Good article in today's Lexington Herald. Good reason we need to put much more thought into who we elect as our leaders.
Billionaire makes money and sense By Merlene Davis HERALD-LEADER COLUMNIST
Merlene DavisWarren Buffett, ranked the third-richest man on the Forbes list of the 400 richest people, thinks the way our government taxes us has to change.
He wants to be taxed more.
I know. It's incredible.
With all the tax windfalls for the rich in recent years, you'd think Buffett would be trumpeting the trickle-down theory.
But Buffett, CEO and largest shareholder of the holding company Berkshire Hathaway, thinks the rich have been given a pass.
Worth an estimated $52 billion, he has long captured the attention of a lot of folks when he opens his mouth or puts his money in a particular stock.
Because of his wealth, he doesn't understand why he isn't paying more in taxes.
Can we clone this man? In a recent interview with journalist Tom Brokaw, Buffett said he crunched some numbers and discovered that he is taxed at a lower rate than the 15 people in his office who voluntarily participated in his survey.
Based on payroll and income taxes paid, Buffett said he is taxed at a rate of 17.7 percent.
"The average for the office," he said, "was 32.9 percent. There wasn't anybody in the office, from the receptionist on, that paid as low a tax rate. And I have no tax planning. I don't have an accountant. I don't have tax shelters. I just follow what the U.S. Congress tells me to do.Assuming that none of you reading this is a billionaire, that means we all pay a higher rate in income and payroll taxes than Buffett does. All of us.
That's insane. Why aren't the folks who complain so vehemently about paying any kind of taxes screaming about this?
Haven't we seen during the past couple of decades that the trickle-down theory's supposed financial benefits evaporate before they get to us? How much longer do we have to watch the rich getting disgustingly richer?
Brokaw asked Buffett essentially that same question. He wanted to know why we Americans aren't outraged by that discrepancy.
"I don't think people understand it," Buffett said. "For one thing, you'll see a lot of surveys that say the rich, the top 1 percent, pay this much of the income tax. Now, I think what people don't realize is that almost one-third of the entire budget comes from payroll taxes."
Payroll taxes are simply taxes on income, he said. "And people don't understand that the rich pay practically no payroll tax," Buffett said.
He said normal folks pay payroll and income taxes on all their earnings.
He said he paid income tax on $66 million, but his payroll tax stopped at $90,000.
"The remaining $66 million does not get taxed with payroll tax," Buffett said. "So, the person who makes $60,000 in our office gets taxed in full on the payroll tax and taxed in full on the income tax."
Why that is so important, why the rich should pay payroll taxes on all their earnings, Buffett said, is because the payroll tax is how this government continues to function.
The government collects $800 billion from payroll taxes, or about one-third of the $2.5 trillion raised annually.
"Everybody hates taxes," Buffett said. "But if we're gonna raise $2.5 trillion, we've gotta get it from somebody."
And it appears that "somebody" isn't the super rich.
So Buffett challenged his rich counterparts.
He said he would give $1 million to the favorite charity of anyone who discovered that they pay income taxes at a higher rate than the people in their offices.
He said it now takes $1.3 billion to be listed on the Forbes 400. "And the aggregate wealth is just staggering," he said. "And those people are paying less percentage of their total income to the federal government than their receptionists are."
He's had just four takers on his challenge, and all discovered similar discrepancies.
If I ever get a load of money from an unknown relative who dies or from the lottery (if I ever remember to play it), I hope I will be as socially responsible as Buffett.
Until then, I will simply have to mimic his willingness to help others with what little money I have.
