Where’s Worstall? Tyler Duh-duh? Tim J?

Come on guys, don’t be shy, tell us why Warren Buffett is so wrong. It will make fascinating reading.

[Buffett was sound on health care reform, too]

Buffet is taxed in the US. The article indicates capital gains tax is 15% as opposed to 28% here.

Maximum income tax is 35% and that level is only paid on income over $379k.

In the UK off course we have the 50% rate which kicks in at a lower rate. This suggests that UK taxes are far more progressive in the UK.

Apart from which Mr Buffet may pay a lower proportion of tax, but probably pays more tax and recieves less Govt benefits than anyone else in his office.

And off course this is one man’s opinion. You will find plenty of wealthy Americans with a different viewpoint on taxes.

“Where’s Worstall? Tyler Duh-duh? Tim J?

Come on guys, don’t be shy, tell us why Warren Buffett is so wrong.”

Because he’s lying through his teeth.

http://www.forbes.com/sites/timworstall/2011/08/15/warren-buffetts-very-strange-tax-argument/

In short, the US taxes corporate profits at 35% and then taxes the dividends at another 15%. His average tax rate is thus around 50%.

Everyone else taxes either the dividend or the corporate profit….for example, here, the profit is taxed at the company level but then the dividends are tax free for basic rate taxpayers.

Yes, Buffett clearly knows less than you Tim on how much taxes he pays. OK

And, regardless of how much tax he pays, how little benefits he receives, his point that high tax rates do not discourage people from investing is still valid.

I’m sure a Laffeter curve exists somewhere but it’s certainly nowhere near as low as right wing practitioners of voodoo economics would have us believe.

Sunny, clearly another example of More means Worstall.

Buffett’s take on health care reform was so inconvenient to some on the right that it merited special attention from FNC:

http://zelo-street.blogspot.com/2010/03/republican-wrong-in-retelling.html

So try the Wall Street Journal’s explanation then:

http://online.wsj.com/article/SB10001424053111903999904576466541882356616.html

“The reason for the light capital gains and dividend tax is that corporations pay up to a 35% tax on their profits before a dime of it is passed on to shareholders. The real tax rate on corporate income paid to individuals through capital gains and dividends is not 15%. It is closer to 45% once you count the tax on corporate profits.”

Ah yes ,the WSJ, that impartial font of economic wisdom.

Yea because its in the WSJ its not true!

That all depends on what one means by “truth”. No?

OK, so let’s try this argument again in terms you might grasp.

So, who pays corporation tax?

We know absolutely that it’s not the corporations (yes, even Larry Elliott and Vince Cable say this).

So, it’s some combination of the shareholders, the customers and the workers.

Now, when we have this argument about the incidence of the corporation tax all the Sunny’s and Murphy’s of the world shout that “It’s the rich shareholders who pay he corporation tax!”.

Well, OK then, so we’ve got to include the corporation tax in what a rich shareholder like Warren Buffett pays in tax then, don’t we?

Now, if you want to change your tune and start arguing that no, it’s the workers that really pay the corporation tax then fine, I’m all ears……

@11

First you call Warren Buffett a liar, demonstrating the superior insights of the Adam Smith Institute, that well known museum of economic thought that has fraudulently appropriated the name of the founder of economics. You assert that his average tax rate is 50%.

Then you cite as evidence an *op-ed* piece in the Murdoch WSJ – that’s the same owner as Fox News Channel (fair and balanced my arse) that so blatantly misrepresented him over health care reform – which says it’s “closer to 45%”, and that corporations pay “up to” 35% on their profits. So is the WSJ wrong? And what variations are there from the 35% figure?

None of what you have posted refutes Buffett’s assertion on his own tax bill. Nor have you addressed his point about job creation between 1980 and 2000, and since then.

Still, never mind, eh?

I think Tim you’re distorting the point Warren makes. Even after any corporation tax situation, his personal wealth is such that $7mil is a mere 15% of his remaining income. I don’t think it’s unreasonable that he’s saying there is more that rich people could do in redistributing wealth.

Is his argument right about whether tax changes would not have a negative impact on expertise and jobs in the US? I don’t know, but there is certainly a lot of “fat” as far as wealth is concerned that could be better served out in society, and perhaps Warren doesn’t feel that many of his fellow billion/millionaires would involve themselves in being “more fair” voluntarily.

Surely the arguments here are missing the point?

Regardless of whether Buffett is right on the amount of tax that he pays, his central point – that investors are not “scared off” from investing due to tax rates – still stands. Which directly contradicts the sacred cow that is the Laffer curve, which our resident “libertarians” are so keen to bring up every time taxation is mentioned.

@13

I don’t think Tim is distorting the point at all. Mr Buffet quite clearly states that the income tax he paid was 17.4% of his taxable income. His taxable income would include large amounts of dividends from Berkshire Hathaway. However as Tim points out this has already had corporation tax deducted.

As has been pointed out Mr Buffet does clearly believe the rich should contribute more and he is entitled to his opinion. I believe he does indeed make large amounts of charitable donations. I have more respect for a rich person such as Warren Buffet saying the rich should pay more tax rather than having the less well off complain about rich bankers and demanding they hand over still more of their earnings.

“that investors are not “scared off” from investing due to tax rates – still stands. Which directly contradicts the sacred cow that is the Laffer curve,”

He’s clearly and obviously wrong there too. Who would invest if the tax on profits was 100%?

Andy,

There clearly will be a point at which taxes will scare off investors – Buffet made the point that 39% was not enough to scare off investors. However the recent increase in North Sea oil tax which has increased some marginal rates to around 80% has made some companies scrap projects and the recent increase in taxes has seen some financial services companies move to Switzerland.

Tim:

Has anyone seriously suggested such a rate? The argument you’re making is a bit Sir Humphrey.

The most significant bit of the quote from Buffett is where he points out that he has been a major investor in eras of considerably higher capital tax, and has made huge amounts of money and created many jobs doing it. He also points out that the taxes going down and the economy going down correlate.

It is no surprise that it’s possible to postulate a corporation tax level that would break business. The point, however, is that Buffett is not doing so; he’s suggesting that business would not roll up and die if the tax rates went up from where they are today.

“Has anyone seriously suggested such a rate? The argument you’re making is a bit Sir Humphrey.”

How short memories are. Top tax rate on “unearned income”, ie, income from investments, was 98 % in 1979.

And Roy Jenkins actually had it up at 130%, retroactively naturally, in 1967.

“The most significant bit of the quote from Buffett” *in my opinion* is where he deliberately distorts the average tax rate that he himself faces. He’s been doing this for years and every time he does someone calls him out on it. And then he comes back and makes the same deliberate “mistake” again.

The man’s simply lying for he does know better.

Congratulations to Mr Buffet for stating the unbelievably, overwhelingly obvious.

to put his statement a slightly different way: it’s quite a good idea to tax people that actually have money. As opposed to people who do not. Taxing people who have lots of money will get you more money than taxing people who have none. Also, people who have lots of money can actually afford to pay taxes on that lots of money. People with no money cannot afford to pay taxes on the money they don’t have.

Which bit of that does not make sense?

It amazes me that people with real power can continue to argue otherwise. It really is that simple and that obvious. Anyone who says otherwise is lying to you, and they know it. [or are just very very stupid]

Warren Buffett has been on before about paying a lower tax rate than his cleaner:

“Warren Buffett, the third-richest man in the world, has criticised the US tax system for allowing him to pay a lower rate than his secretary and his cleaner.” (2007)
http://www.timesonline.co.uk/tol/money/tax/article1996735.ece

Plus ça change, plus c’est la même chose

How short memories are. Top tax rate on “unearned income”, ie, income from investments, was 98 % in 1979.

And Roy Jenkins actually had it up at 130%, retroactively naturally, in 1967.

I genuinely didn’t know that. Did anyone pay it?

if they did, why did we continue having a functional economy? It sounds like he should have killed it, taking both 100% of profit and then also taking 30% of pre-existing capital from every business in the country. Or do the figures not, in fact, mean that?

Beyond that, however, I should clarify by saying I meant had anyone seriously suggested it, as a future policy? i.e. is it within the current Overton window in UK economic thinking?

Also, could you answer the substantive point I just made, please?

Buffett posits that raising tax on the extremely rich from current level would not lead to economic Armageddon. His credibility as a capitalist is significant. He adduces as evidence his own extensive experience as a major investor in periods of both sustained economic growth and considerably higher taxation of the rich.

Is there anything actually untrue or flawed about that analysis? I’m noticing that you haven’t yet addressed that issue at all, preferring to keep pointing out that his corporations pay tax independently of the tax he himself pays. Not sure that comes as a surprise to anyone, since our current laws are set up precisely to ensure that corporations are legal entities independently of their owners.

@14

I refer you to @5

Great minds clearly think alike

The solution is simple. Warren Buffett and his “mega rich friends” can simply donate their fortunes to the Bureau of Public Debt?

http://www.thefiscaltimes.com/Articles/2011/07/25/WP-Citizens-Chip-Away-at-debt-sort-of.aspx#page1

According to that article a grand total of $81 .7 million has been donated through the program since 1961, I am sure that Buffett and his friends could donate 100x that and still have enough to live a privileged life.

@20

Really that simple and obvious?

The problem is that many people that have lots of money resent paying huge amounts of taxes, especially on programmes they do not agree with and believe to be detrimental to society.

In the UK the top 1% of income tax payers pay 27% of income tax. How much do you want them to pay? It is not difficult to see why high earners choose to live in low tax countries such as Monaco.

The politics of envy is an ugly thing, you lefties always wanting other peoples mon…(oh wait…he’s rich, super rich!…uh oh….hmmm)

Utter nonsense! He must be a self-hating millionaire suffering from rich guilt!

Governments are too afraid of Mr Buffet and the likes fleeing the country and setting up shop in Aruba or the Channel Islands.
Busdrivers, shop assistants or gardeners can’t do that.

Just to let Worstall know that he is in suitably illustrious company: Donal Blaney and the Cato Institute have also found adversely on Warren Buffett.

So the Sage Of Omaha must have got something right.

@25 Fungus

The problem is that many people that have lots of money resent paying huge amounts of taxes, especially on programmes they do not agree with and believe to be detrimental to society.

Oh dear.

You really need to read that back to yourself and appreciate how dripping in pomposity and selfishness it really is.

I’m amazed anyone thinks in this highly simpistic toddler-tantrum like way and expects to get respect for the argument.

@29 BenM

yeah, that.

If we got to pick and chose which government programs we supported, life on the whole would be vastly different, and I dare say infinitely worse.

the whole point of taxation is /supposed/ to be that folks who can afford it provide a safety net for those that can’t. Any argument that aims otherwise has overwhelmingly missed the boat. But hey, that sounds suspiciously like modern USA.

incidentally, when you have guys like Warren Buffet and Stephen King giving money away because.. well, they feel they aren’t being taxed enough: your system is very, very wrong. And the crazy thing is, your President knows it.

@30

I agree with the concept of a safety net – the problem is the vast majority of people in the UK rely on Government funding of some sort.

I also don’t believe in progressive taxation – I believe it is quite reasonable that you have a relatively high tax free threshold of say £10k (for once I agree with the lib dems) and then have a flat tax rate.

Despite what Mr Buffet says high tax rates will eventually cause people to look at ways of reducing their tax. Very few people try to avoid paying tax. It appears even Mr Buffet tries to minimise his tax bill – it would be interesting to see how he managed to get his income tax rate down to 17.4% given the tax rates in the US.

@29

Everyone is selfish. Including those less well off who demand the rich hand over there wealth to others. And my point is correct – there are many people out there who resent paying high taxes.

envy? uhm… no.

I’d be perfectly happy earning £50,000 a year. I really have no idea what I’d do with more than that [seriously. I was making that a few years back and lived in total comfort]

the problem isn’t exactly that there are people who earn billions, it’s that policy in both the US and UK specifically makes it vastly easier for very rich people to get much richer, while earnings for ‘the poor’ have stagnated or dropped.

You have, here, governments who have no money coming in, yet who continue to not tax people who have shit-tons of cash. It makes absolutely no sense. Tax people who have money, because they have it, as opposed to people who don’t have money… because they don’t.

I fail to see what about that is so puzzling.

ok. final thought: three years ago I was paying more in tax per week than I earn now. How much did that bother me? Not remotely, because I still took home easily enough money to live on. If you’re earning millions, you have nothing to complain about.
[my income dropped because I went back to college to change career, from medicine to engineering. My choice and I do not regret it in the slightest]