Warren Buffet does pay more than his secretary in taxes

[billc]

Here is an article that takes on Warren Buffet and Barak Obama, tax warriors extraordinaire, and their claim that Buffets secretary pays a higher tax rate than her billionaire boss...

http://www.americanthinker.com/2011/09/coddling_misinformation_about_taxation.html

Dividends Taxation -- Double-Taxation
While it is true that the federal income tax on dividends from investments held for one year or more (and capital gains from sales of stock held for at least one year) is only 15%, this is not the whole story. Mr. Buffett and President Obama completely ignore the double-taxation aspect of corporate earnings, a key aspect of our income tax system. They purposely fail to mention that dividend income streams reach the taxpayers and the rich only after they have been already taxed once (35% to 41.6%) at the corporate level (with some exceptions with regards to REITs and certain trusts, etc.) before being distributed to their[COLOR=#009900 !important]shareholders[/COLOR]. Then the same income streams get taxed a second time(15%) when individuals actually receive the money from the corporations they own. The true and full federal tax rate on those earnings is not 15%, but anywhere from 50% to 56.6%.
Fair or Unfair?
Is it really "unfair" that shareholders are taxed only 15% the second time around, after the companies they own have already been taxed once at 35% to 41.6% on average?
Stocks grant investors part-ownership of companies. The money invested buying those stocks is 100% at risk. Share purchasers are the actual owners of those businesses, and the earnings they produce are lawfully and ethically theirs. Once those corporations pay their federal and state income taxes -- averaging from the lowest (35%) in Nevada, Wyoming, and South Dakota to the highest (41.6%) in Pennsylvania and Iowa, as reported by the nonpartisan

Tax Foundation -- the remaining earnings belong to the shareholders. That income is now their income.

However, once companies have made a profit and paid their taxes, the owners -- the investors who risked their money on purchasing these stocks -- have not yet seen a dime from the earnings of their corporations. In order for money to actually reach the shareholders, a company must pay out dividends. When those dividends are paid out, then the IRS taxes them at rate of 15% (for long-term investments held for one year or more; the regular federal rates are applied for stocks held for less than one year) for each individual who receives them. By the time stockholders get to keep any money from the earnings of the corporations they own, the government has taxed it twice and confiscated at least half of it (50% to 56.6% approximate rates). That's not enough of a "fair share" to pay?

 

[David43515]

Couldn`t have said it any better. Thanks for the post. Now see if you can ind one on inheritance taxes.I`ve seen kids inherit the family farm or a small local business (a gas station and a bakery) that didn`t owe a dime when the parent was alive, but to pay the inheritance tax when they died their kids had to sell them. Kind of makes it hard to see the point of saving any money or building up your own business.

That`s why I always preach to anyone who owns a business, no matter how small, to incorporate and to pass everything on that way before they die.

 

[billc]

A different look at Buffet's silliness...

http://biggovernment.com/ccravaack/...president-obamas-millionaires-vs-secretaries/

When President Obama states that high income earners are paying less tax then the middle class, he cites the example of Warren Buffett, a multi-billionaire who only pays 17.4% of his taxable income. However, Mr. Buffett is an anomaly in the upper tax bracket, because most of his income is earned through capital gains, which is taxed at a relatively lower 15% rate (IRS, February 2011). According to figures compiled by the nonpartisan Congressional Budget Office (CBO), those making over $1 million per year pay an average tax rate of 23.3%, while those making between $30-50,000 dollars pay an average tax rate of 7.2%.
Most people in the upper tax brackets are not receiving stock options as compensation, and are therefore subject to the same progressive tax structure as “secretaries.”
Under the current tax system, millionaires don’t just pay a higher tax rate; they also are responsible for a much higher percentage of income taxes paid. Again, the most recent CBO statistics available demonstrate that the top 1% of wage earners contribute nearly 40% of all income taxes paid in this country. The bottom 50% of America’s wage earners contribute only 3% of all income taxes. Additionally, under the current tax structure created under the Bush tax cuts, lower income citizens received a new lower tax bracket as well as the Earned Income Tax Credit, which has enabled further reductions to their tax burden.

Why it would be bad to increase capitol gains taxes to make the "rich" pay their "fair share"...

In order to reduce this perceived “inequality” between millionaires and secretaries, President Obama has proposed an increase in capital gains taxes to 28%. This is a mistake. While billionaires take advantage of this tax classification to cushion their compensation packages, the lower rate was designed to help the elderly make the most of their golden years (half of all taxpaying seniors have capital gains or dividend revenue) and to help middle class Americans make the most of their earnings. The low capital gains tax encourages people to invest their earnings in the enterprises of their fellow citizens, enabling business growth and expanding the wealth of ordinary Americans. Using the guilt ridden complaints of an already privileged few to discourage the attainment of a higher standard of living by hard working citizens is a disingenuous political strategy by the administration at the detriment of the American economy.

 

[Josh Oakley]

Since you guys are talking about Warren Buffett, I figure Warren Buffet might as well have a voice in all this. Here is an article he did for the New York Times.

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html

 

[Steve]

Since you guys are talking about Warren Buffett, I figure Warren Buffet might as well have a voice in all this. Here is an article he did for the New York Times.

http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html

The difference isn't what the rich pay on their taxable income vs what you or I pay. They pay more.

The key is the difference between what the "mega rich" receive as income and what income is taxable. So much of their income is sheltered and not taxed, it makes a huge difference. I've posted statistics in a couple of threads now from the IRS. There are people who earned in the Millions who paid ZERO income tax. There were many more who paid very, very little.

I don't begrudge anyone from taking every advantage they can legally. But at the same time, we can legally expect more. I physically cringe every time someone NOT in the top 1% defends them as though they're poor, hapless, helpless victims. "But they pay 20% of all income tax." Well, yeah! Of course they do. They own 50% of all assets. They make 50% of all of the income.

I've also said before, and still believe, that the greatest feat the wealthiest people in the USA have performed was to convince the middle class that the rich are the victims. I think that, in a time when everyone is cinching up their belts and watching the old household budget, the rich should be included. No more, no less. Everyone should do their part.