Coddling the super-rich, according to Warren Buffett

CODDLING THE SUPER-RICH: Warren Buffett, of the good ship Berkshire Hathaway, writes in his op-ed for the New York Times of one of his ongoing qualms with the US tax system: he isn't taxed highly enough.

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. 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.

Although I agree with Buffett on the deplorable matter of tax breaks (incidentally, it's the middle class which ultimately receives the bill for these; for as a result the rich pay little tax, and the poor have never paid much in tax anyway) I have serious reservations as to whether tax brackets constitute the ideal solution for our problems in this area. If I were to implement my own solution, it would be established thusly: a flat income tax of 25% for everyone, regardless of how large their income (never mind goods and services tax, where applicable, for the moment). I'd also abolish minimum wage, but that's an entirely separate issue. Bill Gates, with whom Buffett has partnered on numerous occasions philanthropically (you know, donating thirty billion dollars, and all) shares Buffett's view on the idea of higher taxation for the rich. Given all the work he does in terms of charity, an interesting question would be whether he would prefer paying money to a government, or paying money into his own foundation. Regardless, the solution to low taxation on the rich isn't to raise it; that is a tried-and-failed method – it's in closing the endless loopholes.