Warren Buffett is Wrong on Taxes

Brian, great story and explanation of Buffett's comments. I can see why Buffett's statements are being scrutinized so close to the election given his influence over public opinion during our economic crisis. -a Buffett follower

"As I have argued, the income tax grabs at just that; income. It goes after those making a monthly paycheck. Not those like Mr. Buffett who have their money in low-tax stock portfolios. There is a massive difference between the wealth of people such as Warren Buffett, Bill Gates and the rest of the Forbes 400 and the successful businessperson making a few hundred thousand dollars per year. But yet that businessperson will be much more impacted by the increase on income taxes than the uber-rich." How many years would it take for someone making $250,00 a year to acquire the amount of wealth that Gates and Buffett have ? Raising the tax rate on people on people making over $250,000 won`t mean spit to Gates or Buffett. Buffet is for Buffet. What is his guaranteed return on his GS investment? Perhaps these gentleman should remember what country gave them the opportunity to acquire their massive wealth. You are right Brian, as far as I know there is no law stopping Mr. Buffet from giving the government more money than he is REQUIRED to pay.

If the comparison is made correctly, a "Family" with atleast one child, would actually receive an Earned Income Credit refunded to them for approximately $2,815. This equates to most people in America as Redistribution of Wealth. If a "Family" has two children the Earned Income Credit refunded to them would increase to $4,667. By the way, Family is defined by Websters as: parents and their children. When you reference the US Tax Code, please make sure you are giving the correct tax tables as your references. Tax tables in the code do not take into effect the number of dependents reported on a tax return to arrive at a taxable income. I would also recommed that in the future when you write an article regarding tax issues that you consult a tax professional to determine that your substance it correct. When the Democratic candidate speaks of giving 95% of Americans a tax break, remember that only 60% of us actually pay taxes. What will really happen is the folks that are currently getting Earned Income Credits will get a higher credit refunded to them; thus redistributing wealth once again. For those of you who don't employ anyone, here is what happens when these credits are received by the recipient. In some cases they are receiving 33% of their annual income in a tax credit/refund. Most don't use this money to get ahead in life, instead they take off from work for one, two and sometimes three months as they have sufficient income to support themselves from the handout they have just recieved. If this is increased under a new Democratic administration, the time off from work will only increase and not improve most of these peoples' lives. Sincerely, A CPA

Whenever I have heard or read Buffet on higher taxes, as he said about retaining the "death tax", I've screamed at myself "if he wants to give more let him give more. If he believes that the government can better do with his money than he can himself, let him make the contribution. But, don't structure the tax laws so that I'm forced to allow the government to confiscate my money". Both John McCain and Barack Obama have mentioned offering some sort of "economic" role to Warren Buffet. This makes me wonder whether or not there is a real difference between McCain and Obama on the economy.

Remember the original Constitution and Supreme Court ruled that the power to tax is the power to destroy and that income taxes were Unconstitutional. What we really need to do is repeal the 16th Amendment, shrink the Federal government 80% and put this country back in line with what the original founding fathers wanted. A country that provided freedom for its citizens to earn a living without that living being stolen.

The only "fair tax" would be a consumption tax that taxes you on what you spend and not on what you earn. While this tax has been called regressive (i.e. it would stop people from consuming, or unduly burden the poor), it may be the best option. For Example, a local candidate where I live, Steve Hudson (US Congress MD District 8), has suggested such a tax on candy and soda to help pay for federal medical programs (i.e. obesity will be part of the problem and part of the solution).

I don't understand... do you not think Warren Buffett fully understands which kind of tax he pays? His point is not semantic. His point is that something is wrong with a system that allows him to make that much money and pay a lower rate. PERIOD. As another individual who will pay more under the Obama tax plan, I wholeheartedly agree with Mr. Buffett.

Buffet is not a prophet or a Guru, he is a good investor. I get scared everytime Mr. Middle class Obama says his plan is good because Warren Buffet is on board. What the heck does he know about the real world and being middle class?

Now Jonathan at 8:15am had the best answer of any post. I agree 100%. Take a look at the constitution when it was created...NO TAXES. We fought a war over forced taxation call The American Revolution. "That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed....For imposing Taxes on us without our Consent..." Read the Declaration of Independence people. Nuff Said.

Warren Buffett is no doubt a brilliant investor. He has a very humble persona that in recent years has changed a little, and why not. I have been preparing tax returns for my investment clients for 38 yrs. I know what people pay in taxes, and it's a considerable expense. The wealthier you are the more you pay in taxes. I've always thought that Buffett's claim might be true but disingenuous. He is confusing the issues. Maybe his personal income tax rate is only 17% but many of the companies that he owns or has stock in, are paying big bucks in taxes. So his claim of a lower pesonal tax rate than his secretary or any other CEO of a Fortune 500 company might be a little bit of bragging about how well he is in arranging his ducks in order ...

I agree with Jonathon and Jason, read the constitution (for all you on the left that would be the Constitution of the United States of America not the USSR constitution). Not only are we forced to pay taxes every employeer is forced into the occupation of tax collecting. And they have no choice. Time for a new revolution. Lock and load...

The progressive tax system is what the Adam Smith, Father of our Capitalistic Economy, founded for our taxing system with. Unfortunately if we need to have taxes (unless we have no government, anarchy, or flat tax, socialism) the where-with-all to pay is the only way we know how to tax meaning the rich will pay more than the poor. The real question is how much more, that is the true debate? What we cannot do is continue to borrow 700 billion and not find a way to pay for it, either by raising taxes or eliminating expenses (usually a combination of both)...

W. Buffet lives in such an illusionary world of his! Yeah he's a hard-core Democrat because he never had to pay 40% income tax since all of his income are from investments! If he's such a patriot why can't he go ahead and volunteer to pay 40% of his stated paper wealth, this would knock him off the Forbes list so he can come to reality really fast to join rank with noble wealthy people like T. Boone Pickens!

To Anne, I think you just made an argument that non-cap gains income tax rates (wages, self-employed income, S Corp earnings, interest etc.) should also be lowered to 15% or less. I'd go for that. The real problem is gov't spending because it drives taxation. Money is only a medium of exchange and a somewhat unreliable measurement of wealth. So money is not the key, but the total goods produced is a better measurement of wealth creation. And all wealth is created or produced by the free market. Gov't does not produce wealth and cannot since it does not own the means of production (i.e. factories, mines, oil wells, power plants, etc.). So whenever gov't intrudes into the market place to remove funds through either direct income taxation or borrowing from the private sector, it removes real wealth from the citizens. Now if the gov't was more efficient at investing this back into production than the free market (i.e. they had a crystal ball and knew which companies, technologies, would produce the greatest economic progress), then we would all be better off if the gov't took all our money and gave us enough back to live on and reinvested it into the areas it produced the greatest benefit (this is known as communism, which failed miserably). But gov't is extremely inept (i.e. old Soviet Union), it wastes money that would've been put to better use if it was left in the free market. So the extra goods/services/new technologies that would've been produced had the money been left in the free market, don't get produced and we all end up paying higher prices because of it, rich or poor, regardless of tax bracket. It is therefore irrational to argue for higher tax rates. Jason, Jonathan, et al. who are limited gov't types. You are correct, this is why the founding fathers (especially Thomas Jefferson) sought to limit the ability of gov't to take money from its citizens. They wanted the federal gov't to protect the several states from invasion, set up a court system, and pretty much leave everyone else alone. Thomas Jefferson was a big proponent of laissez-faire capitalism, which pretty much ended in the 19th century.

How about cut government spending. Not just by a few million like Obama, and McCain talk about, but abolish entire agencies. If we were to go back to the 1997 levels in spending we could abolish the IRS/FIT and still have a balanced budget! Won't hear that on Fox News! Its actually conservatism!

warren buffet.. here we go again.. always talking about assets.. never about the accrued liabilities.. Note: this is just the reverse of when financial reporters go over the national debt / deficit and fail to talk about assets.. 1. Warren Buffet is us.. 2. Accrued liabilities are income, gift, estate, admn, health care, non profit donations etc... 3. additional income and asset growth.. go back to number 2. 4. More "circular" economics. so you see it doesn't matter what buffet does... it will all eventually end up with the "taxpayers" that got him there in the first place... remember .. anybody who bought stocks when the dow was 700 in the '70s is going to look like a genius... IF YOU LIVE LONG ENOUGH..!! and also please note Birkshire Hathaway.. 40 percent drop from high to low.. just like the rest of the market.. we just appreciate he is doing such a fine job.. only concern is he underpays his staff.. their salarys should be triple the going market.. good job warren... and i am sure you are enjoying plenty of "free" food.. !!

Why am I not surprised tha Buffet is supporting Obama.Most of the rich people are supporting Obama.Did anybody checked who are the richest man in America.If you did your homework you would find that the are Democrats.Why are the bank and Waal street supporting Obama.I have a hard time to figure out why the republicans are branded as supporting rich.I can consider myself to be a midlle class.As far as I am concern last time when democrats were running the country 50% of my social security was taxed.Because my income was over $ 32,000.Today the democrats are claiming that $ 32,000 is bellow powerty limits.With Clinton`s supporting Obama what we can expect. In January they will claim that our financial situation they inharited from Republicans does not leave them a choise but to stick it to ua again. Wake up America.Where are the richest people living.Isn`t it West and East coast. And we know whom they are supporting.

Why do rich people want everyone else to pay more taxes ? Why ? I'm all for an 90% tax rate for anyone making what Buffett or Gates makes ! Now let the SOB squeel like a stuck pig ! Maybe he can borrow money from his secretary ! Buffet is such a hypoctrite!

Does Warren Buffet (and other wealthy liberals who don't believe they pay enough taxes) not know he can send into the Feds whatever he wants? I believe it is called a "gift to the government." He could even lead a group of his liberal wealthy buddies to chip in even more billions then he could alone.

Brian Sullivan is wrong on taxes. But let me make a correction first - Buffett has been referring to the "Super-Rich", not your average paper-rich average middle-class joes. He has made his statements very clear on TV, as well as before Congress. "Income" vs. "investment" is exactly how the rich (and especially the super rich) reaps great benefit, and this is a flaw that Mr. Buffett is keenly aware of and one point he is presciently making. (The man is amazing is seeing what is coming so many years ahead) I myself intend to exploit that flaw to the fullest, making all my money from "investments" and not from "income", until that day when Congress realizes that taxing the middle class to death using the "notion of working income" can no longer generate enough revenue. On that day, we will not be debating about this silly point. Buffett is being Practical, not unrealistically ideological. Get with it, people.

Yes Mr Buffet is wrong. Hopefully, at least some of Buffet's 44 billion is providing working capital for companies that employ workers. I.E. the idea that "rich' people are the creators of jobs. How many peoople does his secretary employ? Lower rates of taxation have always stimulated economic activity which generated larger tax revenues. The vast majority of politicans who advocate higher rates of taxation are rich or super-rich socialist idealogues who care nothing for the good of the country or those of us who make this great county "work". They care only for their obscene greed for power over other people. These people such as Harry Reid, Nancy Pelosi, and Barrack Obaama are the most practiced of consumate liars who can look you straight in the eye and lie to you even in the face of hard evidence that what they say is a lie. Look at what they do, not at what they say. These people are worse than liars. They are no better than street punk burglars who will steal you blind and then lie about it when caught red-handed. They began raiding the Social Security "Trust Fund" when their policies of high rates of taxation cut government revenues. Then when a period of economic prosperity resulting from the lower rates of taxation of the Reagan era,(when lower rates of taxation doubled the amount of revenue collected due to economic growth) produced high amounts of revenue into the Social Security system they put the system "on budget" so that they could use those high collections to claim that they had a budget surplus. Without the higher Social Security collections being mingled with the general fund revenues there was no surplus. The federal budget was still in deficit. Lies, lies and more damned lies.

One problem the "Fair Tax" eludes is that the rich have the ability to travel overseas and spend their wealth. Without preventative action the rich will go to foreign countries satisfy their consumption habit and never return the spoils to the good 'ol US to pay their percentage. Joe Plumber can't afford to travel overseas and therefore will be mandated to a "Fair Tax".

What about this??? http://www.youtube.com/watch?v=fIqyCpCPrvU