that he has stated several times that he has not seen investors make investment decisions based on what the potential taxes would be....seems a bit strange to me.

    If this is the case, then why do Muni bonds seem to trade at a lower yield than other similarly risk rated bond investments? I guess I always thought this had to do with how they were tax advantaged and that investors were willing to accept a lower interest rate due to them being tax advantaged...........no?

    At the end of the day, aren't we, as investors, trying to maximize returns and minimize risks? Don't taxes affect returns? So wouldn't they affect the risk you were willing to take? I think you can argue the magnitude of the difference they will make, but can you really argue that they don't make a difference? Hmmmm.........

    Again, I'm not arguing for higher taxes or against them, I'm just questioning one of the points he keeps making......and wondering what I am missing. Thx.

  • Report this Comment On November 26, 2012, at 4:40 PM, ScottmFool wrote:

    I generally agree with Mr. Buffett's (and presumably Mr. House's) premise that a higher marginal rate on personal income will not negatively affect GDP, job growth, business investment, etc.

    However, not all taxes are created equal, and I think looking at these numbers in aggregate results in that being overlooked. Some taxes ARE good; they help build our core infrastructures and defense. (Personally, I can live with a moderately-progressive marginal tax rate. I prefer flat, but a simple, progressive marginal tax rate is livable).

    But some taxes are bad: AMT, the 3.8% ADDITIONAL tax on investment income in 2013, the marriage penalty tax (I'll expand on that in a followup), the 2% tax on GROSS SALES of medical devices (regardless if the device is profitable or not); putting married couples making $250k in some of the same categories as Buffett, Gates, Ellison, etc.

    In Buffett's efforts to help our country be financially stable, I fear his efforts are unwittingly (to him) being used to promote the expansion of bad tax laws. It's not JUST about the money, it's about the arbitrary and bloated tax laws that results in the loss of hard-earned income, and is almost impossible to plan for.

  • Report this Comment On November 26, 2012, at 4:42 PM, slpmn wrote:

    ^ Buffett isn't suggesting taxes don't affect returns, they obviously do. He is trying to rebut the point made by the anti-tax coalition, which is, raising taxes will stifle investment because if the return is reduced, people won't invest.

    Buffett is saying this isn't true, investors always invest because that's how they make money. He'll invest if the cap gains rate is 0% and he'll invest if it's 50%, and so will everyone else, because - what else are you going to do with your money? Keep it in a bank account out of spite?

  • Report this Comment On November 26, 2012, at 4:45 PM, ScottmFool wrote:

    sed s/House/Housel/

  • Report this Comment On November 26, 2012, at 4:49 PM, damilkman wrote:

    I do not understand the charts used in this article. In the 1st chart I see that top rates on gains were highest when the US economy struggled. Did not the economy struggle the most from about 72 to 86? So it seems like showing that chart is an example of tax rates being bad.

    I do agree with some posters that tax rate is often a response to other forces. One might decrease the tax rate when GDP growth is low and increase it when everyone is profiting.

    I believe a better comparison on GDP growth is to compare US growth verse EU. We would want to adjust for population demographics. If the author can show that higher taxes promote GDP growth then I am for a top rate of 100% :)

    Of course we know that the government is less efficient with capital then the free market. We tolerate this because the governement can do things free markets are unable. However, each dollar removed via taxes returns less. This is the reason why unemployment in my opinion is so high in the EU. Their money is less efficient then ours because they are spent by an inefficient entity.

  • Report this Comment On November 26, 2012, at 6:07 PM, maiday2000 wrote:

    "Buffett is saying this isn't true, investors always invest because that's how they make money. He'll invest if the cap gains rate is 0% and he'll invest if it's 50%, and so will everyone else, because - what else are you going to do with your money? Keep it in a bank account out of spite?"

    Maybe you do. In the end, a savings account that loses no money is better than a stock market that is falling. High taxes that fund a bloated and inefficient government destroys wealth and capital, period. The other option is capital flight. People with money just invest in another country with better prospects.

  • Report this Comment On November 26, 2012, at 6:50 PM, xetn wrote:

    Buffett is a hypocrite when it comes to high taxes. He donates most of his wealth to such entities as the Gates Foundation and avoids high estate taxes. He takes a relatively low salary so avoids income taxes. He is nothing more than a government spokesman for high taxes.

    The Buffett take is high taxes and huge amounts of government spending (consumption) at the expense of the citizens is the way to increased wealth and riches. What a joke. Pure Keynesian crap!

    In reality, nothing can be consumed unless and until it is produced. Production, in a modern economy, is based on investing for capital and growth depends on ever expanding capital (machines, land etc.). Since the financial crash, we have been consuming capital, not increasing it. This leads to lower production and directed more to consumption instead of research and development.

  • Report this Comment On November 26, 2012, at 7:08 PM, DanFPilot wrote:

    It is hard to believe that a writer for an 'investing' website is advocating 'punishing' individuals who engaging in a positive activity. Is it fair to punish those who delay gratification in the present in order to invest for the future? While in the meantime, encouraging people to overspend on housing through the mortgage interest deduction. Or providing subsidies to high income people (and Fool writers) to buy Chevy Volts and have solar panels installed on their homes. Long term, 'growth and income' investing is good for the country for many reasons and the rates of taxation on long term cap gains and dividends should not be increased. Class warfare is lame and it is getting very old.

  • Report this Comment On November 26, 2012, at 7:50 PM, srjenkins wrote:

    Many or most are living the dream and have no idea of the cost. How Mr. Buffet can pontificate about drops in a bucket, assuming the remainder is sustainable, exhibits spectacular faith that we will keep the dream alive.

  • Report this Comment On November 26, 2012, at 8:26 PM, ShyOptimist wrote:

    Anyone that says this is about taxes has missed the point. It is about the size of government. Higher taxes facilitate a larger government. The premise of the article: "that current tax revenue isn't enough to pay for the services voters by and large refuse to cut." is simply wrong. It is a fact that there are never enough taxes to pay for all the services voters are willing to grow accustomed.

  • Report this Comment On November 26, 2012, at 10:08 PM, ynotc wrote:

    1. Buffett is assuming that the only alternative is a savings account. One could invest in real estate. If all investors got the returns that Buffett did early in his career this would not be an issue but he is hardly the rule.

    2. If the percieved risk is too great then you may not be willing risk your capital if the government takes an inordinate share. BTW what did the government do to earn a share? Regulate the industry thats a good one.

    3. As the Laugher curve (a bell shaped curve for the uninitated) has shown not only will you get diminishing returns once the tax rate exceeds a certain level but the marginal income recieved by the government will fall off of a cliff. Once this happens it hurts capital markets and the financial industry and thus our economy.

    4. I fully expect that tax rates will go up. What will be interesting is to see if it actually increases economic activity and economic well being as is implied.

  • Report this Comment On November 26, 2012, at 11:06 PM, ershler wrote:

    ynotc,

    Buffet is assuming you are going to invest in something you can make a good return on instead of letting it sit around just to avoid paying taxes on the money you would have made.

    The Laffer (not Laugher) curve is only correct at the endpoints of the curve. You don't have any idea of the shape of the curve. Greatest revenue may be realized with a tax rate anywhere greater than 0% and less 100%.

    Morgan goes out of his way to point out there is not a connection between tax rates and economic growth.

  • Report this Comment On November 27, 2012, at 12:57 PM, taurusks wrote:

    Xetn said : """Buffett is a hypocrite when it comes to high taxes. He donates most of his wealth to such entities as the Gates Foundation and avoids high estate taxes. He takes a relatively low salary so avoids income taxes. He is nothing more than a government spokesman for high taxes. """

    That is the single worst argument towards proving someone is a hypocrite. You are saying donating more than 90% of his wealth is a tax evasion?

    He would have been a hypocrite, if he evade taxes so he can keep more of your money. In this case, he gave it away.

    I don't even want to get to the rest of the argument.

  • Report this Comment On November 27, 2012, at 5:12 PM, sheldonross wrote:

    Buffet's statement is complete BS for the small investor.

    Perhaps it applies to institutional investors and/or the bulk of money invested.

    However, if the rate of post tax return is too low, I'm certainly going to do something else with my money. Real estate, buy a car, etc.

    I suppose that might ultimately stimulate the economy through consumption and/or alternative investments, but post-tax - real gains - is what I base my investments decisions on.

    Your article actually confirms this.* Why the he** would so many people be investing in tax-sheltered accounts such as 401Ks and IRAs if they weren't after gains without the tax penalty.

    -->* "About half of all corporate dividends are paid to investors that don't pay tax -- pensions, non-profits, foreign entities, and the like. Changes in the dividend tax rate don't affect their tax bills."

  • Report this Comment On November 27, 2012, at 5:19 PM, sheldonross wrote:

    As I dwell further on this, I can't help but see the conflicting message.

    401Ks, IRAs, etc. are designed to ENCOURAGE investment with tax-based incentives.

    Then we're supposed to accept the premise that investing shouldn't take taxes into account?

    Which is it? Or does Buffet not believe in IRAs either?

  • Report this Comment On November 28, 2012, at 6:17 AM, TopAustrianFool wrote:

    Mr. Buffett says that he would not change his growth plans because of higher rates, but higher taxes robs the market place of the capital it needs for growth. Without capital for growth there is no new jobs.

    Taking the capital away capital to give to the govt who spends it on non-sustainable jobs its a waste of wealth that will be reflected in a new recession sooner or later.

  • Report this Comment On November 28, 2012, at 12:43 PM, ynotc wrote:

    ershler,

    "Greatest revenue may be realized with a tax rate anywhere greater than 0% and less 100%"

    The question really is: at what point will taxes become a disincentive to investors?

    I posit that given the risky and changing regulatory environment that incrimental tax increases will scare away investors.

  • Report this Comment On November 28, 2012, at 4:18 PM, ershler wrote:

    ynotc,

    So what is the problem with letting the Bush tax cuts expire? The plan was the cuts would eventually expire; not letting them adds to uncertainty to the situation.

  • Report this Comment On November 28, 2012, at 5:05 PM, jono64a wrote:

    The self-serving plutocrat like Buffett is a rank hypocrite, fighting the IRS against a tax bill for BH. Similarly the soi-disant "patriotic millionaires" crowd calling "tax me", but when challenged to donate more to the IRS online, they all refused. There is a good video clip of this.

    In an Obama v Hillary debate, the leftist moderator pointed out that capital gains revenue increased when the rate decreased, and vice versa. But Obama supported higher rates anyway for "fairness".

    There is something particularly bad about the capital gains tax, because it is not indexed for inflation. So many people are taxed when they haven't made any real gain, or even might have made a loss. Dividend tax is also an evil double tax on top of the corporate tax already paid by by the stockholder. In Australia, they have a system called "dividend imputation" where this corporate tax is "imputed" or "credited to the bill" of the individual tax payer, precisely to avoid this double tax.

    I would rather trust economist Dr Thomas Sowell than Buffett. He has recently written a booklet "'Trickle Down Theory' and 'Tax Cuts for the Rich'" Here he goes through the history of Wilson, Coolidge, JFK, and Reagan. He shows that the "trickle down" is a total fiction and tool of demagogues. Rather, those who advocated cuts in tax rates (including JFK) argued that it would encourage more economic activity and less tax sheltering, enabling the economy to grow, thus increase revenue.

  • Report this Comment On November 29, 2012, at 10:19 PM, cdb5556 wrote:

    you should ask mr buffet how his railroad is doing, since his buddy obama blocked the keystone pipeline, effectively eliminating a competing method of getting Canadian crude to US refineries. follow up with a question about how much of the federal yearly budget obama/buffet's "rich 2% tax" would generate. Answer-6%. It's the spending that is the problem. Buffet is a Buffoon.

  • Report this Comment On November 29, 2012, at 11:07 PM, RouteReflector wrote:

    6% is a sizeable amount and a decent tradeoff for a tool that would have virtually zero impact on the economy, as per the Congressional Research Service.

    It's not necessary to entirely wipe away the deficit. As long as revenues increase and spending decreases to the point where the debt stays constant in relation to GDP growth, everything will be fairly stable.

  • Report this Comment On November 30, 2012, at 1:04 AM, ChairmanMAObama wrote:

    warren the fraud buffet has a fat greasy pig he needs help with. He has a rail that that helps recreate the pipeline dear leader doesn't want. If you let BNSF go to canada I will be your fall guy on taxes. He doesnt really care about taxex as long as those below him get taxed the same his power will grow on compounding alone. Its about power for the fraud from Omaha. He wont live longenough for the progressives run him over with said train and thats a damn shame. Flat tax for and freedom for our companies.

  • Report this Comment On November 30, 2012, at 11:25 AM, bigtex55 wrote:

    There are several problems with Mr Buffett's arguments. The idea that investors don't take taxes into account is absurd and Mr Buffett of all people should know that. When it comes to multi-national companies they absolutely take tax rates into account when deciding where to invest. Even domestically it is well known that companies can be lured to a particular state or county by promises of reduced property taxes on their new manufacturing plant (or whatever they are building). He makes the point that very few people are affected by a rise in capital gains and dividend taxes because of IRA's and other tax deferred institutions. If that's true then raising those taxes doesn't help balance the budget or reduce the deficit which is presumably what we are trying to accomplish. There is the valid point made by others here about the tax base - something the charts do not reflect. I would rather have a 100% tax rate on 25% of my income than a 35% tax rate on 100% of my income. That is a more reasonable comparison of the rate and base from the 50's and 60's with today's tax code. And finally, there is the philisophical point. A government that is continually encouraged to tax their way out of its spending problems will always spend money at a faster rate than the taxpayers can afford. At some point the weary taxpayer needs to stand up to government and say enough is enough.

  • Report this Comment On November 30, 2012, at 11:34 AM, rationalroy wrote:

    Warren Buffet is not a hypocrite...far from it!

    He will pay far more taxes if the rates go up.

    But, he cars about all the suffering unemplpyed

    people in the Country.

    Come on, republicans, get behind this guys

    advice. Get these damn tax rates where they were under Clinton, at least! We have gone straight downhill under the current rates except for the filthy rich, who have just gotten richer and richer.

    Let's stand up fpr the middle (now lower) class and

    do what is right for a change. Who is paying

    Boehner and McConnell. They will not listen to

    reason and just are trying to say no to anything

    Obama suggests. What A-----!

  • Report this Comment On November 30, 2012, at 11:53 AM, donkatfun wrote:

    RouteReflector wrote,

    It's not necessary to entirely wipe away the deficit. As long as revenues increase and spending decreases to the point where the debt stays constant in relation to GDP growth, everything will be fairly stable.

    Over 30% of the government revenues go to pay for servicing the debt. What could be done with that 30% and no debt? People are sucessful when they live below their means and government would be to.

  • Report this Comment On November 30, 2012, at 12:01 PM, TMFMorgan wrote:

    <<Over 30% of the government revenues go to pay for servicing the debt.>>

    Revenue in 2012 will be $2.5 trillion and net interest costs $225 billion. So less than 10%, not "over 30%."

  • Report this Comment On November 30, 2012, at 12:20 PM, jrj90620 wrote:

    Buffett avoided taxes by holding stocks for decades,with wealth appreciating,tax free.He also pays little dividends on his Berkshire holdings,to avoid taxes.Years ago,when cap gains taxes were higher,there was a 50% exclusion and income averaging.Both are gone today.States like California tax short and long term gains the same,with no compensation for inflation.Now,the cap gains tax,in California,is from 9.3-13.3.Add that to Federal and no inflation compensation,and you can get to over 50% real taxes.Buffett was asked,a couple years ago,why he is giving his wealth to the private Gates Foundation,instead of govt.He said govt would waste it.So,I think Buffett is just trying to get the ignorant masses to love him.He doesn't want a legacy of being an evil rich guy.He is pulling up the drawbridge on others,trying to do well.He made his on low taxes and no advocates high taxes.What a jerk.Maybe just senility.

  • Report this Comment On November 30, 2012, at 12:40 PM, df32707 wrote:

    Buffet is a fraud - his whole life is dedicated to not paying taxes. If you made him a dealer in securities required to mark to market every year

    his tune would change dramatically.

  • Report this Comment On November 30, 2012, at 12:53 PM, 48ozhalfgallons wrote:

    Oops! I misread the title. I thought it was about Warren Buffet on Texas.

  • Report this Comment On November 30, 2012, at 1:44 PM, DR55MAC wrote:

    I don't know about the rest of you,but Warren Buffet makes me tired. I have a suggestion for Mr. Buffet. I think he should find a pre-owned auto and assume a disguise and be an "Underground Boss" and get out of Omaha and visit with the rest of us. Then write his columns. That's real substance.

    Jeannine- age 74 in case you want to know.

  • Report this Comment On November 30, 2012, at 2:14 PM, bwana999 wrote:

    People keep forgetting that "let the government pay for that" means you and me.

    If you want the service, eventually you're going to have to pay for it! The government's job is to insure the service is the best for the money... and a lot of government services are NOT.

  • Report this Comment On November 30, 2012, at 4:12 PM, donaldo15 wrote:

    It's easy for Buffet to agree with the administration on higher taxes because he has made his fortune by investing other peoples money and then paying capital gains rate on those earnings versus earned income rates.

    For the rest of us, capital gains is a second tax and so when the highest rate increases by 5% and then the capital gains rate also increases by 5% it has a real effect on hiring decisions, especially when you are a S-corp making $250k which includes your business income.

  • Report this Comment On December 01, 2012, at 11:15 AM, keninden wrote:

    As an S-corp making (recently) $250K, I disagree. I don't hire because I make a little more or less money. I only increase my overhead if demand for services requires it, giving me an opportunity for increasing profits.

    That's the myth about "job creators". Job creation doesn't happen because someone has money to burn. It happens when consumers (the real job creators) have money to spend.

  • Report this Comment On December 01, 2012, at 2:50 PM, Handworn wrote:

    I'm not opposed to taxes rising on the wealthy, at least in theory, but I'd point out that Buffett's remarks are a trifle disingenuous, in the sense of not mentioning the fact that his record has been built in part by avoiding dividends and capital gains taxes as much as possible. He's done this by buying only companies that he correctly believes will outperform substantially over the long term so that he doesn't have to sell them, and by urging the managements of companies he doesn't completely own to devote more profits to buying back shares than to increasing the dividend. This will, therefore, affect him percentage-wise less than many rich people.

    I should stress that I'm not accusing him of hypocrisy-- I think he's speaking his beliefs. But the oxen of his opponents on the issue are more vulnerable to being gored than his.

  • Report this Comment On December 01, 2012, at 6:27 PM, esotericevets wrote:

    The masses are effectively being sifted and segregated and there is a natural desire to try to give the bottom sifted a hand up somehow. It is hard to rise the lowered; the yeast of handouts of nutrition, cash and hollow forms of education fatten the bread irregularly. The rich and the politically connected seem one and the same. Guess which city has the bulk of the richest per capita counties around it (last I heard it was DC). A friend from overseas suggested to me that McDonalds is the main problem. He suggested that due to so many worthy cows being slaughtered in recent decades, perhaps the world is being inundated with first time humans. Naturally, these humans are likely to founder. The Ayn Randers would advocate a lot of tough love and self lifting by ones own bootstraps. Still others would let bleeding heart compassion rule the day. I don't have a clue as to what to write next, so I wont.

  • Report this Comment On December 02, 2012, at 1:24 AM, ChrisBern wrote:

    "the simple truth is that current tax revenue isn't enough to pay for the services voters by and large refuse to cut."

    The simple truth is that if we were to raise taxes by enough to balance the budget, it would take about $1.2 trillion in additional tax revenue. That type of tax increase would cause the U.S. to be in a full-scale recession/depression for years. What does that tell us? That we're spending WAY beyond our means. WAY beyond!

  • Report this Comment On December 05, 2012, at 5:13 PM, TopAustrianFool wrote:

    Morgan;

    "Revenue in 2012 will be $2.5 trillion and net interest costs $225 billion. So less than 10%, not "over 30%."

    Yes, but by 2016, about 30% of the debt matures and the interest costs will be over $3T/yr.

    Do you still feel good about printing money?

  • Report this Comment On December 05, 2012, at 6:26 PM, Doug4sails wrote:

    1. DO NOT TAX INFLATION.

    2. Tax the first $200,000 of after inflation gains each year at a low rate, tax the next $750,000 at the Taxpayer's ordinary income rate, beyond $1 million tax at 50% or higher. Adjust levels for inflation annually.

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