POLITICS - Taxes and the Buffett Rule

Message to Republicans and conservatives; America NEEDS an equitable tax system, NOT the favor-the-rich tax system you favor.


"Obama Renews Push for Buffett Rule: Debating How to Handle Millionaires' Taxes" PBS Newshour 4/10/2012

Excerpt

JEFFREY BROWN (Newshour): And we turn to what is clearly becoming an election-year fight over tax policy.

PRESIDENT BARACK OBAMA: Do we want to keep giving those tax breaks to folks like me who don't need them or give them to Warren Buffett? He definitely doesn't need them. Or Bill Gates? He's already said, "I don't need them." Or do want to keep investing in those things that keep our economy growing and keep us secure? That's the choice.

(CHEERING AND APPLAUSE)

JEFFREY BROWN: The president renewed his call for higher taxes on the wealthy on a swing into Florida. He urged Congress again to adopt the so-called Buffett rule.

Billionaire investor Warren Buffett had famously observed that, under the current system, his secretary pays a higher tax rate than he does.

WARREN BUFFETT, Berkshire Hathaway: I don't think our tax system is very equitable.

Another excerpt

DOUGLAS HOLTZ-EAKIN, former Congressional Budget Office director (opposing view): So, on average, millionaires pay more. Now, some don't.

Now, how would they do that? We don't think they're breaking the law. Indeed, what they're doing is they're taking advantage of special provisions in the tax code. Now, those are probably there because tax codes are about more than fairness. It's also about social goals, such as encouraging charitable contributions. It's about economic growth objectives, so lower taxes on dividends and capital gains.

So the way those millionaires have lower effective tax rates is they do things that are deliberately in the code and have purposes. And if they aren't something that we value, we should get rid of them. But that's tax reform. And that's not what they're doing.

Very subjective view of course.

While it is true that the rich take advantage of the present tax code/law (aka special provisions), WHY they do is the question. Many do take advantage to support social goals; like the Bill & Melinda Gates Foundation or the Joan B. Kroc Foundation (aka Mrs McDonald's), BUT that MAY NOT be the reason.

The rich have an overwhelming advantage to use their income to hire tax lawyers/consultants to find tax shelters, which only purpose is "reducing taxable income resulting in a reduction of the payments to tax collecting entities." One example is offshore banking, putting money into a non-U.S. bank in a nation that does NOT report to the U.S. tax authorities, therefore hiding income.

Add to this the investments in foreign nations that do NOT benefit the U.S. taxpayer.

What Bill Gates and Warren Buffett are telling us is a higher tax rate will NOT prevent them from charitable works. A higher tax rate will NOT prevent them from investing in creating new businesses and jobs.