The “Oracle of Omaha” has spoken….
For those who don’t know, Warren Buffet is President of Berkshire Hathaway and one of the richest men in America. He is, obviously, very shrewd on investments and the Economy.
He’s also an honest man who believes the Rich are getting away with way too many benefits while the Middle Class and the poor are footing the bill for the Republican economic policies that led to the economic collapse.
I encourage you to read his entire Op Ed, from today’s New York Times, as re-printed below:
OUR leaders have asked for “shared sacrifice.” But when they did the asking, they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.
While the poor and middle class fight for us in Afghanistan, and while most Americans struggle to make ends meet, we mega-rich continue to get our extraordinary tax breaks. Some of us are investment managers who earn billions from our daily labors but are allowed to classify our income as “carried interest,” thereby getting a bargain 15 percent tax rate. Others own stock index futures for 10 minutes and have 60 percent of their gain taxed at 15 percent, as if they’d been long-term investors.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
If you make money with money, as some of my super-rich friends do, your percentage may be a bit lower than mine. But if you earn money from a job, your percentage will surely exceed mine — most likely by a lot.
To understand why, you need to examine the sources of government revenue. Last year about 80 percent of these revenues came from personal income taxes and payroll taxes. The mega-rich pay income taxes at a rate of 15 percent on most of their earnings but pay practically nothing in payroll taxes. It’s a different story for the middle class: typically, they fall into the 15 percent and 25 percent income tax brackets, and then are hit with heavy payroll taxes to boot.
Back in the 1980s and 1990s, tax rates for the rich were far higher, and my percentage rate was in the middle of the pack. According to a theory I sometimes hear, I should have thrown a fit and refused to invest because of the elevated tax rates on capital gains and dividends.
I didn’t refuse, nor did others. I have worked with investors for 60 years and I have yet to see anyone — not even when capital gains rates were 39.9 percent in 1976-77 — shy away from a sensible investment because of the tax rate on the potential gain. People invest to make money, and potential taxes have never scared them off. And to those who argue that higher rates hurt job creation, I would note that a net of nearly 40 million jobs were added between 1980 and 2000. You know what’s happened since then: lower tax rates and far lower job creation.
Since 1992, the I.R.S. has compiled data from the returns of the 400 Americans reporting the largest income. In 1992, the top 400 had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008, the aggregate income of the highest 400 had soared to $90.9 billion — a staggering $227.4 million on average — but the rate paid had fallen to 21.5 percent.
The taxes I refer to here include only federal income tax, but you can be sure that any payroll tax for the 400 was inconsequential compared to income. In fact, 88 of the 400 in 2008 reported no wages at all, though every one of them reported capital gains. Some of my brethren may shun work but they all like to invest. (I can relate to that.)
I know well many of the mega-rich and, by and large, they are very decent people. They love America and appreciate the opportunity this country has given them. Many have joined the Giving Pledge, promising to give most of their wealth to philanthropy. Most wouldn’t mind being told to pay more in taxes as well, particularly when so many of their fellow citizens are truly suffering.
Twelve members of Congress will soon take on the crucial job of rearranging our country’s finances. They’ve been instructed to devise a plan that reduces the 10-year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country’s fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality.
Job one for the 12 is to pare down some future promises that even a rich America can’t fulfill. Big money must be saved here. The 12 should then turn to the issue of revenues. I would leave rates for 99.7 percent of taxpayers unchanged and continue the current 2-percentage-point reduction in the employee contribution to the payroll tax. This cut helps the poor and the middle class, who need every break they can get.
But for those making more than $1 million — there were 236,883 such households in 2009 — I would raise rates immediately on taxable income in excess of $1 million, including, of course, dividends and capital gains. And for those who make $10 million or more — there were 8,274 in 2009 — I would suggest an additional increase in rate.
My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice.
Warren E. Buffett is the chairman and chief executive of Berkshire Hathaway.
Lost in the 21st Century 
My Thoughts: The Rich Are Different
“Let me tell you something about the very rich. They are different from you and me.” F. Scott Fitzgerald from “The Rich Boy”
I talk a lot about the Rich and post a lot of articles about the Rich. I think it’s time I defined and clarified my thoughts-even if I speak in generalities.
First of all, I want to differentiate between two categories of wealth.
One, I’ll call simply, The Wealthy. The other, I’ll call The Rich.
I do not have anything against The Wealthy. They really aren’t that different from you and me. This is the social category that we, in the South, used to call “Old Money.”
The Wealthy had enough class and taste that the socio-economic differences are more subtle. They would be horrified to flaunt their wealth or to think it made them “better” than other people. This category of the financially blessed was usually better educated and, thus, aware of their privilege and the obligations that went with it. They understood the concept of “those to whom much is given, much is expected.”
I love the honest Wealthy folks I’ve known or known of in my life. These are people who gave back and made the world a better place.
The Wealthy usually did not involve themselves actively in Politics. If they did, it was usually out of a sense of duty or obligation to try to make things better for those less fortunate. It was kind of like joining the Junior League for them.
They were frequently Democrats.
The Wealthy understood shared responsibility and honor. There was a time when the Partners of Wall Street firms and Investment Banks were personally financially responsible for any losses. That is gone with the wind…
In the past, the Rich would try to emulate the Wealthy. Not today…
The Rich are the ones I can’t stand. We used to call this social group “New Money.”
These are the ones who, as a rule, are taking over our government.
There are exceptions to the “New Money” condition. The Koch Brothers, for example, have had money for several generations, but they are Rich, not Wealthy.
No matter how much money the Koch’s donate to the ballet and museums, they have no class or true sense of societal obligation. They are Rich, not Wealthy because they have no social conscience and only care about money. No matter how hard they try to seem otherwise, they are vulgar.
People recognize this and that’s why David Koch was booed at the American Ballet Theatre performance of “The Nutcracker” last December even when it was pointed out he gave the ABT $2.5 million. Money does not buy class or absolve one of all sins- even in New York….
The Rich build their lives around money. It is all that matters to them. They never have enough, always want more and are more than willing to do anything immoral, unethical or illegal to get it and keep it. They get away with this because they use their money to build a parallel world where the rules-and laws- don’t apply to them, but to everyone else.
As the late Leona Helmsley, who was Rich, not Wealthy, said: “Only the little people pay taxes.”
This is the mantra of the Rich.
The Rich have taken precedence over the Wealthy in today’s world. The Wealthy, being mostly Democrats, didn’t fight back and were over-powered by the Rich on Wall Street and in Washington. The Rich did away with the concept of individual responsibility for actions within financial firms. They only want individual responsibility to apply to the poor and middle classes.
The Wealthy who used to be part of the GOP, who were called “Cloth Coat Republicans” or “Country Club Republicans” are now extinct.
The Rich are the new Wall Street Barons and Hedge Fund Kings who made their money manipulating the system and not creating anything. They turned Wall Street into Las Vegas- both in tone and style. They manipulate numbers. Money is a concept to them, not a reality.
They don’t build factories or create jobs. They never will. That is too much work. They are morally bankrupt. They feel no need to “give back” as they really didn’t work hard to earn anything; they just took it.
The Rich are the top 1% of the population who own about 35% of the total wealth in this country. Of all the wealth created in the last 30 years or so, 47% went to this group. And they don’t want to pay taxes on it. This alone is enough to make me a socialist.
The Rich are the ones who manipulated the system so CEO’s,who in 1960 made an income of 42 times the average worker’s salary, by 2000 made 531 times the average worker’s salary. And now pay the lowest tax rate since the 1950’s.
This is the crowd that runs companies into the ground, brings the entire economy to the brink of disaster, destroys jobs and livelihoods for the middle class, then takes a “golden parachute” of millions of dollars for their efforts. There is no accountability for performance or decision-making within this group.
The New Money crowd, that have become the Rich of Wall Street and the financial powers that drive Washington, focus solely on money. Getting it, keeping it, making more of it. They worship money itself, not what it can do. These people do not drive the economy- or only a small portion of it- as to them money is something to be hoarded and bragged about. Or flashed around with multiple homes, cars, planes, diamonds and wives. They don’t spend it on creating jobs, as they and the GOP would like you to think. That will never be their goal or priority.
Money is their God and they want to honor it.
I hate the nouveau and not so nouveau Rich who are determined to destroy the Middle Class and let the poor starve. I detest the nouveau Rich who want children to grow up in poverty and ignorance and deny Health Care because people can’t afford private insurance. I abhor the Rich who want to take money from Social Security and leave the elderly to eat cat food so they can keep more money in their Cayman Islands or Swiss Bank accounts.
The Wealthy class of yesterday would never behave this way.
And if they tried, the Government would stop them.
At least for the last 80 years.
Hopefully, this clarifies my position.
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Footnote: You can check my facts from my main point of reference and learn much more about “the numbers” here:
http://sociology.ucsc.edu/whorulesamerica/power/wealth.html
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