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View Diary: Warren Buffett calls for A Minimum Tax for the Wealthy (107 comments)

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  •  As a history teacher, you should note (7+ / 0-)

    that the overall goal of Buffett and, yes, Obama are simply to raise the top marginal rate back to 39.6 %.

    First those rates are still much below the historical average.  Back in the 1950s, the median taxpayer paid no income tax.  Today, Buffett's secretary pays a higher proportion of taxes than the Billionaire Oracle of Omaha.  The wealthiest could easily pay a much higher rate than currently.

    Secondly, the taxing of four dollars per every one hundred earned after the first quarter of a million won't be missed by the Rich Kids of Instagram crowd.  Compare this to the pain inflicted upon real people by the "chained" cpi social security cuts.  To paraphrase Leona Helmsley, sacrifice like taxes are only for the little people.

    Thirdly, economists Saez & Picketty have argued that the Buffett rule would do nothing to address income inequality.  They have argued for a progress tax with a top rate of 70% before there would be any disincentive.  For an overview, see this NY Times article.

    "The working class mind is strange and unpredictable" -- Ty Lookwell

    by Illinibeatle on Mon Nov 26, 2012 at 05:40:20 AM PST

    •  Need to understand... (2+ / 0-)
      Recommended by:
      elwior, LilithGardener

      No one paid close to the marginal tax rate back in the 50's due to all the deductions.  What was the effective tax rate?

      Of course just increasing taxation does not solve income inequality.  What are you investing the incremental tax dollars in?  Job training, Pell grants, etc....that is the way to solve income inequality.  

      •  Exactly the right question (3+ / 0-)
        Recommended by:
        VClib, Roger Fox, LilithGardener
        No one paid close to the marginal tax rate back in the 50's due to all the deductions.  What was the effective tax rate?
        All the discussion of top marginal rates prior to the Tax Reform Act of 1986 are completely meaningless, because of the vastly different scheme of deductions and exemptions. People should be focused on EFFECTIVE tax rates.  

        And I haven't seen any real analysis of the effective tax rates from the Eisenhower years.  The CBO has data back to 1979, and it shows that the Clinton rates were the highest effective tax rates on individual earned income ever during that time -- higher than when top marginal rates were 70%.   See the SECOND chart here.

        •  but there are other distinctions (2+ / 0-)
          Recommended by:
          Words In Action, elwior

          that make a difference, deductions for plant and equipment, for owning real factories that produce jobs, or FIRE dominating the picture and casino debt.   Less income inequality,   if CEO's make ten times versus five hundred times the average salary of the workers, one is addressing a different policy problem.

          Effective tax rates matter, so does effective tax policy that supports growth overall in the economy, not just to 1-2% of the taxpayers.

          •  I think I agree... (1+ / 0-)
            Recommended by:
            elwior

            ...CEO compensation limits make people feel better - its the fairness thing.   But it has no impact on solving our real problem - income stagnation in the middle class.

            So I care about what do you do with a meaningful amount of incremental tax dollars (and I don't think CEO comp limits will supply enough).   Again - education and training....

            And an intelligent industrial policy - credits for hiring locally, credits for manufacturing facilities, and yes, a big tax cut for repatriating offshore earnings IF you use the money to hire locally.

      •  No, but I would wager real money that the effectiv (0+ / 0-)

        rates were nevertheless much higher.

        The best solution is an AMT indexed to inflation, for the top couple of brackets. Of course, I would add several brackets above $250K...

        The Class, Terror and Climate Wars are indivisible and the short-term outcome will affect the planet for centuries.

        by Words In Action on Mon Nov 26, 2012 at 10:22:04 AM PST

        [ Parent ]

      •  About 55% in 1955 for top incomes. n/t (0+ / 0-)

        Don't tell me what you believe, show me what you do and I will tell you what you believe.

        by Meteor Blades on Mon Nov 26, 2012 at 11:26:45 AM PST

        [ Parent ]

        •  Source? (0+ / 0-)

          Please...I also have not seen any credible source for this kind of data....

          •  I did that calculation a couple of years ago... (2+ / 0-)
            Recommended by:
            a gilas girl, teacherken

            ...and can't find the original. Here's something to tide you over until I do find it (if I can):

            • Between 1960 to 2004, the top 0.1 percent of U.S. taxpayers — the wealthiest one in one thousand — have seen the share of their income paid in total federal taxes drop from 60 to 33.6 percent.

            •America’s highest income-earners — the top 400 — have seen the share of their income they pay in federal income tax alone plummet from 51.2 percent in 1955 to 16.6 percent in 2007, the most recent year with top 400 statistics available.

            • If the top 400 of 2007 paid as much of their incomes in personal income tax as the top 400 of 1955, the federal treasury would have collected $47.7 billion more in revenue from just these 400 taxpayers.

            • In 2007, if the top 0.1 percent of taxpayers — Americans with incomes that averaged $7,126,395 — had paid total federal taxes at the same rate as the top 0.1 percent paid these taxes in 1960, the federal treasury would have collected an additional $281.2 billion in revenue.

            Don't tell me what you believe, show me what you do and I will tell you what you believe.

            by Meteor Blades on Mon Nov 26, 2012 at 02:06:57 PM PST

            [ Parent ]

    •  Repeal the 86 TRA and the Reagan tax cuts (0+ / 0-)

      That would actually bring some stability to the economy.

      Short of that.....

      I would make the bottom 3 brackets roughly like this

      0-30k-8%
      31-49k-9%
      50k-10%

      Then add 6 more brackets

      2mill-40%
      4mill-41%
      6mil-42%
      12mill-43%
      24mil-44%
      48mill-45%

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Mon Nov 26, 2012 at 11:08:18 AM PST

      [ Parent ]

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