Buffett Rule - Class Warfare

[Danoff]

Obama would like to raise the minimum tax paid on the combination of income AND capital gains to 30% only for people making above a threshold income. He has stated that this is an issue of fairness above anything else - this makes sense since the projections for what this tax would raise are only 1% of the deficit. So it's not about raising money, it's about rendering justice - and that makes it class warfare.

Obama, Buffet and Buffet rule supporters like to make statements to the effect of "millionaires should pay at least as much tax as their secretaries". They point to low total tax rates (like Romney's 14%) as evidence that they pay less than middle class worker's total tax rates (15.9%).

The capital gains rate for millionaires is the same as non-millionaires

Everyone pays 15%. Everyone. Secretaries, CEOs, janitors. Nobody gets a special capital gains rate for being rich. There is no preferential treatment for anyone. The difference is that middle class families generally make a much smaller percentage of their income from capital gains than richer people. So then you have to ask yourself if it's fair to tax capital gains at the same rate as income - which most middle class people would say yes to as long as it's not the capital gains on their house value, in which case they would suddenly recant.

Social Security Tax is the same for everyone

Everyone pays 7% with their employer paying 7% (unless you happen to be your own employer at which point you pay 14%) on their first 100k and zero dollars after that. There's a reason for this (in theory) it's because you're funding your own retirement. Supposedly you only get out what you put in. In my view social security shouldn't even be in this comparison, but they love to put it in because it skews the percentages.

Someone who makes $1,000,000 pays 7% on everything up to 100k, or $7000 in SS tax. Someone who makes $100k pays 7% on everything up to $100k, or $7000. That's a 7% total tax rate the middle class guy and 0.7% total tax rate on the rich guy. Except for one tiny little detail, it's the exact same tax rate on taxable SS income. It's ABSURD to include money that can't be taxed as income under SS in any kind of calculation that includes SS taxes.

These are the big tax breaks they're talking about. That's it. Not loopholes, or special treatment in the tax code, these are the two big issues they're trying to "fix"... for reasons of justice alone, not the financial well-being of the country.

So how did people pay $0 in tax after making so much money? I have no clue and there is no supporting data that I've seen anywhere that explains this. The only thing I can think of is that these are unrealized capital gains. When Mark Zuckerburg owns 50% of facebook (or whatever) and facebook goes up in value, his stock can be worth an extra $50 million overnight. That doesn't mean he MADE $50 million, the stock simply fluctuated by that much and his current net worth changed. It'll change again tomorrow. That's my only guess as to how they're pretending that people "made" so much money and paid $0 in income tax. Either that or offsetting capital gains - making $1 million in one stock but losing $1 million in other stocks.

Nobody seems to be willing to stop and think about what happens when you tax capital gains at a higher rate (discourages investment in the american economy).

Anyway, I can tell you how to fix this little problem of injustice right now. Stop classifying capital gains as income. It isn't income. Any middle class homeowner would agree that when his house goes up $10,000 in value he hasn't made $10,000 unless he sells. And even then it's an investment that paid off, not income. He took the risk, he gets the reward. If you want to tax capital gains at 30% you need to tax all home value increases at 30%, because they are fundamentally capital gains.... what's that? No?

Capital gains is not income. Stop classifying it as such and you'll see Mitt Romney's overal tax rate shoot through the roof - way higher than his secretary. That's what he already pays on his income now, you just can't tell because capital gains are getting confused with real income.

Ok that's my rant. This is retarded.

 

[Milldrum]

Capital gains are counted as income because you invest in something to generate a return. If you make a loss then you can claim that as well.

It is not 'class warfare' as it will be described. The guy that has nothing makes no capital gains. But he would choose to if he could. Why you ask, because it means that he has made a capital gain on something instead of having nothing.

Now, to the Op, can you declare your political alliance? Who do you support? I think you might be a member of a party and you are just parroting the mantra as asked by your leaders.

 

[arora]

He has stated that this is an issue of fairness above anything else

Because, it's only fair to pay huge saleries to idiots so they can tell us what to do ....

About the rest, it's really sad when one is penalized for doing the right thing, do everything wrong though and uncle Obama will give you a cookie. This reminded me of the estate tax etc, it's so unfair to be born into money when some crooked polatition could line his pockets with your grampa's hard earned wealth.

Sometimes you gotta laugh to keep from crying, or going on a mad shooting spree. I wish people would wake up but I know they won't.

 

[Milldrum]

Because, it's only fair to pay huge saleries to idiots so they can tell us what to do ....

About the rest, it's really sad when one is penalized for doing the right thing, do everything wrong though and uncle Obama will give you a cookie. This reminded me of the estate tax etc, it's so unfair to be born into money when some crooked polatition could line his pockets with your grampa's hard earned wealth.

Sometimes you gotta laugh to keep from crying, or going on a mad shooting spree. I wish people would wake up but I know they won't.

Your a complete fool or a puppet. Did your parents tell you to think that? It is just plain stupid.

The American President gets paid peanuts compared to other CEO's. Name another company with the diverse range of interests and budget turnover as the US Government. Then what does this person make as a salary?

The US is making a loss every year. So to fix that problem, tax cuts go to the richest in society. The poor Joe on $30,000/yr gets a "We care about you!" speech. But tax a guy that makes $30,000/wk slightly more or even the same rate is considered bad policy. He still makes a lot of money.

 

[Dapper]

Because, it's only fair to pay huge saleries to idiots so they can tell us what to do ....

About the rest, it's really sad when one is penalized for doing the right thing, do everything wrong though and uncle Obama will give you a cookie. This reminded me of the estate tax etc, it's so unfair to be born into money when some crooked polatition could line his pockets with your grampa's hard earned wealth.

Sometimes you gotta laugh to keep from crying, or going on a mad shooting spree. I wish people would wake up but I know they won't.

You and Danoff don't know about the rest of Buffett's ideas?

*Congressional Reform Act of 2011*_

1. No Tenure / No Pension. A Congressman collects a salary while in office and receives no pay when out of office.

2. Congress (past, present & future) participates in Social Security. All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the rest of the American people. It may not be used for any other purpose.

3. Congress can purchase their own retirement plan, just as all Americans can.


4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

5. Congress loses their current health care system and participates in the same health care system as the American people.

6. Congress must equally abide by all laws they impose on the American people.

7. All contracts with past and present Congressmen are void effective 1/1/12. The American people did not make this contract with the members of Congress. Congressmen made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.

*no lined pockets*

 

[Joel]

Your a complete fool or a puppet. Did your parents tell you to think that? It is just plain stupid.

The American President gets paid peanuts compared to other CEO's. Name another company with the diverse range of interests and budget turnover as the US Government. Then what does this person make as a salary?

The US is making a loss every year. So to fix that problem, tax cuts go to the richest in society. The poor Joe on $30,000/yr gets a "We care about you!" speech. But tax a guy that makes $30,000/wk slightly more or even the same rate is considered bad policy. He still makes a lot of money.

So where do you draw the line then? I'm sure there's people in Australia who make less than you, so shouldn't you be helping them out?

 

[arora]

tl;dr past the 'fool' part, thanks though 👍

So what, the harder I, my family, or my invested dollars work, the more right you have to steal from me? Prescription for laziness and poor victims...

EDIT : I do know Dapper, I wasn't speaking specific to Buffet's points. I'll say this much though, anyone who wants to pay more tax can, he says he does but, in reality only if others are forced to first.

 

[Danoff]

Capital gains are counted as income because you invest in something to generate a return.

Not necessarily. You may invest in something to avoid losses (like moving dollars to gold or other currencies). You may invest in a company because you want to support that company. You may invest in cars because you want the car. You may invest in a house because you want to live in it. Alternatively you may invest in houses, cars, commodities, or companies because you think that that investment will be worth more in the future. None of that makes it income. This is not trade for goods or services, it's speculation - gambling even. You take all the risk, why does the government line its pockets with the reward?

Now, to the Op, can you declare your political alliance? Who do you support? I think you might be a member of a party and you are just parroting the mantra as asked by your leaders.

I can't really declare an alliance. Libertarian best describes my political views. I have no idea what the Libertarian party leaders think about this particular subject because I don't even know their names.

 

[Dapper]

EDIT : I do know Dapper, I wasn't speaking specific to Buffet's points. I'll say this much though, anyone who wants to pay more tax can, he says he does but, in reality only if others are forced to first.

I ain't commenting on taxes specifically, although he could cut the govt a check if he wanted.

But you can't say the extra tax dollars due to Buffett's ideas will go into politician's pockets and not mention Buffett has outlined specific ways to keep money out of politician's pockets. That's all.

 

[arora]

Agreed

 

[Terronium-12]

Your a complete fool or a puppet. Did your parents tell you to think that? It is just plain stupid.

The American President gets paid peanuts compared to other CEO's. Name another company with the diverse range of interests and budget turnover as the US Government. Then what does this person make as a salary?

The US is making a loss every year. So to fix that problem, tax cuts go to the richest in society. The poor Joe on $30,000/yr gets a "We care about you!" speech. But tax a guy that makes $30,000/wk slightly more or even the same rate is considered bad policy. He still makes a lot of money.

If you're incapable of addressing someone without digging into them (and you do have a history regarding this very thing), then don't bother replying.

 

[niky]

@Mildrum, you're treading on thin ice. Either debate in a civil manner or receive an infraction.

-

I kind of get where Danoff is going with this... unrealized Capital Gains should not be taxable... not until the time they are liquidated and such gains (or losses) can be computed into your taxes.

 

[arora]

Well, it's not that ofensive to me, he's passionate on the subject, missing my point though, like Dapper. I didn't mean to say the government keeps all the money, just enough to enforce the wealth redistribution policies they create. After all, the whole point is that of fairness, which things are not.

Unrelated, I'll go out on a limb and ask for loop hole reform in the short term, but stripping wealth in the name of fairness? no.

 

[Danoff]

Unrelated, I'll go out on a limb and ask for loop hole reform in the short term, but stripping wealth in the name of fairness? no.

The problem is, what loop holes? I've never seen the loopholes identified. They call capital gains tax a loop hole. In fact, that's the primary "loophole" everyone is complaining about... and it applies to everyone exactly equally.

 

[arora]

Maybe this guy can explain.

http://www.nationalreview.com/articles/284052/norquist-myth-charles-krauthammer

Not in that article explicatly but I've heard him toot this horn for quite a while, I bet some google skills better then my own(limited to ps3 atm) would yeild at least why he says that. He usually states some facts or stats to back his claims, more then huff and puff anyway. Prolly my fav neo con lol.

The capital gains loophole? I'm at a loss there, seems like bs to me as I agree with you on that subject.

EDIT:

''Raising revenues through tax reform is better than simply raising rates, which Democrats insist upon with near religious fervor. It is more economically efficient because it eliminates credits, carve-outs, and deductions that grossly misallocate capital. And it is more fair because it is the rich who can afford not only the sharp lawyers and accountants who exploit loopholes but the lobbyists who create them in the first place.''

CHARLES KRAUTHAMMER

 

[sumbrownkid]

Tax reform was called on for so many years.

Main reason people are up in hot air about it is due to the economy diving and joblessness. The guy with the millions becomes the popular enemy.

That said, it's tough to stomach the fact that the top earners pay less in proportion compared to the average joe.

It's becoming clear that with a growing population, more social services are gonna be demanded down the line. And with fed being in the red, and the average American still struggling, it's only a matter of time to put the upper echelon to the stake.

Call me a socialist or whatever, at the end of the day, I think the guy with a billion dollars can afford to pay that extra 100,000.

But really, what got us here is the over zealous spending. I think our military can afford a few more cuts for starters.

 

[Danoff]

That said, it's tough to stomach the fact that the top earners pay less in proportion compared to the average joe.

Both wrong.

The top earners pay exactly the same capital gains rate as the bottom earners. Also, the average joe pays almost nothing. Almost the bottom 50% of earners don't pay any federal income tax. The "middle class" is more like the top 60-90% of earners - not the "average joe". Average in the US means you pay almost nothing.

Call me a socialist or whatever, at the end of the day, I think the guy with a billion dollars can afford to pay that extra 100,000.

If someone earns $10 million (not a billion) in a given year, the buffet rule would charge $3 million as opposed to $1.5 million currently. Not an extra $100,000, an extra $1,500,000.

But really, what got us here is the over zealous spending. I think our military can afford a few more cuts for starters.

I wouldn't start with the military but it's very high on the list. Entitlements are killing us. Obamacare, Medicare, and social security are the ones that need to be addressed the most. The military comes next, it's a pig too.

 

[lbsf1]

Don't worry, whatever tax you end up with it will still be significantly less than us in the UK.

Here many pay 40% income tax, the rest not much lower. Then we have to pay 20% VAT on pretty much all purchases, and now the government have taken away many peoples child benefits which was kinda a tax rebate for those with kids.

Granted we have free healthcare, but even that is almost failing.

/rant over.

 

[MatskiMonk]

Don't worry, whatever tax you end up with it will still be significantly less than us in the UK.

Here many pay 40% income tax, the rest not much lower. Then we have to pay 20% VAT on pretty much all purchases, and now the government have taken away many peoples child benefits which was kinda a tax rebate for those with kids.

Granted we have free healthcare, but even that is almost failing.

/rant over.

Those that receive child benefits - that actually 'need' them - are not paying anything like 40% tax, and in many cases receive more back than they pay out. Not to mention that those in an income bracket where they are struggling will be receiving other benefits... And also we don't pay VAT on many foods and stuff for kids... I'm not saying some people don't struggle, but everyone I know with kids who 'needs' their benefits, also seem to have reasonable Sky packages and other such basics, like his 'n' hers iPhones -- all whilst living in council houses that cost hundreds a month less than privately renting. It really sickens me that people I know, approaching retirement, who have painful nervous system disorders are getting their benefits cut whereas young people who choose not to go to work because they'd only earn what they are gifted on benefits, still seem to be okay. Those that are socially irresponsible seem to be the ones financially rewarded by our government. We've got teenagers having kids, and claiming benefits from the age of 16, they will probably never pay back more than they cost, and they will grow into adults believing they are owed a living by the government.

We get free healthcare, free education, our streets are relatively safe, and relatively clean, and we don't have to live in fear of our government... yes we get taxed in all directions, but it's not like we don't get something in return, and if we weren't paying out £150,000,000,000 in welfare payments (more than we spend on education, or healthcare, or defence) each year... maybe taxes wouldn't need to be so high.

I know what I've said isn't true in all cases, but I know for fact it's true in many cases. I am glad we live in a society that wants to look after people that cannot look after themselves.. but that isn't what we do, we allow hundreds of millions to be given to people that don't 'need' it.. and our taxation system is a direct reflection of that.

/rant over... for now

 

[lbsf1]

I know what I've said isn't true in all cases, but I know for fact it's true in many cases. I am glad we live in a society that wants to look after people that cannot look after themselves.. but that isn't what we do, we allow hundreds of millions to be given to people that don't 'need' it.. and our taxation system is a direct reflection of that.

/rant over... for now

We pay hundreds of millions to people who don't want to look after themselves.

I think that all countries like ours that are half Democracy and half Capitalism will reach the same problem as we have now in england and the US. Capitalism favours the rich and allows them to make lots of money, democracy and the welfare state means that it favours those with little money and or can't work. Therefore everyone wins. This is ok when the economy is growing since that pays for it, however once the economy stumbles then it can no longer work.

For someone to make money someone else has to lose it.

 

[Famine]

For someone to make money someone else has to lose it.

Hogwash.

Even if there were a finite money supply, which there isn't.

 

[Danoff]

For someone to make money someone else has to lose it.

As Famine indicates, this is a common misconception about economics. Wealth gets created from nothing.

 

[lbsf1]

As Famine indicates, this is a common misconception about economics. Wealth gets created from nothing.

Understood, my mistake.


May I ask, is that because technically everything is wealth of somekind and therefore makes it more complex, and if the whole economy is growing then wealth is effectively created from nothing??

Do you have a link to anywhere which gives an explanation of it since I find that kinda interesting on the basics of economics. (yeah I know how geeky that sounded.)

 

[Danoff]

So this is a video about how an economy can grow and wealth can be created, but it starts out with existing wealth. Even in the beginning of the video, the two guys on the island use their labor to produce wealth for themselves even if they are not trading. Hopefully though the video explains how labor, and improvements in efficiency of labor can produce valuable goods and services without having to take anything from anyone else.

 

[Diatribe777]

I wouldn't start with the military but it's very high on the list. Entitlements are killing us. Obamacare, Medicare, and social security are the ones that need to be addressed the most. The military comes next, it's a pig too.

These programs are set up to help americans when they are in a desperate (sometimes life-threatening) situation.

We have quite a lot of military bases..maybe closing a couple of those could help with funding important social programs that save american lives.

In fact we are providing aid/welfare to other nations, but some americans have a problem when we want to help our own citizens?

 

[Jubby]

In fact we are providing aid/welfare to other nations, but some americans have a problem when we want to help our own citizens?

I think it's easier to see the welfare issue when the person in front of you at the grocery store can buy "better" or more groceries with food stamps. The foreign aid is just as silly, but we don't see the wire transfer or plane full of bricks of money.

 

[Dapper]

The govt can limit what products food stamps can buy. But that kind of defeats the purpose, which is to help people get better food.

I see your point, though. Maybe the soda isle, for instance, should be off limits.

 

[Jubby]

The govt can limit what products food stamps can buy. But that kind of defeats the purpose, which is to help people get better food.

I see your point, though. Maybe the soda isle, for instance, should be off limits.

What i was referencing was buying $150+ wedding cakes, lobster, $8/lb steak with it. I'm sorry when I was making good money (just got laid off but hope for a rehire) I couldn't and wouldn't dream of buying that expensive stuff, even though I probably could have.

I'd love to see it turn into a "you're allowed this and only this" situation. It works really well with a program for pregnant women and children. You're given a voucher to buy milk, eggs, cereal, a protein, and other various essentials.

 

[Danoff]

These programs are set up to help americans when they are in a desperate (sometimes life-threatening) situation.

We have quite a lot of military bases..maybe closing a couple of those could help with funding important social programs that save american lives.

In fact we are providing aid/welfare to other nations, but some americans have a problem when we want to help our own citizens?

Good point. Foreign aid first, then social programs, then military. You want to help your fellow american, do it through charity.

 

[ExigeEvan]

Don't worry, whatever tax you end up with it will still be significantly less than us in the UK.

Here many pay 40% income tax, the rest not much lower. Then we have to pay 20% VAT on pretty much all purchases, and now the government have taken away many peoples child benefits which was kinda a tax rebate for those with kids.

Granted we have free healthcare, but even that is almost failing.

/rant over.

And most American states have an individual income tax that's applied on top of the federal tax. And the 40% tax rate is one of several tax thresholds, and above what the majority of the UK workforce will ever earn.