The Rich Should Pay More Taxes

The rich should pay more taxes.

That's the conclusion of one of the richest people in America, multi-billionaire Warren Buffett. In a recent Op-Ed for the New York Times he states this case for his conclusion:

“Our leaders have asked for 'shared sacrifice,' but when they did the asking they spared me. I checked with my mega-rich friends to learn what pain they were expecting. They, too, were left untouched.

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 were long term investors.

These and other blessings are showered upon us as if we were some endangered species."

He further stated that last year his tax rate was only 17.4 percent of his taxable income. He compared that to 20 other people in his office whose average tax rate was 36 percent. He says the mega-rich pay 15 percent on most of their income. In the 1980s and 1990s the percentage rate for the wealthy was much higher. He says he sees nothing to support the theory that higher tax rates will dampen the spirit of investors to participate in the market place. He states that even when capital gains rates were 39.9 percent investors didn't shy away from sensible investment.

One of the positive results of the period of 1980-2000 was the creation of 40 million jobs in our country. In 1982 the top 400 earners in America had aggregate taxable income of $16.9 billion and paid federal taxes of 29.2 percent on that sum. In 2008 the aggregate income of the top 400 had soared to $90.9 billion but the rate paid had fallen to 21.5 percent.

In concluding his comments Mr. Buffet says “twelve members of congress will soon take on the crucial job of rearranging our country's finances. They’ve been instructed to devise a plan that reduces the 10 year deficit by at least $1.5 trillion. It’s vital, however, that they achieve far more than that. Americans are rapidly losing faith in the ability of Congress to deal with our country's fiscal problems. Only action that is immediate, real and very substantial will prevent that doubt from morphing into hopelessness. That feeling can create its own reality. Job one of the 12 is to pare down some future promises that even a rich American can't fulfill. Big money must be saved here. Then the twelve need to turn to the revenue side in order to make the tax system more equitable."

In his parting shot Buffet says “My friends and I have been coddled long enough by a billionaire-friendly Congress. It’s time for our government to get serious about shared sacrifice."