William Thien

Is Warren Buffett for Real Regarding His Taxes?

Posted on: September 18, 2012

I heard another news story on The Buffett Rule, an idea floated around more so earlier in the election cycle about tax fairness. On the surface it sounds nice. And I would have to agree, it seems unfair that Warren Buffett pays at a lower tax rate, fifteen percent probably, than his secretary, or whomever for that matter.

But he probably pays a lot more in taxes than his secretary and probably generates quite a few more taxes than his secretary through his investments. Raising taxes for wealthy taxpayers is probably not the answer to the country’s debt problems and it is almost certainly unfair.

Most wealthy taxpayers pay a lot more in taxes than the average taxpayer. One presidential candidate paid $1.9 million in taxes at an effective tax rate of 14.1 percent of his income. But did he and his family use $1.9 million in services? Most wealthy taxpayers pay much more in taxes. For example, someone who makes $45,000 a year may pay at a rate of 30 percent (I don’t know what the exact rate is) and Warren Buffett pays at 15 percent, the capital gains and investment tax rate, a rate half of what the guy who makes $45,000 pays. But even at that rate Warren Buffett most likely pays a much larger amount in taxes, millions perhaps. I don’t know how much Warren Buffett pays in sum total, but it is likely more than someone making $45,000. The guy who makes $45,000 doesn’t pay nearly what Warren Buffett pays. I do think the guy who makes $45,000 probably pays too much in taxes, though. But I don’t think that has anything to do with Warren Buffett.

Yet, that is not really what I’m all about on the matter. I think taxes are too high across the board. If you are simply going to raise taxes on the very wealthy and do nothing to modify the tax code or improve taxes for everyone, Warren Buffett included, then I don’t see the need to raise the taxes on the very wealthy.

What this looks like is just another way to raise taxes with no hope of ever seeing a tax decrease, a decrease for anyone or even a more favorable tax code, and it makes me wonder why Warren Buffett is so eager to comply?

First they will raise taxes on the wealthy. Warren Buffett doesn’t realize it, but he will then become “The Poster Child of Tax Increases.” I can’t see that anyone would want that legacy in America, particularly after having done such wondrous things in the financial sector. Then, to justify raising taxes on everyone else, they will say, well, we’ve raised taxes on the wealthy, now it’s everyone else’s turn. That’s what will happen if they raise Warren Buffett’s taxes, you can bet on it. They will start raising everyone else’s taxes.

And I wonder if Warren Buffett already knows that? He’s a pretty shrewd guy. You think he knows? I bet he does. Maybe not.

Why would Warren Buffett figure on something like that? You think he knows eventually his tax fairness plan would be used to raise everyone else’s taxes? He’s probably determined that well in advance of everyone else or has hired someone who knows tax law so well that they know that’s exactly what would happen, that once they raised Warren Buffett’s taxes, they would raise everyone else’s and say since they raised Warren Buffett’s taxes and those of the wealthy, now it’s everyone else’s turn. I wonder if Warren Buffett knows that will happen? No, it can’t be.

It just…can’t…be! Not Warren Buffett, too! They got to him, ladies and gentlemen. They got to him. Now Warren Buffett is one of them, too!

I like the Buffett family. I listen to music composed by Buffett’s son, Peter. It’s beautiful. I like the Buffett name. They are good people. It’s too bad they got to Warren Buffett.

I am sure there is a better way.

Copyright © William Thien 2012

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