Warren Buffett: I pay 17.7 percent on taxable income; my receptionist pays 30 percent

[DeepModem Mom]

WP: Buffett Slams Tax System Disparities
Speech Raises at Least $1 Million for Clinton Campaign
By Tomoeh Murakami Tse
Washington Post Staff Writer
Wednesday, June 27, 2007; Page D03

NEW YORK, June 26 -- Warren E. Buffett was his usual folksy self Tuesday night at a fundraiser for Sen. Hillary Rodham Clinton (D-N.Y.) as he slammed a system that allows the very rich to pay taxes at a lower rate than the middle class.

Buffett cited himself, the third-richest person in the world, as an example. Last year, Buffett said, he was taxed at 17.7 percent on his taxable income of more than $46 million. His receptionist was taxed at about 30 percent.

Buffett said that was despite the fact that he was not trying to avoid paying higher taxes. "I don't have a tax shelter," he said. And he challenged Congress and his audience to see what the people who "clean our offices" are taxed, to loud applause.

A populist tone permeated the 70-minute talk with the billionaire investor and philanthropist in Manhattan on Tuesday night. The talk, given to about 600 Wall Street bankers and money managers, raised at least $1 million for Clinton's presidential campaign, the Associated Press reported.

The event comes as public frustration has grown over executive compensation and disparity in pay. It also comes as Congress debates changes to the tax code that would decrease take-home pay for managers of private-equity firms and hedge funds, pools of money for wealthy families and institutional investors. The rich can take advantage of tax loopholes, including one that allows those managers to pay the capital gains tax rate of 15 percent instead of the ordinary top income tax rate of 35 percent.

Buffett said that he and other privileged Americans must do more to help the less fortunate....

http://www.washingtonpost.com/wp-dyn/content/article/2007/06/27/AR2007062700097.html?nav=most_emailed

[Captain Hilts]

1. Bravo for his being active in campaigning for a change of tax laws. nt

[havocmom]

2. K&R for some honest discussion on the inequity of the tax system

Those who reap the most benefits seem to pay the lower rates. Fucking Welfare Moguls in their Lear jets! ;)

[Jim__]

3. If bush had his way, Buffet would pay 0%.

bush wanted to drop all taxes on capital gains.

[Selatius]

18. There are corporations that get down to below 5 percent. They seem to be the norm.

WASHINGTON -- More than half of US corporations paid no federal income taxes during the boom years of the late 1990s, and those that did were able to shelter much of their income, according to congressional accountants.

...

The GAO report showed that 61 percent of US corporations paid no federal income taxes from 1996 through 2000, a period of rapid economic growth and rising corporate profits.

An estimated 94 percent of US corporations reported tax liabilities amounting to less than 5 percent of their total income in 2000. The corporate income tax rate is ostensibly 35 percent, but companies are able to reduce their effective burden by claiming various deductions and credits.

US companies paid an average of $11.88 in corporate taxes for every $1,000 in gross receipts, the study said.

http://www.boston.com/business/globe/articles/2004/04/11/most_us_firms_paid_no_income_taxes_in_90s/

[PBS Poll-435]

31. How about News Corp?

They own FOX Tv, FOX Snooze, 20th(21st?) Century Fox Studios, NY Post, and they haven't paid corporate income tax in 2 FYs!

And they are hurting sooooo bad right now, they are about to purchase the Wall Street Journal.

[Divine Discontent]

50. Damn...

and Buffett should use your sentence and say that! that's great! the inequality of the tax system is yet ANOTHER despicable fact of the bush years.


www.cafepress.com/warisprofitable <<-- check it out, top '08 stuff

[Mark D.]

4. While America Sleeps

Even if this makes major news headlines, people won't get it. Not on the right anyway. All the lower
middle class and the middle class who go bonkers when a right wing politico bellows 'cut taxes' just
won't get it. He pays less than half what a lower middle class person pays. HELLO! A thousand great
newspapers covering it will be a thousand trees falling in a thousand empty forests in America...

[Cosmocat]

6. Yep ...

the dolts in the MSM will brainless and whorishly parrot the "tax and spend dems" and republians are the low tax party, and the sheeple will graze along ...

[DeepModem Mom]

7. Thanks for your post, Mark -- welcome to DU!

[SammyWinstonJack]

No kidding, right? Boggles the mind, don't it?

:crazy: :banghead: :crazy:

[calimary]

34. Welcome to DU!

I'm just glad he's out there saying it. He might have occasion to say it again. And again. And one of these times, somebody will be listening. I'm just glad to see this mindset expressing itself from the highest of mega-buck heights.

[phantom power]

5. Buffet understands that everybody loses if the middle class loses. Even rich people.

[HughBeaumont]

24. Today's rich besides him don't give two flicks.

Most of the wealthy power brokers of America, through their votes and corporate actions, have made it painfully obvious that they're willing to sacrifice the long term health of the companies they govern and the economy in general to get theirs and as much of it as possible NOW.

[IronLionZion]

28. Everyone does better when EVERYONE does better

SOMEbody has to buy our goods and services.

[Drum]

35. So true!

:thumbsup:

[TahitiNut]

36. He understands that life isn't a zero-sum game ... while Cheney/Bushites know NOTHING else

The sociopathically corrupt who are obsessed with killing, oppressing, exploiting, and impoverishing others are a true CANCER in our body politic.

[DinahMoeHum]

8. He'd be the first to tell you that he didn't make his millions by himself

and he doesn't call himself a "self-made man".

"I Didn't Do It Alone"
http://www.faireconomy.org/notalone/

[OrangeCountyDemocrat]

9. Buffett Is A Cool Rich Guy!

He Gets It!

Too bad he's in the minority amongst his wealth class.

He has more intelligence and compassion in one finger than * has in his entire body.

[The Doctor.]

41. Do let me explain why (though I'd bet you already get it)...

I would wager that Buffett is not old money. I'm sure a 5 minute search would show just how long his family has been wealthy for.

The problem isn't the 'new money' folks, it's the 'old money' elite. Old money elitists understand something that most of us just can not wrap our heads around. They understand that no matter what their objective or agenda, they must not ever compromise their power. Wealth is power.

If your family has a long-term objective to make changes, whether for good or ill, then you must not compromise your resources and ability to make change.

All that stuffy, fake snobbery that we associate with 'old money' is not merely brought about by a 'superiority complex', but out of a sense of self-preservation. At those levels, 'polite' is not merely a nicety, it is a survival trait. Taking 'polite' to the extreme is an art, and here's why; At those levels, connection is everything and those connections, those alliances must be constantly reassured. For someone to show even a hint of disdain by even a slightly misinterpreted gesture is enough to threaten those alliances. The collapse of an alliance can create immediate enemies and the end to an agenda... if not more.

So, alliances aside, something else is crucial to the execution of an agenda; wealth. One must have resources to affect the changes they want. Great changes require great resources. One of the first rules of affecting change among the old money elite is do nothing that curtails your resources, no matter what. If one's resources are diminished, the ability to affect change is likewise diminished, and there, in a vicious cycle, we see a great loss of power. They will not compromise their resources willingly. Unfortunately, this results in an ever-increasing quest for power and the agenda for change, whether good or ill, becomes exactly tertiary in their quest.

In many cases, these families really do want to make the world a better place... so long as they are in charge of that place.

Then, there are the 'new money elite' whom the 'old money elite' despise for stumbling into the game without a clue how to get along. Many of the 'NME' ;) are just plain greedy, take-what-you can sorts. Then there are Warren Buffet and Bill Gates types who realize, at least to some extent, that the old money game will never pay off in a better world for all. They have, perhaps, figured out that even they will suffer (to an extent) if the middle class fails.

We have to get old money out of politics.

[fishwax]

48. Buffett came from a pretty solid background

His dad ran a brokerage and was also a U.S. Representative, and Warren went to an Ivy League school initially (though he later transferred to the University of Nebraska).

You make some interesting points about the old and new money bit, but of course there are always exceptions to both. Either way, Warren Buffett has kept a remarkably level head through the years, in spite of breathing that rarefied air :)

[The Doctor.]

61. Very impressive.

If his family wealth goes back more than two generations, he is a break-away example.

Good to see that can still happen.

[vssmith]

55. FDR was old money

JFK wasn't real old money but he wasn't a self-made man either.
On the other had Ken Lay was new money.

These examples in no way shoot down your theory but at the very least show some exceptions.

[The Doctor.]

62. Ken lay was a perfect example of NME Greed.

Unscrupulous and careless.

One of the other reasons the OME despise the NME. (even though they tend to forget the ugly origins of their own wealth... a la Bush)

[AwakeAtLast]

10. I'll give that the 5th K & R!

I heard a neighbor say something like, "Why is the middle class disappearing?" (Repub, BTW)

I didn't bat an eye. I said, "Because the corporations are in charge, they give their CEOs insane packages, and then pay very little taxes on it. Someone has to make that up!"

He didn't have much to say. ;)

[progressoid]

11. Both he and Bill Gates support the inheritance tax as well.

and that fell on deaf ears too.

[bikebloke]

12. Seen it

I once worked for a bank auditing loan applications. I'd see tax returns from people making $300,000 - $500,000 a year where they'd pay less than what I was paying. Not percentage wise, but in actual dollars. And I wasn't earning too much more than minimum wage. Bastards.

[valerief]

13. The rich take care of their own and digest the rest of humanity. nt

[Gormy Cuss]

14. Paris Hilton's out of jail!

Who has time to discuss tax inequity with such important news.? :sarcasm:


I admire Buffett for talking about it, just as he did his low Prop. 13 tax bill on his vacation house in California, but I'd admire him more if he would put his money where his mouth is and make a voluntary contribution to the government to raise his taxes to the same percentage level as his receptionist for one year. Buffett can afford to do so and it would make a far stronger statement than simply stumping about it.

[indepat]

15. 17.7% tax for Warren, almost 30% for his receptionist, yet 'pukes still look

for ways to push the tax burden further upon the middle class while racking up almost $8 trillion in additional Federal debt since the Gipper. But do not worry folks, most of that $8 trillion now reposes in the wealth of our most affluent including large corporations which pay a minuscule portion of their income in Federal taxes.

[midnight]

16. This is appalling . The secretary pays a higher percentage

in taxes than the billionaire investor that she/he is working for.

[gravity]

17. There is a difference between long term capital gains and salary

The problem if you raise the long term capital gains tax, it will hurt middle class investors in the process who could be saving for retirement.

I believe that the top income brackets should have higher marginal rates, and executives should be pay the higher tax rates for their compensation packages, but I don't think it's right to raise the long term capital gains tax to those as income taxes.

Short term capital gains are already taxed at the higher rates, so many who invest for living already have their capital gains treated as their salary.

[Selatius]

21. I hardly think Buffett was seriously suggesting we kill the goose that lays the golden eggs.

I think he's seriously suggesting taking away many credits and exemptions the people in the top 1 percent use (or abuse) to shift away from themselves the burden of taxation. A person who benefits disproportionately from society shouldn't have society disproportionately pay for his way. I have nothing against being rich or trying to get rich. I have something against getting rich by making everybody else pay the "operating" costs.

[lumberjack_jeff]

44. Why do we buy the idea that capital, and not labor are the golden-egg producers?

The economy grows because workers are more productive. Capital has harvested the benefits of those gains.

I have nothing with people trying to get rich by working, either.

[mhatrw]

26. what rates are short term cap gains taxed at?

how short term is short term?

[Dorian Gray]

30. 40% and a you hold the investment for under a full year.

[mhatrw]

38. How many American workers even pay ANY capital gains tax

on an annual basis? My guess is less than 5%. It's a crime that the cap gains tax rate is so low while even to poorest of the poor pays an effective 13% in FICA income tax, and singles earning $40,000 to $60,000 a year pay more than double the cap gains tax rate when you include FICA with federal income tax.

[TahitiNut]

39. Wrong! Short term gains are taxed at ordinary income rates. Period.

Long term capital gains are taxed at rates LESS THAN HALF the marginal rates of ordinary income. Furthermore, capital gains are tased only when 'realized' - except in estates where they mostly go untaxed!

Someone in a 35% marginal tax bracket pays only 15% income tax on a long-term capital gain.The captial gains tax rate is 5% for taxpayers in the 10% and 15% marginal tax brackets.

http://invest-faq.com/articles/tax-cap-gains-rates.html
http://taxes.about.com/od/capitalgains/a/CapitalGainsTax_4.htm

[mhatrw]

40. I knew that somebody was pulling my chain!

Not that I've ever had any long OR short term capital gains to speak of like many, many other Americans.

[BlooInBloo]

29. lololol!

[TahitiNut]

37. Taxing people less on the income they receive from the labor of OTHERS is inexcusable!!

Absolutely no rationalization can be tolerated. None.

[ProudDad]

51. Who are you talking about????

For the vast majority of folks in the U.S. "saving for retirement." means paying FICA insurance out of their paychecks...

That's the only freakin' "retirement investments" most have...

I think there should be a 110% marginal tax rate for anyone making more than $500,000 per year from ANY SOURCE...including "deferred salary" like dick face cheney...

[hfojvt]

54. funds invested for retirement

are not taxed until those funds are withdrawn.

[Lance_Boyle]

19. Kudos to Buffett, but

what is his receptionist's annual salary? Sure, Buffett ought to be paying the maximum rate of 35% instead of the cap gains rate of 15% - that's a disgustingly blatant loophole to benefit Bush's base. They accidentally let a decent human slip through and benefit from it, too. But depending on his receptionist's salary and what bracket s/he falls into based on that level of income, maybe s/he *ought to* be paying income taxes at the 30% rate. :shrug:

[On the Road]

20. I Believe He Says She *Was* Paying 30%

Don't if that's average or marginal, or whether it includes all federal, state, and local taxes.

[Lance_Boyle]

22. all I'm saying is that 30% might be the proper rate for her, depending

upon annual income. I think we all agree that Buffett's income should be taxed at the max 35% level (actually, most of us probably agree that it should be taxed even more than that!).

[Selatius]

23. She IS paying the 30 percent tax rate.

According to 2006 tax schedules, his receptionist would have to make over 74,200 in a year to push into the 28 percent tax bracket. She would have to make over 336,550 to get into the 35 percent tax bracket.

[Lance_Boyle]

25. So it looks like she must be making over $74,200 a year.

In that case, the 28% tax bracket is perfectly appropriate for her, as it is for everyone else making > $74,200/yr.

[mhatrw]

27. It's not appropriate for her to be taxed at a rate 13% higher than Buffet.

Your point is silly. All things are relative. 30% for her is "appropriate" only if billionaires are taxed 40%+.

[FloridaJudy]

32. So at least he's paying his employees well

If this is true, I have a lot more respect for him than for most bosses.

[Sgent]

43. Not when you include

the 15% FICA tax that every employee pays.

[mhatrw]

60. Every employee earning less than $100,000 you mean.

The ones earning millions pay a much lower effective rate for FICA.

[Big Pappa]

53. I was thinking the same

She would have to be over 100k.

[redqueen]

33. Yes, really hard to figure that out.

I'm sure that's why rich republicans haven't come around to their senses... it's just too hard to figure out how very very unfair they are being.

[lovuian]

42. Even Buffett knows we are heading for a Depression

it can't keep going like that

[spanone]

45. no shit, warren.

[lumberjack_jeff]

46. Some math is in order

Marginal tax rate or total tax?
Including or excluding social security? How about the employers share?

This could be a really compelling story if the numbers could be validated.

[Tab]

47. Buffet has made this exact point before

And he recognizes there's only so much money you can have. There's so much you need for basics, and tax rates should be low. But at some income level, you've pretty much paid for whatever you need to live in a reasonable lifestyle, and the rest should be gravy, and taxed higher.

It is not the first time he's complained that he makes millions a year and has low taxes, even though much of that is gravy, whereas some of his staff pay double his tax rate, and need to utilize every remaining penny. He knows you need to make a certain amount just to survive.

I have nothing but respect for Warren Buffet.

[BlooInBloo]

49. Yup - he gained mine when I heard what he said about his kids' inheiritance....

... To the effect of: They'll be left with enough to do anything they want, except nothing.

[kbqr]

52. Now Buffett will have to convince the 'less fortunate' that he should pay more taxes

I doubt it will change as I assume it is the media and the education system responsible for most Americans believing that they will become part of the billionaire class . . . and, thus, they do not want taxes raised on their future self. Despite even government figures showing that real and nominal wages are falling for the bottom 99 percent and that mobility is becoming decidedly less mobile in America. So, raising taxes on the billionaire class is a vote loser when over half of the population thinks they are going to be one.

[CTyankee]

56. Yep, and this is why so many of these people are Republicans

They do not want to see themselves in any way like a poor person, even a working poor person. It is part of their self esteem.

My garage mechanic's son who is probably about 20 years old, no college, fixes cars in his dad's shop, defends the multi zillionaires by saying they pay the "most" in taxes. Well, yes. 17.7% of $46 million is a lot of money; 30% of say, $30,000 is a huge bite (I'm assuming that the 30% includes all taxes (not just income, but payroll, personal property, real estate, town and city and this is before any deductiones are taken).

I'm sure this kid thinks he'll be rich some day so he's not in favor of reducing his future income on behalf of the teeming masses. It's scary to imagine what this guy is thinking...

[mhatrw]

58. Who Wants To Marry Into The 17% Income Tax Bracket? n/t

[whistle]

57. A receptionist in the 30% income tax bracket....wow, Buffett pays his people well

<snip>


Tax Year: 2007
Filing Status: Married filing separately

If your taxable income is between... your tax bracket is:
$0.00 and $7,825 : 10%
$7,826 and $31,850 : 15%
$31,851 and $64,250: 25%
$64,251 and $97,925: 28%
$97,926 and $174,850:33%
$174,851 and over :35%


To take an example, suppose your taxable income (after deductions and exemptions) was exactly $100,000 in 2003 and your status was Married filing separately; then your tax would be calculated like this:


( $ 7,000 - 0 ) x .10 : $ 700
( 28,400 - 7,000 ) x .15 : 3,210
( 57,325 - 28,400 ) x .25 : 7,231
( 87,350 - 57,325 ) x .28 : 8,407
( 100,000 - 87,350 ) x .33 : 4,175
Total: $ 23,723

This puts you in the 33% tax bracket; but as a percentage of your income, your tax is about 23.7%.

This next calculator lets you try it out with your own numbers:


Tax Hikes, Tax Cuts
1993 saw a tax hike on the wealthy (via two new brackets at the top), and then 2001 through 2003 saw a series of tax cuts that lowered the tax brackets as follows:


1992 1993 -
2000 2001 2002 2003 -
2007
15% 15% 15% 10% 10%
15% 15%
28% 28% 27.5% 27% 25%
31% 31% 30.5% 30% 28%
36% 35.5% 35% 33%
39.6% 39.1% 38.6% 35%


From 2000 to 2002 most brackets dropped by one percent, and there was a new low bracket added for the "lucky duckies" at the very bottom. In 2003 most brackets got an additional cut of two percent with a special gift for the "other" lucky duckies, the ones at the top. But note that the rich still paid more in 2003, and everybody else paid less, than was the case in 1992. Now if we could just balance the budget...

http://www.moneychimp.com/features/tax_brackets.htm

That last statement above is just wishful dreaming. A balanced budget is an impossibility as long as the U.S. allows private banks to print money and charge the federal government interest on all bank notes issued.

[mhatrw]

59. You are forgetting FICA. That's another 12.5% hit on just the first $95,000 in EARNED wages.

And without a "lock box," FICA is nothing but another federal income tax -- a federal income tax that is HIGHLY regressive.