President Barack Obama says “it’s only right that we ask everyone to pay their fair share in taxes.”
Rich folks must be wondering when their refund checks will start arriving in their mailboxes.
The current income tax is progressive, requiring those making more to pay a higher rate. Thus, those earning a million dollars pay, on average, 29 percent of their income to Uncle Sam, while those taking home $50,000 to $75,000 a year pay an average of 15 percent. This progressivity can be seen in wide angle, too: Figuring credits and exemptions, 47 percent of Americans pay no federal income tax at all. Meanwhile, the top ten percent in income pay 73 percent of all income taxes collected.
And Obama’s idea of taxing “the rich” would only make it more unfair.
But, wait, what about billionaire Warren Buffett? Doesn’t he pay a lower percentage of his income in taxes than does his secretary?
Most of Buffett’s income comes off his investments, not in salary. That’s capital gains, taxed at 15 percent. Obama decries it, but doesn’t propose any specific increase in capital gains taxes. Why? He doesn’t want the stock market to crater. As he put it two years ago, “The last thing you want to do is raise taxes in the middle of a recession.”
So, when President Obama says the rich should pay their fare share, what does he mean? Simple: “If you’re not rich, vote for me.”
This is Common Sense. I’m Paul Jacob.
8 replies on “Fair Share Laid Bare”
I’ve heard that Buffett takes only a nominal salary of $15,000 per.
Mr. Buffet holds most of his wealth in unrealized capital gains in public companies (I understand not having pass-through tax treatment in most cases). Unrealized capital gains in domestic companies are not for now subject to tax. Those capital gains are nonetheless all subject to a ca. 35% friction that is the annual (payable quarterly in advance) corporate income tax (the cos. do well, so not much in the way of tax losses to offset usually), not to mention other excise taxes, fees, tariffs, and related legal and accounting costs spent to comply with the rules or minimize liabilities. The loss of return on investment (that is, income) to government also depletes his pool of capital for other activities. Hence, his wealth has been depleted annually by taxes on the corporations in which he has interests. That’s a tax on him as a holder of interests in those companies. For him not to count the effect of income and other taxation on the corporate entities he owns in determining tax effects on him is most puzzling — especially in a public essay. The effects of corporate income taxes keep most regular schmoe investors chasing wealth and seldom achieving real wealth. The only vehicles that avoid this effect are required to pay out 90% of income by government, forcing them to use debt to finance operations to too large a degree and also preventing them from storing up cash for tough times.
His support for the estate tax and the benefits it provides to his life insurance companies might be a good subject for you, Paul. This might be a reprise; I have a vague recollection of your covering this important matter before.
If Warren Buffet’s secretary pays a higher tax rate than he does, then he must pay her REAL WELL!!
What people forget about the dividends that are only taxed at 15%, “Qualified dividends”, is because that is money paid out after the corporation has paid the 35% fed tax on it, plus state taxes, then the distribution is again taxed at 15% more when the individual recieves it. So in reality, dividends ate taxed at 50%.
“Tax the Rich” is not meant to be the rich at all. “Millionaires” and “Billionaires” have become people who make $250,000 or more. The leftists need to destroy the middle class to meet their ends. They cannot have entrepreneurship and people thinking for themselves. For Warren Buffett it means competition and a possible diminishment of his power and wealth. It’s as simple as that and written for all to see in the Communist Manifesto.
Not only do 47% pay no income tax at all, most of them receive thousands in Earned Income Credit which is an expense to taxpayers who pay income taxes.
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The rich are paying less to the government.
Because there are less of them. The number of millionaires has declined 39% from 2007. Of note, that was when the republicans lost control of Congress. The top 1% of the country has had a 15% drop in income over the past 4 years. This is the same group that is still paying 38% o0f all the taxes in the US. A number that is almost unchanged as a percentage fromwhat is was under Clinton, and even after the purported Bush tax cuts. So there are fewer wealth=y people and the ones that are left are still picking up the same percentage of the overall taxes going to the government.
These are the folks that are not payingtheir “fair share”?
So earnings of the rich go down. Unemployment and overall poverty of the rest of the country goes up? Seems like the only share that has gone up in that time is the government’s.
Probably just a coincidence.
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