Warren Buffett Talks Class Warfare

By Justin Gardner | Related entries in Economy, Money

Ben Stein (yes, that one) recently sat down with one of the richest men in the world and discussed wealth, the rich and the war on the working class in this country.

Get ready for some eye opening stuff

Mr. Buffett compiled a data sheet of the men and women who work in his office. He had each of them make a fraction; the numerator was how much they paid in federal income tax and in payroll taxes for Social Security and Medicare, and the denominator was their taxable income. The people in his office were mostly secretaries and clerks, though not all.

It turned out that Mr. Buffett, with immense income from dividends and capital gains, paid far, far less as a fraction of his income than the secretaries or the clerks or anyone else in his office. Further, in conversation it came up that Mr. Buffett doesn’t use any tax planning at all. He just pays as the Internal Revenue Code requires. “How can this be fair?� he asked of how little he pays relative to his employees. “How can this be right?�

Even though I agreed with him, I warned that whenever someone tried to raise the issue, he or she was accused of fomenting class warfare.

“There’s class warfare, all right,� Mr. Buffett said, “but it’s my class, the rich class, that’s making war, and we’re winning.�

So why are they winning? As if you even have to ask…

Another argument was that raising taxes actually lowers total revenue, and that only cutting taxes stimulates federal revenue. This is supposedly proved by the history of tax receipts since my friend George W. Bush became president.

In fact, the federal government collected roughly $1.004 trillion in income taxes from individuals in fiscal 2000, the last full year of President Bill Clinton’s merry rule. It fell to a low of $794 billion in 2003 after Mr. Bush’s tax cuts (but not, you understand, because of them, his supporters like to say). Only by the end of fiscal 2006 did income tax revenue surpass the $1 trillion level again.

By this time, we Republicans had added a mere $2.7 trillion to the national debt. So much for tax cuts adding to revenue. To be fair, corporate profits taxes have increased greatly, as corporate profits have increased stupendously. This may be because of the cut in corporate tax rates. Anything is possible.

A great article and some needed reality in these fiscally irresponsible times.


This entry was posted on Monday, November 27th, 2006 and is filed under Economy, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

14 Responses to “Warren Buffett Talks Class Warfare”

  1. JustAnotherIdjit Says:

    I demand reimbursement for the 5 minutes I wasted reading the Jake’s
    “comment”!

  2. Paul in Austin Says:

    I like the simple argument that we need to raise enough taxes to pay the bills. We can lower the taxes as fast as we can figure out how to lower the costs of government.

    Ironically the rich benefit the most from an economically sound US since their assets are likely to be more valuable as the world covets US economic stability.

  3. Alex Says:

    I’d be really interested to see the breakdown of that data sheet, and especially more details on Mr. Buffet’s income and taxability.

    I’m solidly middle class, and always looking for ways to reduce my tax burden, but never find anything substantial. I can save a few hundred bucks here or there occassionally by finding a deduction that actually applies to me, most of them apply to low income people, and they are rather substantial. I have quite a few friends that pay next to nothing percentage wise in taxes compared to me because their income is 20-40% lower.

    On the other hand, the few friends/aquaintances I have that are wealthy are forced to employ accountants to plan for them, simply because if they don’t they end up very close to where I am after taxes despite having salaries double and more than mine.

    So, I’m seeing the opposite case of this article… why is that? Granted I don’t know any multi-millionaires. I think there’s a very large omission from this analysis. Maybe most of Mr. Buffet’s value is tied up in investments that will be taxed out the wazoo when cashed in/sold? When you have substantial wealth, salary becomes a very small factor in overall taxation.

  4. JohnB Says:

    The article is probably misleading and overly simplified (as everything is in the media).

    Buffett only makes $100,000 as CEO of Berkshire. What were the numbers involved for everyone?

    I agree the tax system is grossly unfair and in need of a radical overhaul. But why not show some numbers and demonstrate it?

  5. sleipner Says:

    Wow, a CEO that actually makes a reasonable and justifiable income…how…70′s of him.

  6. DosPeros Says:

    in conversation it came up that Mr. Buffett doesn’t use any tax planning at all. He just pays as the Internal Revenue Code requires.

    “Tax planning” IS “just pay[ing] as the Internal Revenue Code requires.” Legal tax avoidance should not be mistaken for illegal tax evasion.

    But furthermore, Warren’s fortune is almost entirely in the form of long-term capital gains — very little need to find an off-shore bank to stuff income when he’s paying 15%.

    For your reading pleasure though: here is a list of abusive tax shelters per the fucking IRS: http://www.irs.ustreas.gov/businesses/corporations/article/0,,id=120633,00.html

    enjoy

    I also demand reimbursement for the time it took me to scroll past Jake’s comment.

  7. BenG Says:

    Mr. Buffett makes a truely remarkable admission of unfairness here in the way the Gov. collects taxes and all you can say is ‘I don’t believe it’ ? JohnB, he gives us examples of ‘the numbers’ in very simple terms: make a fraction to show the percentage you pay in taxes. He says right off that this includes all the millions he makes in dividends and interest, which is how much of the wealth is secured by the wealthy. I believe this is why the Rebublicans have so successfully pushed for lower capital gains taxes and desire the flat tax. So much of the income will be immediately available after just 15% is taken out for taxes. Is why it so lucrative to be paid in stock options? It’s not what you make but what you keep that counts. And to show their appreciation they outsource all of our jobs overseas.
    This is what Mr. Buffett sees as so unfair. And why, even though he benefits greatly from the system as it is, he knows it needs to be changed before our own greed destroys us.
    Mr. Ben Stein ended this interview by commenting: “THIS brings me back to Mr. Buffett. If, in fact, it’s all just a giveaway to the rich masquerading as a new way of stimulating the economy and balancing the budget, please, Mr. Bush, let’s rethink it. I don’t like paying $7 billion a week in interest on the debt. I don’t like the idea that Mr. Buffett pays a lot less in tax as a percentage of his income than my housekeeper does or than I do.
    Can we really say that we’re showing fiscal prudence? Are we doing our best? If not, why not? I don’t want class warfare from any direction, through the tax system or any other way.”

  8. Lewis Says:

    I say you’re blaming the government for something that’s not it’s responsibility. Extremely rich people don’t have to spend all that money on themselves. They can give most of it to the government or the less fortunate if they choose. It’s a personal decision.

    The greed factor affects all the rich -not just white republican businessmen. Look at all the liberal Hollywood types and rock stars – most all of them are poster boys for decadent extravagance. Or how about all those democratic politicians like Kerry, Edwards and Gore.

    Buffet knows he can pay an 80% tax rate and still live far better than almost all of us. His offer of self sacrifice is completely empty. Maybe he should pay his employees more instead. Or pay 100% of their health care, or do more with his money to create good paying jobs for more of us little people. He can start doing all that tomorrow instead of waiting years for tax laws to be changed. But the reality is he’s just another way too rich person completely full of bull poop.

  9. DosPeros Says:

    The lesson here and the ONLY lesson is REDUCE government spending. Is anybody talking about increasing the tax rate for capital gains? Does anyone seriously want to raise the income bracket? We’ve played this game before — it was called the 1970′s and it didn’t work out.

  10. BenG Says:

    Lewis; Just finally got back to this and saw your response. I came off sounding too Dem. vs. Rep. and shouldn’t have. The tax code has been evolving far too long to blame it on one party. My point has more to do with Govs role in safeguarding the opportunities for the working class. The rich get enough favors in life, not to say they don’t deserve to have their cake n eat it too when they work for it. If government doesn’t work for the average bloke than why should anyone agree to pay taxes. Get back to the reason we formed this nation; no taxation wthout representation. And not just the lobyists, who get a large chunk of grant money and earmarked funds for who they represent. So we get taxed to hell, and they get all the representation money can buy. Is that what our government is for?

  11. Around the web | alexking.org Says:

    [...] Warren Buffett Talks Class Warfare [...]

  12. DosPeros Says:

    This post got me thinking — NOT ONE of Donklephant’s esteemed contributors even made passing comment on the death of this country’s FINEST AND BEST 20th century economist — Milton Freidman. And yet you post this, which is down right vacuous in terms of meaning…anything, let alone economics. Sad showing gentlemen, through omission you have shown your entire hand and it is not pretty.

  13. Mir khudadad baloch Says:

    please help me iwant to come in europ iam in prisan in pakistan please help me i well be greatful for sir

  14. DosPeros Says:

    Justin – Do you have any bond money to get Khudadad out of the clink? I’ve got a lil’ bungalow I’d be happy to set him up in if you go get him.

Leave a Reply


NOTE TO COMMENTERS:


You must ALWAYS fill in the two word CAPTCHA below to submit a comment. And if this is your first time commenting on Donklephant, it will be held in a moderation queue for approval. Please don't resubmit the same comment a couple times. We'll get around to moderating it soon enough.


Also, sometimes even if you've commented before, it may still get placed in a moderation queue and/or sent to the spam folder. If it's just in moderation queue, it'll be published, but it may be deleted if it lands in the spam folder. My apologies if this happens but there are some keywords that push it into the spam folder.


One last note, we will not tolerate comments that disparage people based on age, sex, handicap, race, color, sexual orientation, national origin or ancestry. We reserve the right to delete these comments and ban the people who make them from ever commenting here again.


Thanks for understanding and have a pleasurable commenting experience.


Related Posts: