Posted by
Moneyrunner on Monday, November 12, 2007 10:20:34 PM
Barack Obama said on Sunday's Meet the Press with Tim Russert
But, look, I’ve, I’ve got a friend, Warren Buffett, you may know, the guy made $46 million last year. This is public information because he’s concerned that he is paying a lower tax rate than anybody else in his office.
When we examine
Warren Buffett and his complaint that his tax rate is lower than his secretary we find that it’s true. But only because of the way Buffett has decided to pay himself.
Warren Buffett is the Chairman and major shareholder of
Berkshire Hathaway, a very successful insurance company that owns large pieces of other companies, like the Washington Post. Berkshire Hathaway is also the sole owner of other companies like
GEICO, the insurance company that uses a funny little green lizard speaking with a British accent as a “spokesman.” Berkshire Hathaway has
assets of $276 billion, revenues for the first 9 months of 2007 of $90 billion, earnings for the same period of over $10 billion.
Now here’s the reason why Buffett’s tax rate is so low: he pays himself
$100,000 per year. Little more than a good plumber or electrician.
And why does Buffett pay himself so little when people with similar jobs are paid $5 to $10 million for similar jobs? Very simple, he doesn’t need the money. His wealth is roughly
$40 billion and he has income from dividends and capital gains that represents virtually all of his reportable income.
So all Warren Buffet would need to do to owe more tax is to raise his earned income, in other words pay himself what his peers in the industry are earning.
Buffett’s position on taxes is a form or moral preening. If he genuinely feels that more of his income should be used by the government he can just write a check to the treasury.
Attn Dept G
Bureau Of the Public Debt
P. O. Box 2188Parkersburg, WV 26106-2188
Instead, Buffet hectors the rest of us about not paying enough in taxes. What Buffett is really complaining about is not his own tax bill but the tax bills of other people. And not necessarily the tax bill of billionaires.
Do a little checking about the ultra-wealthy in the
US. The Forbes 400 is a good place to start because the bottom of the list is worth about $1.3 billion, a good cut-off point. The fact is that if we confiscated the entire wealth of Buffett, Gates and every other billionaire member of the Forbes 400, the US treasury would gather in about $1.5 trillion dollars, or
enough to run the Federal Government for about 6 months. Of course that wealth is not found as dollar bills or gold bullion in locked vaults. It’s ownership in companies; in most cases it a financial rather than a “real” asset. If the government were to try to confiscate these assets they would disappear like a cloud of dirty smoke. The real value of these assets is found in the knowledge and acumen of the owners. Take that away from them and the value of the asset disappears.
It’s a dirty little secret that government at all levels goes to where the real money is: the middle class. They are the ones who have most of their income in the form of easily traceable wages. They are the ones who have predictable incomes. And they are the ones who command the bulk of the country’s assets.
According to
Wikipedia, families earning between $25,000 and $100,000 control 60% of the nation’s income. 68% of the nation’s income is earned by people making less than $150,000 per year. While people making between $100,000 and $200,000 per year are “comfortable” they are not “wealthy” except to class warriors. That’s the reason that despite all the political rhetoric, when the government wants more money, they go where the money is: the middle class.
It’s the dream of every working man to become rich. Its taxes that are the main obstacle to making that happen. Buffet found a bankrupt shirt company that he turned into an insurance company because of the
favorable tax treatment insurance companies get. Buffett used the tax code to make himself one of the world’s richest men and now that he got where he is he wants to pull the ladder up and keep others from becoming rich.
I would believe more readily in Warren Buffett’s claims of financial sainthood it he gave away his entire fortune instead of keeping nearly $10 billion for himself. And then if he decided to live on his $100,000 per year annual salary. What is it that a person with $10 billion can’t afford that a person with $40 billion can? That’s in worthwhile question that Warren Buffett may be able to answer for us.
But until then, I’m not taking the bellyaching of a billionaire who does not put his money where his mouth is. Let’s see Buffett stroke that check to the Government. He has the address.