US Debt

Well, ol' Warren sure stirred the economic sector (along with MotoKid's brain) with his hypocritical plea to be taxed more while he continues to hide his wealth from taxation behind an army of lawyers and accountants.

For the class warriors bemoaning the disappearance of the middle class and wanting Obama to bail out socialism on the backs of "the rich", the Wall Street Journal posted this arising out of Buffett's pot stirring. And while no doubt our resident socialists, statists, and haters of anyone who has more than they have will take it as cheery news, it isn't exactly good news for the socialism they embrace when you think about it:

Millionaires Go Missing
There's nothing like a recession to level incomes.

Speaking of "millionaires and billionaires", the real tax news is that there are fewer of both these days. This month the IRS released more detailed tax data for 2009, and the nearby table records the decline of the taxpaying rich.

In 2007, 390,000 tax filers reported adjusted gross income of $1 million or more and paid $309 billion in taxes. In 2009, there were only 237,000 such filers, a decline of 39%. Almost four of 10 millionaires vanished in two years, and the total taxes they paid in 2009 declined to $178 billion, a drop of 42%. Those with $10 million or more in reported income fell to 8,274 from 18,394 in 2007, a 55% drop. As a result, their tax payments tanked by 51%. These disappearing millionaires go a long way toward explaining why federal tax revenues have sunk to 15% of GDP in recent years. The loss of millionaires accounts for at least $130 billion of the higher federal budget deficit in 2009.



If Warren Buffett wants to reduce the deficit, he should encourage policies to create more millionaires, not campaign to tax them more.

The millionaires who are left still pay a mountain of tax. Those who make $1 million accounted for about 0.2% of all tax returns but paid 20.4% of income taxes in 2009. Those with adjusted gross income above $200,000 a year were just under 3% of tax filers but paid 50.1% of the $866 billion in total personal income taxes. This means the top 3% paid more than the bottom 97%. Yet the 3% are the people that President Obama claims don't pay their fair share. Before the recession, the $200,000 income group paid 54.5% of the income tax.

For the past three decades, the political left has obsessed about income inequality. As the economy experienced one of the largest and lengthiest economic booms in history from 1982-2007, the left moaned that the gains went to yacht club members.

Well, if equality of income is the priority, liberals should be thrilled with the last four years. The recession and weak recovery have been income levelers. Those who make more than $200,000 captured one-quarter of the $7.6 trillion in total income in 2009. In 2007 the over-$200,000 crowd had one-third of reported U.S. taxable income. Those with incomes above $1 million earned 9.5% of total income in 2009, down from 16.1% in 2007.

It's an old story: The best way to produce income equality is to destroy trillions of dollars of wealth. Everyone loses, but the rich lose relatively more than the poor and the middle class. By that measure, if few others, Obamanomics has been a raging success.

Aaannnnddddd... one final insight into Motokid's fellow Class Warrior, Warren Buffet (Glad Motokid was good enough to bring this up, it has been most illustrative)

Warren Buffett's Tax Dodge
The billionaire volunteers the middle class for a tax increase.

Barney Kilgore, the man who made the Wall Street Journal into a national publication, was once asked why so many rich people favored higher taxes. That's easy, he replied. They already have their money along with lawyers and accountants to make sure they keep it.

That insight is worth recalling amid the latest political duet from President Obama and Warren Buffett demanding higher taxes on "millionaires and billionaires." Mr. Buffett is repeating his now familiar argument this week, coinciding with Mr. Obama's Midwestern road trip on the economy. Since the media are treating Mr. Buffett as a tax oracle, let's take a closer look at some of the billionaire's intellectual tax dodges.

• The double tax oversight. The Berkshire Hathaway magnate makes much of the fact that he paid only 17.4% of his income in taxes, which he considers unfair when salaried workers often pay more. But Mr. Buffett makes most of his income from his investments, in particular from dividends and capital gains that are taxed at a rate of 15%.

What he doesn't say is that much of his income was already taxed once as corporate income, which is assessed at a 35% rate (less deductions). The 15% levy on capital gains and dividends to individuals is thus a double tax that takes the overall tax rate on that corporate income closer to 45%.

This onerous tax on capital is a U.S. competitive disadvantage in the global economy, which is why Congress agreed in 2003 to cut the rates on dividends and capital gains. Even as the rest of the world is cutting tax rates on corporate income, Mr. Buffett wants to raise U.S. rates in a way that would make America less attractive for investment. Under a sensible tax reform, the feds would impose either a corporate tax or a dividend and capital gains tax, but not both.

• The middle-class bait-and-switch. Like Mr. Obama, Mr. Buffett speaks about raising taxes only on the rich. But somehow he ignores that the President's tax increase starts at $200,000 for individuals and $250,000 for couples. Mr. Obama ought to call them "thousandaires," but that probably doesn't poll as well.

The President needs to levy his tax increase at such a lower income level because that's where the money is. In 2009, 237,000 taxpayers reported income above $1 million and they paid $178 billion in taxes. A mere 8,274 filers reported income above $10 million, and they paid only $54 billion in taxes.

But 3.92 million reported income above $200,000 in 2009, and they paid $434 billion in taxes. To put it another way, roughly 90% of the tax filers who would pay more under Mr. Obama's plan aren't millionaires, and 99.99% aren't billionaires.

Mr. Buffett says it's only "fair" to raise his taxes, but he's lending his credibility to raising taxes on millions of middle-class earners for whom a few extra thousand dollars in after-tax income is a big deal. Unlike Mr. Buffett, those middle-class earners aren't rich and may earn $250,000 for only a few years of their working lives. How is that fair?

• The charity loophole. For billionaires like Mr. Buffett, the single most important deduction in the tax code is for charitable giving. Middle-class earners can't give nearly as much money away to reduce their overall tax burden. Yet we don't hear Mr. Buffett calling for the elimination of that deduction in the name of fairness.

Mr. Buffett has also already sheltered the bulk of his fortune from federal taxes by putting them into a foundation that will give the money away. That's an act of generosity, but if the government's purposes are so vital, why doesn't he simply give the money to the IRS?

Rebecca Quick of CNBC put that question to Mr. Buffett in 2007. His answer: "Well, that's a choice and it's an option . . . If I had to give it to a single individual, or make some young Buffett a multibillionaire, or give it to the government, I'd absolutely give it to the government. I think that on balance the Gates Foundation, my daughter's foundation, my two sons' foundations will do a better job with lower administrative costs and better selection of beneficiaries than the government."

Mr. Buffett is no doubt right about the relative efficiency of private donors, but should billionaire philanthropists get such a large tax preference? Another case of fairness?

Mr. Buffett is one of the great stock-pickers of his time, and we don't begrudge him a single dollar of his wealth. We only wish that, having already made himself rich, he weren't so intent on making it harder for others to become rich too. If he's worried about being undertaxed, we'd suggest he simply write a big check to Uncle Sam and go back to his day job of picking off businesses whose heirs can't pay the estate taxes.

Speaking of Warren the Oracle again, and the US Debt, isn't it curious that the media and those who like his "more taxes for the rich" claims can fall all over themselves reporting his comments in the news media and reproducing them here - with specific exceptions?

Why is it that they somehow or other overlook reporting (and posting) the fact that Warren's company hasn't paid it's taxes going back to about 2002 while we're apparently watching Warren to see how the US Debt should be dealt with? Why did the media and the supporters of "more taxes" miss this? Because it didn't fit in with the objective of pimping themselves out for Obama in general and statism and socialism specifically?

Oh well, let's just correct that little oversight of MSNBC, ABC, and all the rest of the non-FOX "impartial" media and supporters of statism and socialism right here:

What? Berkshire Hathaway Hasn’t Paid Its Taxes

Ironic, isn’t it? When Warren Buffett penned that op-ed demanding he be taxed more, we assumed that meant he had actually paid his taxes. Not quite the case. Buffett’s famed company, Berkshire Hathaway, owes taxes that are nearly a decade old.

Oh, and they’re not denying it. Berkshire is freely owning up to the fact that it owes taxes from as far back as 2002. Right now, it looks like there are outstanding taxes from 2002-2004 as well as from 2005-2009. They promise they’ll work it out with the IRS within the next year. Can’t Buffett just take a little out of his piggybank and pay up? For a man who so actively preaches honesty and integrity, we’re a little baffled as to why Berkshire won’t just fork over what it owes.

Obvious question: If Buffett really thinks he and his “mega-rich friends” should pay higher taxes, why doesn’t his firm fork over what it already owes under current rates?

Likely answer: He cares more about shilling for President Obama -- who’s practically made socking “millionaires and billionaires” his re-election theme song -- than about kicking in more himself.

Buffett’s free to back Obama, of course.

And if his firm wants to keep its tax bill low, well, that’s its right, too.

But it would be nice if this “pro-tax-hike” tycoon were a bit more honest about it.

Obama, and co-conspirators like Buffett, claim to want to slap only “millionaires and billionaires.”

But in 2009, for instance, fewer than a quarter-million taxpayers (less than two tenths of 1 percent) reported income over $1 million -- and their combined bill was less than $200 billion.

Raise the top tax rate on them by 13 percent, as Obama wants (from 35 percent to 39.6 percent) and you bring in only another $26 billion, tops -- and that’s if your tax hike doesn’t stifle the economy and kill jobs (which it surely would). Yet what’s $26 billion in a world of $4 trillion federal budgets with trillion-dollar-plus deficits?

No wonder Obama’s hikes on “millionaires and billionaires” actually start with folks and small businesses earning as little as $200,000 gross.

Looks like Buffett’s not the only disingenuous one here. But again, that’s clear from their individual behavior: Obama, Buffett and Democrats like Bill Clinton keep saying they want to pay more taxes.

Fine. They can always write checks.

Good points about the rich & some very interesting info regarding Buffet.. i find it bizarre that someone who has benefited so much from capitalism is against it & wants to move the nation into socialism. I guess i don't really trust these kinds of big business types who are in bed with politicians. What they say has little to do with what they really want.

Unless a person is really committed to big govt (and i don't get that, either!), why would anyone think that more money sent to Washington accomplishes anything? Everything they do is filled with fraud & waste. Bureaucrats clutter the landscape with inefficient, poorly managed plans that always cost more than the same things done by the private sector. Giving the govt more money is pouring it down a rathole. We (the taxpayers) do not get a good return on our investment. The illusion the politicians sell is the 'something for nothing' scam. They convince the voters they will bring home the bacon for their area. There are a few who profit from the fraud & corruption, but it is not to the taxpayers' benefit. We are the losers in the scam. Our money is skimmed & future generations are given less to operate with.

It is criminal what my generation of leaders has done. We have not given the next generation a solid financial footing to run the country. The massive debt will limit our defense capabilities, curtail our infrastructure, & burden future citizens. How can anyone think this is good? The
'Great Generation' that went through the depression, 2 world wars, & saw America go from a 2nd class country to a major superpower left us with a thriving country & a growing middle class. We are giving the next generation massive, crippling debt & another depression. We have let politicians bring us to the brink of ruin with irresponsible spending that has gone on too long.

It is not too late for austerity. We have lived like stereotypical rich kids, whose Fathers worked hard to build up a financial empire, only to see the kids squander it away partying & living lavishly. We need to slash our spending to the bone. Cut everything we cannot afford, which is pretty much everything. We can keep our commitments.. pay off the debts, SS, etc, but we need to cut out the social programs that have brought us to this disaster. We cannot give every person '5 acres & a mule'. We cannot provide cradle to grave support for everything a person might need or want in life. This is not the Govts job anyway, & it is high time we got out of trying to do it. We need to let people work & make a life for themselves. We need to let families take care of themselves. We need to get back to concentrating on the basic rights that Govt is responsible to secure for us. Lets try freedom again. It works.

Yes, we need to protect the weak from the unscrupulous. Govts always attract the corrupt who want to prey upon the weak. The current massive socialistic behemoth is proof of that. But we can do that without selling out our freedoms. It is a dog eat dog world, & we cannot bring peace & stability by shooting all the dogs.

I feel like this has some relevance here.

What do you think about this documentary on the monetary system?

Why can't the US Government be in control of our currency, like print money as they need it WITHOUT interest so it's more capable of paying it's self back, and also control the amount of currency in circulation in contrasts with goods and services in order to control inflation?

Point me in the right direction here...

Looks like a rehash of the 1990's one called The Money Machine or something like that... complete with assassination conspiracy theories et al.

Consider just one point. If government didn't spend more than they took in, why would they have to borrow money to start with? And why did both the president and Harry Reid say a few months ago that any balanced budget resolution (i.e. no government debt in budgets) from the House would be dead on arrival on their desks?

Remember Fanny and Freddy and covering irresponsible, unsecured mortgages to people with no ability to begin to repay them? Well, the Senate wants to get crazy with Fanny and Freddy again - and they had a few RINO Republicans to help them pass it:

Senate votes to extend jumbo conforming loan limits
by JON PRIOR

The Senate voted 60-38 Thursday night to reinstall the
elevated conforming loan limits on mortgages guaranteed
by the government.

The higher limits expired Sept. 30. Sens. Johnny Isakson
(R-Ga.) and Robert Menendez (D-N.J.) introduced an
amendment to H.R. 2112, a minibus spending bill. The
Senate approved the amendment Thursday, and the
Senate will take up the full bill after the recess, according
to Isakson's office.

If the Senate approves the bill, it would then go to the
House of Representatives for consideration.

The Isakson-Menendez amendment would extend the
limits through 2013.

Congress elevated the conforming loan limits in 2008 to
allow the Federal Housing Administration, Fannie Mae,
and Freddie Mac to insure and guarantee more
mortgages when the credit markets froze.

On Oct. 1, these elevated limits dropped to $625,500
from $729,750 in the most expensive neighborhoods. In
each area, the cap dropped to 115% from 125% of the
area's median home price.

The housing industry has been pushing hard for an
extension. The still struggling housing market, they said,
still needs financing from the government even on the
jumbo level.

Does anyone really think the 'super committee' will come up with any workable solutions to the debt? From what i hear, the dems do not want to cut any spending, but want to force the 'triggers' to kick in which will cut defense spending drastically. They seem to only want higher taxes. Our govt is wasteful, corrupt, & ineffective with our tax dollars. Why would we want to give them more? Bigger bonuses for fannie mae execs? More green lending to bankrupt businesses? More & more govt employees making $200k+/yr?

The only 'hope & change' Obama has brought us is the brink of economic collapse & default. This is the goal of the extreme left.. the anarchists & pure communists.. they want the country to collapse so they can take over & implement their pure form of communism.

We've now passed the $15 trillion mark. Look at the debt clock. $100,000's are clipping by in seconds. This is sustainable?

If we don't elect some very fiscally conservative leaders to make hard choices, we will follow the path of Greece & California. The dollar will eventually collapse, & the world will become an even more unstable place.

The philosophy of the school room in one generation will be the philosophy of government in the next.
Abraham Lincoln

It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.
Thomas Jefferson

Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.
Groucho Marx


"Not all chemicals are bad. Without hydrogen or oxygen, for example, there would be no way to make water, a vital ingredient in beer."
Dave Barry