Warren Buffet: Guilty, rich idiot

Helping Hillary Clinton raise money this past weekend, multi-billionaire Warren Buffet complained that his taxes are too low. Buffet is reported to have said that while he only paid about 17% of his income in taxes in 2006, his secretary paid 30%.

I would assume Buffet hires someone else to do his accounting, otherwise he'd be broke.

Buffet's income in 2006 was $46 million, his secretary's, he tells us, was $60,000. Buffet employs quite a few people. It's doubtful his secretary employs any other than possibly someone to mow her lawn, a babysitter and maybe a part time housekeeper. The IRS recognizes that and adjusts the tax rates according to what is spent for personal use, and what is spent for business use. (I'm phrasing this very simply, since so many people, apparently Buffet included, are clueless about the economy and taxes)

The 2006 tax rate for married filing jointly was 35%. If Buffet paid only 17% then he's either a crook, or a moron—who doesn't bother to look at his own tax returns. Buffet claims he doesn't do anything to try to reduce his taxes, yet in spite of the law saying the rate is 35%, he paid only 17%.

So why would he, (naively?), think his tax rate is so low? He's probably either ignorant of, or disingenuously ignoring legitimate deductions. Take the $60,000 he paid his secretary. That's tax deductible, because it's an expense, and his secretary paid taxes on it. The government got 30% of it, so there's no reason for Buffet to pay an additional 35% of it before he gives it to his secretary. That would make the real cost of employing someone high enough to drive up unemployment which would reduce the tax revenues on income as well as increase government expenditures on unemployment compensation and other entitlements. An employed populace is a tax-paying populace, so it's to the government's benefit to encourage employment. But that's elementary economics. Why wouldn't Buffet know that?

The truth is people who earn $336,550+ (the top tax bracket for 2006) spend that money—and quite a bit of that in hiring people, who then in turn pay taxes on it. Individual spending fuels the economy more than government spending. Individual spending is based on an exchange of goods. Government spending is based on robbing one group to pay another in order to get votes.

The graduated income tax (a plank of Marx's Communist Manifesto, in case you didn't know) was put into place as an emergency measure by Abraham Lincoln during the Civil War, and conveniently left in place. It's fueled by class envy. Class envy is fueled by dishonest people who trick the gullible poor into supporting laws that actually keep them poor.

For much of the 60s, 70s and into the 80s, the top tax rate was in the 70% range. But there were so many loopholes, that few people in high income brackets paid that much, in fact they paid very little. It wasn't until Reagan (and what the Liberals like to call the "era of greed") that those loopholes were closed and the tax rates leveled to a more meaningful balance, although still not enough. Reagan's "era of greed" actually forced the super rich to pay more, and the middle class to pay less in taxes. Liberals don't like people knowing that, and use dimwits like Warren Buffet to help cover-up the facts.

The changes Buffet is proposing would take us back to the time when the super rich like Buffet paid 5% or less of their income, while the middle class shouldered oppressively high tax rates.

Buffet doesn't sound so magnanimous now, does he.

Posted by Danny Carlton at June 28, 2007 11:19 AM