As I’m sure you know, investor Warren Buffett is one of the richest people in the world (the third richest, in fact, according the Forbes’ list from March).
Yesterday’s New York Times published on op-ed piece by Buffett that begins
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’d been long-term investors.
These and other blessings are showered upon us by legislators in Washington who feel compelled to protect us, much as if we were spotted owls or some other endangered species. It’s nice to have friends in high places.
Last year my federal tax bill — the income tax I paid, as well as payroll taxes paid by me and on my behalf — was $6,938,744. That sounds like a lot of money. But what I paid was only 17.4 percent of my taxable income — and that’s actually a lower percentage than was paid by any of the other 20 people in our office. Their tax burdens ranged from 33 percent to 41 percent and averaged 36 percent.
Buffett goes on to point out that about 4/5 of federal revenues are in the form of taxes on individuals — mainly payroll and income taxes. But those with ultra-high incomes often face a substantially lower marginal tax rate than people in the middle class.
The IRS reports that in tax year 1992, the last year of the George H W Bush presidency, the people filing the 400 highest-income tax returns paid an average overall income tax rate of 29.2 percent. Sixteen years later in 2008, the last year his son’s presidency, the total taxable income reported on the top 400 returns was more than five times as great. But the average overall tax rate for those returns had fallen to just 21.5 percent.
Buffett is one of a number of wealthy patriotic Americans who have lately called for higher taxes on the very highest incomes. They paid higher marginal rates during the sustained boom of the 1990s, higher still under most of Reagan’s presidency, and higher yet under Eisenhower.
I’d add that it’s worth remember that the Paul Ryan budget, which almost every Republican in Congress is on record supporting, almost entirely offsets its spending cuts with yet more tax breaks that would benefit the rich and only the rich, on the theory that this would create faster economic growth. The reality is that all cutting taxes for the rich gets us is a bigger deficit.